UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


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

For the quarterly period ended September 30, 1997

                                       or

[ ]  TRANSITION  REPORTS  PURSUANT  TO  SECTION  13 OR 15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from             to
                              -----------     -----------


                         Commission File Number: 0-26082


                                  VIDAMED, INC.
             (exact name of registrant as specified in its charter)



        Delaware                                   77-0314454
   (State or other jurisdiction of           (IRS Employer Identification No.)
   incorporation or organization)


                              46107 Landing Parkway
                                Fremont, CA 94538
                    (Address of principal executive offices)

                                 (510) 492-4900
              (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
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. [ X ] Yes [  ] No

The number of outstanding  shares of the  registrant's  Common Stock,  $.001 par
value, was 15,203,173 as of November 13, 1997.


                                                                    Page 1 of 16
                                                        Exhibit Index at Page 15
<PAGE>


                                  VIDAMED, INC.

                                      INDEX

PART I: FINANCIAL INFORMATION
                                                                            Page

Item 1.    Condensed consolidated financial statements - unaudited

           Condensed consolidated balance sheets - September 30, 1997
                and December 31, 1996                                          3

           Condensed consolidated statements of operations - three months
                ended September 30, 1997 and 1996 and nine months ended   
                September 30, 1997 and 1996                                    4

           Condensed consolidated statements of cash flows - nine months
                ended September 30, 1997 and 1996                              5

           Notes to condensed consolidated financial statements                6

Item 2.    Management's discussion and analysis of financial condition
             and results of operations                                         8


PART II: OTHER INFORMATION

Item 1.      Legal Proceedings                                                12

Item 2.      Changes in Securities                                            12

Item 3.      Defaults Upon Senior Securities                                  12

Item 4.      Submission of Matters to a Vote of Security Holders              12

Item 5.      Other Information                                                12

Item 6.      Exhibits and Reports on Form 8-K                                 12

             Signatures                                                       13

                                                                    Page 2 of 16
<PAGE>


                          PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                                  VidaMed, Inc.
                      Condensed Consolidated Balance Sheets
                                 (In thousands)

                                                      September 30, December 31,
                                                              1997          1996
                                                      ------------  ------------
                                                        (Unaudited)      (*)
Assets
Current Assets:
     Cash and cash equivalents ..........................  $ 13,517       3,879
     Short-term investments .............................      --         1,976
     Accounts receivable ................................     3,357       2,413
     Inventory ..........................................     1,604       1,447
     Other current assets ...............................     1,021         665
                                                           --------    --------
           Total current assets .........................    19,499      10,380

     Property and equipment, net ........................     3,470       2,259
     Other assets, net ..................................       231         208
                                                           --------    --------
           Total assets .................................  $ 23,200    $ 12,847
                                                           ========    ========

Liabilities and stockholders' equity 
Current liabilities:
     Notes payable, current portion .....................  $    757    $  1,064
     Accounts payable ...................................     2,187       1,246
     Accrued professional fees ..........................       590         498
     Accrued clinical trial costs .......................       668         982
     Accrued and other liabilities ......................     3,397       3,114
     Restructuring Accrual ..............................     2,100        --
     Current portion of obligations under capital leases        173         470
     Deferred revenue, current portion ..................       415         467
                                                           --------    --------
           Total current liabilities ....................    10,287       7,841

     Notes payable, noncurrent ..........................      --           480
     Other long-term liabilities ........................       666         825

Stockholders' equity:
     Capital stock ......................................    77,478      55,577
     Accumulated deficit ................................   (65,231)    (51,876)
                                                           --------    --------
           Total stockholders' equity ...................    12,247       3,701
                                                           --------    --------
           Total liabilities and stockholders' equity ...  $ 23,200    $ 12,847
                                                           ========    ========

* The Balance  Sheet at  December  31,  1996 has been  derived  from the audited
financial  statements  at that date but does not include all of the  information
and footnotes required by generally accepted accounting  principles for complete
financial statements.
                             See accompanying notes.

