<PAGE>   1

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


(Mark One)

[X]  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934. For the Quarterly period ended December 31, 1999; or

[ ]  Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934. For the transition period from ____________________
     to ___________________.

                         Commission File Number: 0-27186
                                                ---------

                           RAYTEL MEDICAL CORPORATION
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                          <C>
           DELAWARE                                              94-2787342
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)
</TABLE>

            2755 CAMPUS DRIVE, SUITE 200, SAN MATEO, CALIFORNIA 94403
              (Address of principal executive offices) (Zip code)

                                 (650) 349-0800
              (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
   -----       -----


Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

<TABLE>
<CAPTION>
      CLASS                          SHARES OUTSTANDING AS OF JANUARY 28, 2000
      -----                          -----------------------------------------
<S>                                                   <C>
  COMMON STOCK
($.001 PAR VALUE)                                     8,746,344
</TABLE>

<PAGE>   2

                   RAYTEL MEDICAL CORPORATION AND SUBSIDIARIES

                                      INDEX

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

Item 1.   Financial Statements

          Condensed Consolidated Balance Sheets as of
          December 31, 1999 and September 30, 1999.............................3

          Condensed Consolidated Statements of Operations
          for the three months ended December 31, 1999 and 1998................4

          Condensed Consolidated Statements of Cash Flows
          for the three months ended December 31, 1999 and 1998................5


Item 2.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations..................................7


Item 3.   Quantitative and Qualitative Disclosures about Market Risks..........12



                           PART II. OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K......................................13

SIGNATURE......................................................................14
</TABLE>


                                       2

<PAGE>   3

                          PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                   RAYTEL MEDICAL CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    DECEMBER 31, 1999 AND SEPTEMBER 30, 1999
                                 (000'S OMITTED)

                                     ASSETS

<TABLE>
<CAPTION>
                                                          DECEMBER 31,   SEPTEMBER 30,
                                                             1999            1999
                                                          ------------   ------------
                                                                  (UNAUDITED)
<S>                                                        <C>             <C>
Current assets:
  Cash and cash equivalents                                $   5,650       $   6,110
  Receivables, net                                            35,059          34,858
  Prepaid expenses and other                                   3,006           3,143
                                                           ---------       ---------
         Total current assets                                 43,715          44,111

Property and equipment, less accumulated
  depreciation and amortization                               20,620          22,239
Intangible assets, less accumulated
  amortization                                                50,581          51,388
Other                                                             48              45
                                                           ---------       ---------
         Total assets                                      $ 114,964       $ 117,783
                                                           =========       =========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Current portion of long-term debt and
    capital lease obligations                              $   1,464       $   2,124
  Accounts payable                                             4,499           3,793
  Accrued compensation and benefits                            2,962           3,391
  Accrued liabilities                                          5,992           6,204
                                                           ---------       ---------
         Total current liabilities                            14,917          15,512

Long-term debt and capital lease obligations,
  net of current portion                                      24,934          27,246
Deferred liabilities                                              28             129
Minority interest in consolidated entities                     2,152           2,867
                                                           ---------       ---------
         Total liabilities                                    42,031          45,754
                                                           ---------       ---------

Stockholders' equity:
  Common stock                                                     9               9
  Additional paid-in capital                                  62,057          62,053
  Common stock to be issued                                    1,045           1,045
  Retained earnings                                           13,444          12,544
                                                           ---------       ---------
                                                              76,555          75,651
  Less treasury stock, at cost                                (3,622)         (3,622)
                                                           ---------       ---------
         Total stockholders' equity                           72,933          72,029
                                                           ---------       ---------
         Total liabilities and
            stockholders' equity                           $ 114,964       $ 117,783
                                                           =========       =========
</TABLE>


                                       3

<PAGE>   4




                   RAYTEL MEDICAL CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
                                   (UNAUDITED)
                    (000'S OMITTED, EXCEPT PER SHARE AMOUNTS)


<TABLE>
<CAPTION>
                                                   DECEMBER 31,
                                             -----------------------
                                               1999           1998
                                             --------       --------
<S>                                          <C>            <C>
Revenues:
  Cardiac information services               $ 10,441       $ 11,717
  Diagnostic imaging services                   5,332          4,780
  Heart facilities and other                    8,112          9,308
                                             --------       --------
         Total revenues                        23,885         25,805
                                             --------       --------

Costs and expenses:
  Operating costs                              10,402         11,844
  Selling, general and administrative           9,376          9,115
  Depreciation and amortization                 2,188          2,069
                                             --------       --------
         Total costs and expenses              21,966         23,028
                                             --------       --------

  Operating income                              1,919          2,777

Interest expense                                  553            672
Other expense (income)                           (253)          (177)
Minority interest                                 144             69
                                             --------       --------
  Income before income taxes                    1,475          2,213

Provision for income taxes                        575            863
                                             --------       --------
  Net income                                 $    900       $  1,350
                                             ========       ========
  Net income per share:
         Basic                               $    .10       $    .16
                                             ========       ========
         Diluted                             $    .10       $    .15
                                             ========       ========
Weighted average shares:
         Basic                                  8,745          8,667
                                             ========       ========
         Diluted                                8,939          9,077
                                             ========       ========
</TABLE>


                                       4

<PAGE>   5

                   RAYTEL MEDICAL CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
                                   (UNAUDITED)
                                 (000'S OMITTED)

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                            ---------------------
                                                             1999          1998
                                                            -------       -------
<S>                                                         <C>           <C>
Cash flows from operating activities:
  Net income                                                $   900       $ 1,350
  Adjustments to reconcile net income to net cash
    provided by operating activities:
      Depreciation and amortization                           2,188         2,069
      Minority interest                                         144            69
      Pay out of deferred compensation                           --        (1,245)
      Other, net                                                (20)           (2)
      Changes in operating accounts:
          Receivables, net                                     (547)        2,452
          Prepaid expenses and other                             90           570
          Accounts payable                                      756          (460)
          Accrued liabilities and other                          42           993
                                                            -------       -------
             Net cash provided by operating activities        3,553         5,796
                                                            -------       -------

Cash flows from investing activities:
  Capital expenditures                                         (962)       (2,080)
  Other, net                                                    100            (4)
                                                            -------       -------
             Net cash used in investing activities             (862)       (2,084)
                                                            -------       -------

Cash flows from financing activities:
  Income distributions to noncontrolling investors             (937)         (466)
  Paydown of line of credit                                  (1,802)       (2,648)
  Principal repayments of debt                                 (417)         (392)
  Other, net                                                      5            47
                                                            -------       -------
             Net cash used in financing activities           (3,151)       (3,459)
                                                            -------       -------
Net increase (decrease) in cash and cash equivalents           (460)          253
Cash and cash equivalents at beginning of period              6,110         7,463
                                                            -------       -------
Cash and cash equivalents at end of period                  $ 5,650       $ 7,716
                                                            =======       =======
</TABLE>

     The accompanying unaudited condensed consolidated financial statements of
Raytel Medical Corporation (the "Company") have been prepared in accordance with
the instructions to Form 10-Q and do not include all of the information and
notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. Operating results for the
three months ended December 31, 1999 are not necessarily indicative of results
that may be expected for the year ending September 30, 2000. For further
information, refer to the consolidated financial statements and notes included
in the Company's Annual Report on Form 10-K for the year ended September 30,
1999.


                                       5

<PAGE>   6

     For the three months ended December 31, 1999 and 1998, basic and diluted
earnings per share are calculated as follows:

<TABLE>
<CAPTION>
                                                  For the three months
                                                   ended December 31,
                                                  --------------------
(000's omitted, except per share amounts)           1999        1998
                                                   ------      ------
<S>                                                <C>         <C>
BASIC EARNINGS PER SHARE:

Net income                                         $  900      $1,350
                                                   ======      ======
Weighted average shares outstanding                 8,745       8,667
                                                   ======      ======
Per share                                          $  .10      $  .16
                                                   ======      ======

DILUTED EARNINGS PER SHARE:

Net income                                         $  900      $1,350
                                                   ======      ======
Weighted average shares outstanding                 8,745       8,667
Shares to be issued                                   144         151
Options                                                50         259
Warrants                                               --          --
                                                   ------      ------
                                                    8,939       9,077
                                                   ======      ======
Per share                                          $  .10      $  .15
                                                   ======      ======
</TABLE>

     Certain options and warrants to purchase shares of common stock were
outstanding during the three months ended December 31, 1999 and 1998, but were
not included in the computation of diluted earnings per share because their
exercise prices were greater than the average market price of the common shares
for the period. The options and warrants outstanding and their exercise prices
are as follows:

<TABLE>
<CAPTION>
                                                     For the three months
                                                      ended December 31,
                                                   ------------------------
(000's omitted, except per share amounts)           1999              1998
                                                   ------            ------
<S>                                             <C>              <C>
Options and warrants outstanding                   995,443           482,814
Range of exercise prices                        $3.625-$13.50    $4.75 - $13.50
</TABLE>


                                       6

<PAGE>   7

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

     This discussion and analysis includes a number of forward-looking
statements which reflect the Company's current views with respect to future
events and financial performance. These forward-looking statements are subject
to certain risks and uncertainties, including those discussed under "Business
Environment and Future Results" and elsewhere in this Item, that could cause
actual results to differ materially from historical results or those
anticipated. In this Item, the words "anticipates," "believes," "expects,"
"intends," "future" and similar expressions identify forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof.

OVERVIEW

     The Company generates its revenues from cardiac information services which
includes telephonic monitoring services for cardiac pacemaker patients
("Pacing"), cardiac event detection services ("CEDS") and Holter, diagnostic
imaging services and from heart facilities.

     Following the Company's initial public offering in December 1995, the
Company has entered into a series of transactions which expanded its heart
center and physician practice management businesses. As a result, revenue is
being provided from: Raytel Heart Center at Granada Hills ("RHCGH") beginning on
February 1, 1996; the management of Southeast Texas Cardiology Associates II
P.A. ("SETCA") beginning on September 18, 1996; the management of Comprehensive
Cardiology Consultants, a Medical Group, Inc. ("CCMG") beginning on November 1,
1996; and Cardiovascular Ventures, Inc. ("CVI") beginning on August 15, 1997,
which included the multi-specialty physician clinic, Heart and Family Health
Institute ("HFHI") and seven cardiovascular diagnostic facilities.

     Under certain practice management contracts, revenues are recognized
pursuant to long-term arrangements with physician groups under which the Company
provides the physician group with a full range of services, including, but not
limited to, office space, specialized clinical and procedural facilities,
medical equipment, data processing and medical record keeping, billing and
collection procedures and services, non-physician licensed personnel, such as
nurses and technicians, as well as office staff and administrative personnel. In
the case of SETCA and CCMG, the Company's practice management revenues are
derived from the physician groups' revenues, generally as a purchased service,
except for certain physician compensation and employment benefits, which are
paid by the physician group on a priority basis. Under the above management
services arrangements, the Company's practice management revenues represent
approximately 83% and 66% of the revenues of the physician groups for the three
months ended December 31, 1999 and 1998, respectively. For HFHI, the Company
recognizes 100% of all medical revenue as the physicians are employees of the
Company.

     On October 9, 1997, the Company announced it had entered into an agreement
with The Baptist Hospital of Southeast Texas ("Baptist") to develop a Raytel
Cardiovascular Center at the hospital. Under the agreement, Raytel was to manage
the cardiovascular center, which will provide the entire continuum of
cardiovascular services, including diagnostic, therapeutic and patient
management programs. Among other duties, Raytel was to be responsible for the
day-to-day operations of the heart center, including administrative support,
information systems management, marketing and public relations activities. The
Company began operations at Baptist during its fourth quarter of fiscal 1998.
Due to the recent merger between Baptist and the Memorial Hermann Hospital
System, a modified agreement became effective March 1, 1999. Therefore, during
the first five months of fiscal 1999, the Company only recognized revenue to the
extent of expenses. Effective March 1, 1999, the Company is recognizing revenue
based on the modified agreement which calls for the Company to manage portions
of the cardiovascular surgery and cardiology programs at Baptist and to develop
and manage specialty clinics to support the cardiovascular program.