                                                                    Page 3 of 16
<PAGE>

<TABLE>
                                        VidaMed, Inc.
                       Condensed Consolidated Statements of Operations
                           (In thousands except per share amounts)
                                         (Unaudited)

<CAPTION>
                                               Three Months Ended        Nine Months Ended
                                                 September 30,             September 30,
                                              ---------------------   --------------------
                                                  1997        1996        1997        1996
                                              --------    --------    --------    --------
<S>                                           <C>         <C>         <C>         <C>
Revenues:
     Product sales, net ...................   $  1,809    $    245    $  7,164    $  1,235
     License fees and grant revenue .......        550          50         650         150
                                              --------    --------    --------    --------
     Net revenues .........................      2,359         295       7,814       1,385

Cost of Products Sold (see Note 5) ........      3,306         709       6,354       2,331
                                              --------    --------    --------    --------
Gross Profit (Loss) .......................       (947)       (414)      1,460        (946)

Operating Expenses:
     Research and development .............      1,218       1,249       4,571       3,999
     Selling, general and administrative ..      2,935       1,891      10,159       5,502
                                              --------    --------    --------    --------
     Total operating expenses .............      4,153       3,140      14,730       9,501
                                              --------    --------    --------    --------
     Loss from operations .................     (5,100)     (3,554)    (13,270)    (10,447)

Other income(expense), net ................         23          10         (86)         19
                                              --------    --------    --------    --------
Net loss ..................................   $ (5,077)   $ (3,544)   $(13,356)   $(10,428)
                                              ========    ========    ========    ========
Net loss per share ........................   $   (.39)   $   (.33)   $  (1.11)   $  (1.02)
                                              ========    ========    ========    ========

Shares used in computing net loss per share     12,901      10,854      11,981      10,208
                                              ========    ========    ========    ========


                                                                                Page 4 of 16
</TABLE>
<PAGE>


                             See accompanying notes.

                                  VidaMed, Inc.
                 Condensed Consolidated Statement of Cash Flows
                                 (In thousands)
                                   (Unaudited)


                                                            Nine Months Ended
                                                              September 30,
                                                          --------------------
                                                            1997        1996
                                                          --------    --------
Cash flows from operating activities:
     Net loss .........................................   $(13,356)   $(10,428)
     Adjustments to reconcile net loss to net cash
         used in operating activities:
           Depreciation and amortization ..............        907       1,063
           Other ......................................                    146
           Changes in assets and liabilities:
               Accounts Receivable ....................       (944)       (183)
               Inventory ..............................       (157)       (292)
               Other current assets ...................       (356)       (104)
               Other assets ...........................        (23)         20
               Accounts payable .......................        941         145
               Accrued and other liabilities ..........      2,088         523
               Deferred revenue .......................        (52)       (262)
                                                          --------    --------
Net cash used in operating activities .................    (10,952)     (9,372)
                                                          --------    --------

Cash flows from investing activities:
     Expenditures for property and equipment ..........     (2,045)       (584)
     Purchases of short-term investments ..............       --        (9,816)
     Proceeds from maturities of short-term investments      1,977      15,667
                                                          --------    --------
Net cash (used in) provided by investing activities ...        (68)      5,267
                                                          --------    --------

Cash flows from financing activities:
     Net cash proceeds from issuance of Common Stock ..     21,828         554
     Principal payments under capital leases ..........       (380)       (519)
     Principal payments of long-term debt .............         (3)        (18)
     Principal payments of notes payable ..............       (787)     (3,402)
     Net proceeds from issuance of notes payable
         and convertible notes ........................       --         9,776
                                                          --------    --------
Net cash provided by financing activities .............     20,658       6,391
                                                          --------    --------
Net increase in cash and cash equivalents .............      9,638       2,286
Cash and cash equivalents at the beginning
  of the period .......................................      3,879       5,687
                                                          --------    --------
Cash and cash equivalents at the end of the period ....   $ 13,517    $  7,973
                                                          ========    ========


                             See accompanying notes.
                                                                    Page 5 of 16
<PAGE>


                                  VIDAMED, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1997
                                   (Unaudited)

1.       Basis of presentation

The  accompanying  unaudited  condensed  consolidated  financial  statements  of
VidaMed, Inc. (the "Company" or "VidaMed") have been prepared in accordance with
generally accepted accounting  principles for interim financial  information and
with the  instructions  for Form 10-Q and  Article  10 of  Regulation  S-X.  The
balance sheet as of September 30, 1997 and the  statements of operations for the
three and nine months ended  September 30, 1997 and 1996,  and the statements of
cash flows for the nine months ended  September 30, 1997 and 1996, are unaudited
but include all adjustments  (consisting of normal recurring  adjustments) which
the  Company  considers  necessary  for a fair  presentation  of  the  financial
position  at such  dates  and the  operating  results  and cash  flows for those
periods.  Although the Company  believes that the disclosures in these financial
statements  are  adequate  to make the  information  presented  not  misleading,
certain  information  normally  included  in  financial  statements  and related
footnotes prepared in accordance with generally accepted  accounting  principles
have been  condensed  or omitted  pursuant to the rules and  regulations  of the
Securities and Exchange Commission. The accompanying financial statements should
be read in conjunction with the financial  statements and notes thereto included
in the Company's annual report on Form 10-K for the year ended December 31, 1996
filed with the Securities and Exchange Commission.