                                       7

<PAGE>   8

     Effective March 27, 1999, the Company entered into a revised agreement with
RHCGH. The new agreement results in significantly lower revenues and expenses
than revenues and expenses recognized under the previous agreements. However,
under the new agreement, the Company expects to generate income. Under the old
agreements, operating expenses were in excess of revenues.

     In November 1999, the Company filed a demand for arbitration against CCMG
with JAMS/Endispute, Inc. The Company provides management services to CCMG
pursuant to a long-term management services agreement entered into between the
parties in November 1996. The demand for arbitration asserts that Raytel is
entitled to rescission, restitution and/or damages as a result of CCMG's
material breaches of the management services agreement. The Company does not
expect that an adverse opinion in the arbitration will have a material adverse
effect on the financial condition of the Company.

RESULTS OF OPERATIONS

     Three Months Ended December 31, 1999 Compared to Three Months Ended
December 31, 1998

     Revenues. For the three months ended December 31, 1999, total revenues were
$23,885,000 compared to $25,805,000 for the three months ended December 31,
1998, representing a decrease of $1,920,000, or 7.4%.

     Cardiac information services revenues were $10,441,000 for the three months
ended December 31, 1999, compared to $11,717,000 for the three months ended
December 31, 1998, a decrease of $1,276,000, or 10.9%. The decrease in revenues
for cardiac information services was due primarily to lower revenues from CEDS
as a result of lower test volumes, and lower revenues from Pacing due to a
decrease in test volumes as well as lower reimbursement rates. Diagnostic
imaging services revenue was $5,332,000 for the three months ended December 31,
1999, compared to $4,780,000 for the three months ended December 31, 1998, an
increase of $552,000, or 11.5%, due primarily to increases in revenue at certain
centers and the imaging network due to an increase in patient volumes. Heart
facilities and other revenues were $8,112,000 for the three months ended
December 31, 1999, compared to $9,308,000 for the three months ended December
31, 1998, a decrease of $1,196,000, or 12.8%, due primarily to lower revenue at
RHCGH due to the amended agreement partially offset by an increase in revenue at
HFHI.

     Operating Expenses. Operating costs and selling, general and administrative
expenses decreased by $1,181,000, or 5.6%, from $20,959,000 for the three months
ended December 31, 1998 to $19,778,000 for the three months ended December 31,
1999, due primarily to lower expenses at RHCGH due to the amended agreement,
partially offset by slight increases in costs and expenses in diagnostic imaging
services, HFHI and cardiac information services. Operating costs and selling,
general and administrative expenses as a percentage of total revenues increased
from 81.2% for the three months ended December 31, 1998 to 82.8% for the three
months ended December 31, 1999. At RHCGH operating expenses were slightly in
excess of revenues for the period ended December 31, 1998.

     Depreciation and Amortization. Depreciation and amortization expense
increased by $119,000, or 5.8%, from $2,069,000 for the three months ended
December 31, 1998 to $2,188,000 for the three months ended December 31, 1999,
and increased as a percentage of revenues from 8.0% for the three months ended
December 31, 1998 to 9.2% for the three months ended December 31, 1999.

     Operating Income. As a result of the foregoing factors, operating income
decreased by $858,000, or 30.9% from $2,777,000 for the three months ended
December 31, 1998 to $1,919,000 for the three months ended December 31, 1999.

     Interest Expense. Interest expense decreased by $119,000, or 17.7%, from
$672,000 for the three months ended December 31, 1998 to $553,000 for the three
months ended December 31, 1999 due primarily to a decrease in debt.


                                       8

<PAGE>   9

     Other Expense (Income). Other income increased by $76,000 due primarily to
a series of insignificant items.

     Minority Interest. Minority interest increased by $75,000, from $69,000 for
the three months ended December 31, 1998 to $144,000 for the three months ended
December 31, 1999 due primarily to increased income in a certain cardiovascular
diagnostic facility.

     Income Taxes. The provision for income taxes decreased by $288,000, or
33.4%, from $863,000 for the three months ended December 31, 1998 to $575,000
for the three months ended December 31, 1999 as a result of a lower taxable
income.

     Net Income. As a result of the foregoing factors, net income decreased by
$450,000, or 33.3%, from $1,350,000 for the three months ended December 31, 1998
to $900,000 for the three months ended December 31, 1999.

SEGMENT INFORMATION

     The Company's reportable segments are strategic business units that offer
different services. The Company has three reportable segments: Cardiac
Information Services ("Information"), Diagnostic Imaging Services ("Imaging")
and Heart Facilities and Other ("Facilities"). The Information segment provides
remote cardiac monitoring and testing services utilizing telephonic and Internet
communication technology. The Imaging segment operates a network of imaging
centers throughout the United States. The Facilities segment provides
diagnostic, therapeutic and patient management services primarily associated
with cardiovascular disease.

     The accounting policies of the segments are the same as those described in
the summary of significant accounting policies (see Note 2 of the Company's 1999
Annual Report) except that the Company does not allocate all interest expense,
taxes or corporate overhead to the individual segments. The Company evaluates
performance based on profit or loss from operations before income taxes and
unallocated amounts. The totals per the schedules below will not and should not
agree to the consolidated totals. The difference is due to corporate overhead
and other unallocated amounts which are reflected in the reconciliation to
consolidated earnings before income taxes (in thousands):

<TABLE>
<CAPTION>
                                                 Information       Imaging       Facilities         Total
                                                 -----------       -------       ----------         -----
<S>                                               <C>             <C>             <C>             <C>
For the three months ended December 31,1999:
  Net revenue                                     $  10,441       $   5,332       $   8,112       $  23,885
  Total operating expenses                            8,716           3,912           6,144          18,772
                                                  ---------       ---------       ---------       ---------
  Segment contribution                                1,725           1,420           1,968           5,113

  Depreciation and amortization                         736             418             952           2,106
  Interest expense                                       --              72             137             209
  Minority interest/other expense (income)              (12)            (26)            (48)            (86)
                                                  ---------       ---------       ---------       ---------
  Segment profit                                  $   1,001       $     956       $     927       $   2,884
                                                  =========       =========       =========       =========
  Segment assets                                  $  38,368       $  14,701       $  57,272       $ 110,341
                                                  =========       =========       =========       =========
  Capital expenditures                            $     655       $     265       $      39       $     959
                                                  =========       =========       =========       =========
</TABLE>


                                       9

<PAGE>   10

<TABLE>
<CAPTION>
                                                 Information       Imaging       Facilities         Total
                                                 -----------       -------       ----------         -----
<S>                                               <C>             <C>             <C>             <C>
For the three months ended December 31, 1998:
  Net revenue                                     $  11,717       $   4,780       $   9,308       $  25,805
  Total operating expenses                            8,217           3,629           7,991          19,837
                                                  ---------       ---------       ---------       ---------
  Segment contribution                                3,500           1,151           1,317           5,968

  Depreciation and amortization                         695             456             881           2,032
  Interest expense                                       --               3             184             187
  Minority interest/other expense (income)              (79)            (38)             29             (88)
                                                  ---------       ---------       ---------       ---------
  Segment profit                                  $   2,884       $     730       $     223       $   3,837
                                                  =========       =========       =========       =========
  Segment assets                                  $  37,716       $  15,251       $  62,333       $ 115,300
                                                  =========       =========       =========       =========
  Capital expenditures                            $     562       $     817       $     671       $   2,050
                                                  =========       =========       =========       =========
</TABLE>

<TABLE>
<CAPTION>
                                             THREE MONTHS ENDED DECEMBER 31,
                                             -------------------------------
                                                  1999          1998
                                                 -------       -------
<S>                                              <C>           <C>
Segment profit                                   $ 2,884       $ 3,837
Unallocated amounts:
    Corporate general and administrative           1,006         1,122
    Corporate depreciation and amortization           82            37
    Corporate interest expense                       344           485
    Corporate other expense (income)                 (23)          (20)
                                                 -------       -------
Earnings before income taxes                     $ 1,475       $ 2,213
                                                 =======       =======
</TABLE>


BUSINESS ENVIRONMENT AND FUTURE RESULTS

     The Company's future operating results may be affected by various trends in
the healthcare industry as well as by a variety of other factors, some of which
are beyond the Company's control.