Results for any interim period are not necessarily indicative of results for any
other interim period or for the entire year.

2.       Net loss per share

Net loss per share is computed  using the weighted  average  number of shares of
common stock outstanding during the periods presented.  Common equivalent shares
are excluded from the computation as their effect is anti-dilutive.  In February
1997,  the  Financial  Accounting  Standards  Board  issued  Statement  No. 128,
Earnings per Share,  which is required to be adopted on December  31,  1997.  At
that time,  the Company will be required to change the method  currently used to
compute  loss  per  share  and to  restate  all  prior  periods.  Under  the new
requirements for calculating  primary earnings per share or "basic" earnings per
share the  dilutive  effect of stock  options  will be  excluded.  The impact of
Statement  128 on the  calculation  of loss per  share  for the  company  is not
expected to be material.

3.       Inventories

Inventories  are  stated at the lower of cost  (determined  using the  first-in,
first-out  method)  or market  value.  Inventories  at  September  30,  1997 and
December 31, 1996 consist of the following:

                                       September 30,    December 31,
                                           1997             1996
                                       ------------     -----------
   Raw materials                       $  358,000       $  600,000
   Work in process                         57,000          174,000
   Finished goods                       1,189,000          673,000
                                       ------------     -----------
                                       $1,604,000       $1,447,000
                                       ============     ===========


                                                                    Page 6 of 16
<PAGE>

4.       Common stock

In February 1997, the Company entered into an equity financing  agreement with a
European  investment  bank under which  provided  the Company with the option to
sell to such  investment  bank up to $10.0  million of VidaMed  common  stock in
increments of up to $2.5 million.  Under this arrangement,  the common stock was
priced  at a 10%  discount  to the  current  market  price  at the time of sale,
subject  to  adjustment  based on a formula  linked to the  market  price of the
Company's common stock during the 21 trading days following the sale. Concurrent
with each common stock  issuance under this  arrangement,  the Company issued to
the investment  bank a warrant to purchase one share of common stock for each 10
shares of common stock  purchased under the  arrangement.  The exercise price of
the  warrant  is equal to the  adjusted  purchase  price  for the  common  stock
multiplied by 1/0.9, with the resulting product multiplied by 1.25. Each warrant
has a term of three years from the date of issuance.

As of September 30, 1997 the Company had issued 1,570,463 shares of common stock
under the arrangement, resulting in approximately $10 million of net proceeds.

In  September  1997,  the Company  completed a private  placement  with  certain
investors. In this transaction,  the Company issued 2.6 million shares of Common
Stock at a purchase price of $4.75 per share  resulting in net proceeds of $11.7
million to the Company.  In connection with this  financing,  the Company issued
warrants  to  purchase  an  aggregate  of 629,000  shares of Common  Stock at an
exercise price of $6.33 per share.

5.        Restructuring Accrual

In September 1997, VidaMed announced a restructuring  program designed to reduce
costs  and  improve  operating   efficiencies  by  closing  the  company's  U.K.
manufacturing   facility.   The  Company  anticipates  that  following  a  short
transition period,  all future  manufacturing of the VidaMed TUNA(R) System hand
pieces will occur in the U.S.  In this  regard,  the Company  moved into its new
headquarter  facility in Fremont,  California  in July,  1997.  The  facility is
approximately  35,000  square  feet  and  provides  the  necessary  capacity  to
manufacture the VidaMed TUNA hand piece. The company is currently qualifying the
facility as a FDA, GMP and ISO9001 site. A $2.1 million charge for the three and
nine months ended  September  30, 1997 is reflected in cost of goods sold in the
Statements of Operations. The charge reflects $390,000 for the estimated loss on
the  abandonment  of  fixed  assets,  a  $1,305,000  charge  for  the  Company's
obligation related to the shut down of the facility in the next six months and a
$405,000 obligation related to a grant.