     The healthcare industry is undergoing significant change as third-party
payors attempt to control the cost, utilization and delivery of healthcare
services. Substantially all of the Company's revenues are derived from Medicare,
HMOs, commercial insurers and other third-party payors. Both government and
private payment sources have instituted cost containment measures designed to
limit payments made to healthcare providers by reducing reimbursement rates,
limiting services covered, increasing utilization review of services,
negotiating prospective or discounted contract pricing, adopting capitation
strategies and seeking competitive bids. Revenue from the Company's Pacing
operations during certain periods of the last three fiscal years has been
negatively impacted by Medicare reimbursement rate reductions. Reimbursement
rate reductions applicable to the Company's Pacing procedures became effective
on January 1, 1997. These reductions had a negative effect on the Company's
operating results for the last three quarters of fiscal 1997 and for the first
quarter of fiscal 1998. The Company's Pacing operations have been favorably
impacted for the period January 1, 1998 to December 31, 1998 due to an increase
in Medicare reimbursement rates effective January 1, 1998. However, a slight
decrease in these rates became effective on January 1, 1999, thereby having a
negative effect on Pacing revenue for calendar 1999. The Company cannot predict
with any certainty whether or when additional reductions or changes in Medicare
or other third-party reimbursement rates or policies will be implemented. There
can be no assurance that future changes, if any, will not adversely affect the
amounts or types of services that may be reimbursed to the Company, or that



                                       10

<PAGE>   11

future reimbursement of any service offered by the Company will be sufficient to
cover the costs and overhead allocated to such service.

     From time to time Congress considers legislation to reduce Medicare and
Medicaid expenditures. Future legislation of this type could have a material
adverse effect on the Company's business, financial condition and operating
results. Governmental agencies promulgate regulations which mandate changes in
the method of delivering services which could have a material adverse effect on
the Company's business.

     A key element of the Company's long-range strategy was the development and
operation of integrated heart centers and the acquisition of healthcare
providers specializing in cardiology related services and the assets of
physician practices and other businesses related to its current operations. The
success of the Company's existing heart centers and physician practices depends
upon several factors, including the Company's ability to: obtain and operate in
compliance with appropriate licenses; control costs and realize operating
efficiencies; educate patients, referring physicians and third-party payors
about the benefits of such heart centers; and provide cost-effective services
that meet or exceed existing standards of care.

     An element of the Company's strategy is to expand, in part, through
acquisitions and investments in complementary healthcare businesses. The
implementation of this strategy may place significant strain on the Company's
administrative, operational and financial resources and increase demands on its
systems and controls. There can be no assurances that businesses acquired by the
Company, either recently or in the future, will be integrated successfully and
profitably into the Company's operations, that suitable acquisitions or
investment opportunities will be identified, or that any such transactions can
be consummated.

     Providers of healthcare services are subject to numerous federal, state and
local laws and regulations that govern various aspects of their business. There
can be no assurance that the Company will be able to obtain regulatory approvals
that may be required to expand its services or that new laws or regulations will
not be enacted or adopted that will have a material adverse effect on the
Company's business, financial condition or operating results.

     The healthcare businesses in which the Company is engaged are highly
competitive. The Company expects competition to increase as a result of ongoing
consolidations and cost-containment pressures, among other factors.