The  elements of the total  charge as of  September  30, 1997 are as follows (in
thousands):


                                                Representing
                            ----------------------------------------------------
                                                              Cash Outlays
                                                        ------------------------
                              Total           Asset
                            Charges      Write-down     Completed        Future

Fixed assets                 $  390        $  390        $  --          $ --
Facility shut down            1,305          --             --           1,305
Grant                           405          --             --             405
                             ------        ------        -------        ------
Total Special Charges        $2,100        $  390        $  --          $1,710
                             ======        ======        =======        ======


                                                                    Page 7 of 16
<PAGE>

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

This Management's  Discussion and Analysis of Financial Condition and Results of
Operations  for the three and nine  months  ended  September  30, 1997 and 1996,
should be read in conjunction with the  Management's  Discussion and Analysis of
Financial  Condition and Results of Operations  included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996.

This Management's  Discussion and Analysis of Financial Condition and Results of
Operations   contains   forward-looking   statements  which  involve  risks  and
uncertainties.  The Company's actual results may differ significantly from those
anticipated by the forward-looking  statements.  Factors that might cause such a
difference  include,  but are not limited to, those  discussed  below and in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.

Overview

VidaMed has a limited  history of  operations  and has  experienced  significant
operating losses since its inception.  As of September 30, 1997, the Company had
an accumulated  deficit of $65.2 million.  The Company  commenced  international
sales of its  TransUrethral  Needle  Ablation  ("TUNA")  system in late 1993 and
United States sales in October 1996.  Revenues for the quarters ended  September
30, 1997 and 1996 include license fees for distribution rights in Japan.

VidaMed anticipates that a substantial amount of its revenues from product sales
in the future  will be from  sales in the United  States.  The  Company  filed a
premarket 510(k) notification with the Food and Drug Administration  ("FDA") for
the VidaMed TUNA System in March 1996.  The company  received  FDA  clearance to
market  this  system  for the  treatment  of  symptoms  associated  with  benign
prostatic hyperplasia (BPH) in the United States on October 8, 1996. The Company
applied to the American Medical Association for a current procedure  terminology
("CPT")  code  covering  the TUNA  Procedure.  A CPT code  relating  to the TUNA
Procedure  has been  published  in the Federal  Register and will be part of the
Medicare  Physician Fee Schedule for calendar  1998.  Although the 1998 CPT code
facilitates  Medicare  reimbursement within established  reimbursement  amounts,
there can be no assurance of Medicare  reimbursement  as claims are submitted on
an individual basis for reimbursement consideration.  In particular,  individual
Medicare  directors in each state will be responsible for making  determinations
regarding  reimbursement for the TUNA Procedures,  and there can be no assurance
as to the extent to which  Medicare will reimburse for the TUNA  Procedures.  In
the United States, the Company markets the VidaMed TUNA System through a network
of five VidaMed sales  managers and  approximately  35  independent  dealers and
representatives.  A network of distributors,  supported by VidaMed staff,  cover
other countries in Europe, Asia and South America.

VidaMed does not  anticipate  reaching  profitability  in the near  future.  The
Company expects its operating  losses to continue through at least the next four
quarters  as it  continues  to expend  substantial  resources  in  expansion  of
marketing and sales activities, funding clinical trials in support of regulatory
and reimbursement approvals, and research and development.  The Company's future
profitability will be


                                                                    Page 8 of 16
<PAGE>


dependent  upon,  among other  factors,  market  acceptance  of the VidaMed TUNA
Procedure and availability of third-party reimbursement for procedures performed
with the TUNA System.

Although the Company has received FDA clearance of its 510(k)  notification  for
the TUNA System for treatment of symptoms  associated with BPH and has commenced
marketing  of the TUNA System in the United  States,  there can be no  assurance
that the TUNA System will be deemed  clinically or cost effective by many health
care providers and payors, will be deemed superior to other current and emerging
methods for treating BPH or will achieve  significant  market  acceptance in the
United States market. As of September 30, 1997 there have been approximately 200
RF generators sold in the United States and over 2,500 TUNA procedures performed
by urologists. Furthermore,  determinations of reimbursement of the VidaMed TUNA
Procedure by private and governmental  health payors are made by such payors and
their medical  directors  independently of the FDA approval,  and,  accordingly,
there can be no assurance that the TUNA  Procedure will be generally  reimbursed
at adequate  levels in the United  States under either  private or  governmental
healthcare payment systems.  Availability of Medicare reimbursement for the TUNA
Procedure  may be  dependent on  publication  of clinical  data  relating to the
cost-effectiveness  and duration of the TUNA therapy.  Adequacy of reimbursement
for TUNA  procedures  could  have an adverse  effect on the  ability of the TUNA
System to achieve  market  acceptance.  Failure of the TUNA Procedure to achieve
market  acceptance in the United States would have a material  adverse effect on
business, financial condition and results of operations of the Company.

The  Company  does not have a backlog of orders for its  products  in  countries
where the VidaMed TUNA System is sold and  anticipates  that it will continue to
manufacture and ship orders after their receipt.  Accordingly,  the Company does
not anticipate that it will develop a significant backlog in the future.

Results of Operations

Net revenues for the three months ended  September  30, 1997  increased  700% to
$2,359,000 from $295,000 in the three months ended  September 30, 1996.  Product
sales in the third quarter of 1997 increased 638% to $1,809,000 from $245,000 in
the  same  period  in 1996.  For the  first  nine  months  of 1997 net  revenues
increased  464% to $7,814,000  from  $1,385,000  during the same period in 1996.
Product  sales for the first nine months of 1997  increased  480% to  $7,164,000
from $1,235,000 during the same period in 1996. The increase in net revenues and
product  sales  between 1997 and 1996 is the result of sales of the VidaMed TUNA
System in the United States and a one time license fee from  VidaMed's  Japanese
distributor  as a result of  clearance  of the  VidaMed  TUNA System for sale in
Japan. The system was approved for sale in the U.S. in October 1996.

Cost of product  sold for the three and nine  months  ended  September  30, 1997
includes a one time charge of $2.1 million related to the shut down of VidaMed's
U.K.  facility.  Excluding  the  $2.1  million  charge,  cost of  product  sales
increased 70% to  $1,206,000  in the three months ended  September 30, 1997 from
$709,000 in the three  months  ended  September  30,  1996.  Excluding  the $2.1
million  charge,  for the nine months ended  September  30, 1997 cost of product
sales  increased 82% to $4,254,000  from  $2,331,000 in the same period in 1996.
The  increase is due to higher  product  sales in the first nine months of 1997.
Increased sales in the first nine months of 1997 resulted in improved absorption
of manufacturing overhead.

Research and development expenses decreased 2% to $1,218,000 in the three months
ended September 30, 1997 from $1,249,000 in the three months ended September 30,
1996.  The decrease is primarily due to the  completion  in the second  quarter,
ended June 30, 1997 of the  development  efforts on both the VidaMed



                                                                    Page 9 of 16
<PAGE>

TUNA System RF generator and VidaMed TUNA System handpiece.  For the nine months
ended  September 30, 1997  research and  development  expenses  increased 14% to
$4,571,000  from  $3,999,000  in the same  period  of  1996.  The  increase  was
primarily  due to  product  development  for  the new  VidaMed  TUNA  System  RF
generator  resulting from increased  outside  services and development  material
which occurred in the first quarter of 1997.

Selling,  general and administrative expenses increased 55% to $2,935,000 in the
three months ended  September 30, 1997 from $1,891,000 in the three months ended
September  30,  1996.  For the nine months  ended  September  30, 1997  selling,
general and administrative  expenses increased 85% to 10,159,000 from $5,502,000
in the same period in 1996.  The increase was primarily  due to increased  sales
and marketing  expense  incurred in the continuing  product  introduction of the
VidaMed  TUNA  System in the  United  States.  Significant  sales and  marketing
expenses included commissions,  advertising expenses,  trade shows and physician
workshops.

Total operating  expenses in the three months ended September 30, 1997 increased
32% to $4,153,000  from $3,140,000 in the three months ended September 30, 1996.
Total  operating  expenses  for the first nine months of 1997  increased  55% to
$14,730,000  from  $9,501,000  in the same  periods  in 1996.  The  increase  in
operating  expenses was due  primarily  to the increase in selling,  general and
administrative expenses.

Other income (expense) for the three months ended September 30, 1997 was $23,000
and other  expense for the nine months  ended  September  30, 1997 was  $86,000,
compared to other  income of $10,000 and $19,000 for the  comparable  periods in
1996.  This change is primarily due to lower  interest  income  attributable  to
lower  investment  balances,  offset in part by lower  interest  expense  due to
decreasing notes payable and capital lease balances.

The net loss for the three and nine month periods  ended  September 30, 1997 was
$5,077,000 and $13,356,000, respectively, compared to $3,544,000 and $10,428,000
for the comparable periods in 1996.