     The trading price of the Company's Common Stock could be subject to wide
fluctuations in response to quarterly variations in the Company's operating
results, shortfalls in such operating results from levels forecasted by
securities analysts and other events or factors. In addition, the stock market
has, from time to time, experienced extreme price and volume fluctuations that
have particularly affected the market prices of companies in the healthcare
service industries and that have often been unrelated to the operating
performance of the affected companies. Announcements of changes in reimbursement
policies of third-party payors, legislative or regulatory developments, economic
news and other external factors may have a significant impact on the market
price of healthcare stocks.

LIQUIDITY AND CAPITAL RESOURCES

     The Company acquired CDS in June 1996 for cash in the amount of
$14,254,000, SETCA in September 1996 for cash in the amount of $4,010,000 and
CCMG in November 1996 for cash in the amount of $427,000 and CVI in August 1997
for cash in the amount of $16,980,000 plus $280,000 paid during fiscal 1998. At
December 31, 1999, the Company had working capital of $28,798,000, compared to
$28,599,000 at September 30, 1999. At December 31, 1999, the Company had cash
and temporary cash investments of $5,650,000. At December 31, 1999, $17,245,000
was outstanding under the Company's line of credit.

     The Company batch-bills Medicare insurance carriers for most cardiac
testing services performed during the first few months of each calendar year.
This practice results in a temporary build-up of accounts receivable during the
Company's second and third fiscal quarters and the collection of these
receivables primarily during the subsequent fourth fiscal quarter.


                                       11

<PAGE>   12

     The Company has a revolving line of credit with two banks in the amount of
$45,000,000 to fund working capital needs, future acquisitions, equipment
purchases and other business needs. Amounts outstanding under the line of credit
bear interest based on a defined formula and are subject to certain covenants.
The line of credit expires in August 2001 at which time any outstanding balance
will be due and payable.

     The Company's long-term capital requirements will depend on numerous
factors, including the rate at which the Company develops and opens new heart
centers or acquires existing heart centers, physician practices or other
businesses, if any. The Company believes that its cash and cash equivalent
balances, together with amounts available from bank borrowings and cash
generated by its operating activities, will be adequate to meet the Company's
anticipated needs for working capital and capital expenditures through fiscal
2000.

YEAR 2000 COMPLIANCE

     The Company, to date, has not experienced any significant Year 2000
problems. However, there can be no assurance that the Company will not
experience any significant problems as it moves forward into Year 2000.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

     The company is exposed to market risk from interest rate fluctuations
because it uses variable rate debt to finance working capital requirements. The
Company does not believe that there is any material market risk exposure with
respect to other financial instruments that would require further disclosure
under this item.


                                       12

<PAGE>   13

                           PART II. OTHER INFORMATION


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     a.   EXHIBITS:

          The following exhibits are filed as a part of this Report:

<TABLE>
<CAPTION>
          Exhibit
          Number                             Title
          -------                            -----
<S>                   <C>
           10.63      Employment Agreement dated as of August 4, 1999, by and
                      between Allan Zinberg and Raytel Medical Corporation

           10.64      Consulting Agreement dated as of January 1, 2000 by and
                      between Allan Zinberg and Raytel Medical Corporation

           27         Financial data schedule
</TABLE>


     b.   REPORTS ON FORM 8-K:

          The Company filed no reports on Form 8-K during the quarter ended
December 31, 1999.


                                       13

<PAGE>   14

                                    SIGNATURE

     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.

                                                 RAYTEL MEDICAL CORPORATION



Dated: February 10, 2000                        By: /s/ JOHN F. LAWLER, JR.
                                                   -----------------------------
                                                   John F. Lawler, Jr.
                                                   Vice President and
                                                   Chief Financial Officer
                                                   (duly authorized officer and
                                                   principal financial officer)


                                       14

<PAGE>   15

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
          Exhibit
          Number                             Title
          -------                            -----
<S>                   <C>
           10.63      Employment Agreement dated as of August 4, 1999, by and
                      between Allan Zinberg and Raytel Medical Corporation

           10.64      Consulting Agreement dated as of January 1, 2000 by and
                      between Allan Zinberg and Raytel Medical Corporation

           27         Financial data schedule
</TABLE>