Liquidity and Capital Resources

At September 30, 1997 the Company's cash and cash equivalents were  $13,517,000,
compared to  $5,855,000  at December 31,  1996.  In February  1997,  the Company
entered into an equity financing agreement with a European investment bank under
which the Company may, at its option,  sell to such  investment bank up to $10.0
million of VidaMed  common  stock.  As of  September  30,  1997 the  Company has
completed this agreement.  In September 1997, the Company issued common stock in
a private placement with certain investors.  Approximately 2.6 million shares of
VidaMed common stock were issued in September for approximately $11.7 million in
net proceeds.

In April 1995,  the Company  obtained a $3,000,000  credit  facility  secured by
VLLI.  To date,  the  Company  has  borrowed  $3,000,000  under  this  facility.
Borrowings  bear  interest  at the prime rate plus 3% per annum plus  additional
lump-sum  interest of 15% of each borrowing,  payable at maturity.  Repayment of
principal and interest is based on a three year amortization schedule.

During the nine months ended September 30, 1997 and 1996,  VidaMed consumed cash
in operations of $10,952,000  and $9,372,000,  respectively.  The changes in net
cash  used  in  operations  were  mainly   attributable  to  increased  accounts
receivable  resulting  from  increased  product  sales and  sales and  marketing
expenses  associated  with the product  launch of the VidaMed TUNA System in the
United States.


                                                                   Page 10 of 16
<PAGE>

The Company moved in July 1997 to a 35,000 square foot facility in Fremont,  CA.
The Company incurred approximately $1.0 million in capital expenditures with the
move to the new facility in the third quarter.

Although VidaMed believes that its current capital  resources and cash generated
from the sale of products will be sufficient to meet the Company's operating and
capital  requirements  through the next twelve months, there can be no assurance
that the Company will not require  additional  financing within this time frame.
There can be no  assurance  that  additional  financing,  if  required,  will be
available on satisfactory terms or at all. In any event,  VidaMed anticipates in
the future that it may seek to raise  additional  funds through bank facilities,
debt or equity offerings or other sources of capital. VidaMed's future liquidity
and  capital  requirements  will  depend on numerous  other  factors,  including
progress of clinical  trials,  actions  related to regulatory and  reimbursement
matters, and the extent to which the TUNA system gains market acceptance.

Restructuring Accrual

In September 1997, VidaMed announced a restructuring  program designed to reduce
costs  and  improve  operating   efficiencies  by  closing  the  company's  U.K.
manufacturing  facility. The company expects to incur approximately $1.7 million
in cash outlays, primarily over the next twelve months. See also Footnote 5.


                                                                   Page 11 of 16
<PAGE>


                                  VIDAMED, INC.

PART II: OTHER INFORMATION

Item 1.           Legal Proceedings

                  None

Item 2.           Changes in Securities

                  See page 14.

Item 3.           Defaults upon Senior Securities

                  None

Item 4.           Submission of Matters to a Vote of Security Holders

                  None

Item 5.           Other Information

                  None

Item 6.           Exhibits and Reports on Form 8-K

                    a) Exhibits

                       (27.1)  Financial Data Schedule

                    b) Reports on  Form 8-K. No reports on  Form 8-K  were filed
                       during the quarter ended September 30, 1997.


                                                                   Page 12 of 16
<PAGE>


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.


                                      VIDAMED, INC.

Date:     November 7, 1997            By:     /s/   James A. Heisch
       ---------------------               ------------------------
                                           James A. Heisch
                                           President, Chief Executive Officer

Date:     November 7, 1997            By:    /s/   Richard D. Brounstein
       ---------------------              ------------------------------
                                           Richard D. Brounstein
                                           VP Finance, Chief Financial Officer
                                          (Principal Financial and Accounting
                                           Officer)


                                                                   Page 13 of 16
<PAGE>


PART II.          OTHER INFORMATION

Item 2.           CHANGES IN SECURITIES

In the third quarter of 1997 the Company  issued  104,260  shares and closed out
the $10 million equity line with a European investment bank.

During the third quarter of 1997 the Company  completed a private placement with
certain  investors in the amount of $11,702,000 in exchange for 2,587,351 shares
of common stock.


                                                                   Page 14 of 16
<PAGE>

INDEX TO EXHIBITS



EXHIBIT
NUMBER       DESCRIPTION

  27.1       Financial Data Schedule


                                                                   Page 15 of 16