<PAGE>

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

                                  ___________

                                   FORM 10-K


               [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

                    OF THE SECURITIES EXCHANGE ACT OF 1934


                  For the fiscal year ended December 31, 1999
                                      or


             [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

                    OF THE SECURITIES EXCHANGE ACT OF 1934


                        Commission file number 0-21982

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

MINNESOTA                                             41-1663185

(State or other jurisdiction
of incorporation or organization)         (IRS Employer Identification Number)

2658 Patton Road
Roseville, Minnesota                                    55113

(Address of principal executive offices)              (Zip Code)

       Registrant's telephone number, including area code: (651) 639-8035

Securities registered pursuant to Section 12(b) of the Act:  None
Securities registered pursuant to Section 12(g) of the Act:  Common Stock, $.01
                                                             par value

     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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K ((S)229.405 of this chapter) is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
From 10-K or any amendment to this Form 10-K. [_]

     As of February 29, 2000, 25,957,396 shares of Common Stock were
outstanding, and the aggregate market value of the common shares (based upon the
closing price on said date on The Nasdaq National Market) of DIAMETRICS MEDICAL,
INC. held by non-affiliates was approximately $279,042,007.

                      Documents Incorporated by Reference

Parts of the Registrant's Annual Report to Shareholders for the year ended
December 31, 1999 are incorporated by reference in Part II hereof.
Parts of the Registrant's definitive Proxy Statement for the 2000 Annual Meeting
of Shareholders to be held on May 17, 2000 are incorporated by reference in Part
III hereof.
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                                    PART I

     Unless the context otherwise indicates, all references to the "Registrant,"
the "Company," or "Diametrics" in this Annual Report on Form 10-K are to
Diametrics Medical, Inc., a Minnesota corporation, incorporated in January 1990,
and where the context requires, its subsidiary, Diametrics Medical, Ltd.
("DML").

     The following federally registered trademarks of the Company are used in
this Annual Report on Form 10-K: Diametrics Medical, Inc.(R), IRMA(R)SL,
IDMS(R), Paratrend 7(R), Neotrend(TM), Neurotrend(TM) and Trendcare(R).
SureStep(R)Pro is a registered trademark of LifeScan, a Johnson & Johnson
company.

Item 1. Business

Overview

        The Company develops, manufactures and commercializes blood and tissue
analysis systems that provide immediate or continuous diagnostic results at the
point-of-patient care. Since its commencement of operations in 1990, the Company
has transitioned from a development stage company to a full-scale development,
manufacturing and sales organization. The Company's goal is to be the world
leader in critical care blood and tissue analysis systems.

        Blood and tissue analysis is an integral part of patient diagnosis and
treatment, and access to timely and accurate results is critical to effective
patient care. The Company believes that its blood and tissue analysis systems
will result in more timely therapeutic interventions by providing accurate,
precise and immediate or continuous test results, thereby allowing faster
patient transfers out of expensive critical care settings and reducing patient
length of stay. In addition, point-of-care testing can save money for hospitals
by reducing the numerous steps, paperwork and personnel involved in collecting,
transporting, documenting and processing blood and tissue samples. Moreover,
point-of-care blood and tissue analysis could ultimately eliminate the need for
hospitals to maintain expensive and capital intensive stat laboratories.

        The Company's primary product focus since its inception in 1990 has been
the development, manufacturing and marketing of the IRMA ("Immediate Response
Mobile Analysis") System, an electrochemical-based blood analysis system that
provides rapid and accurate diagnostic results at the point-of-patient care. The
IRMA SL System consists of a portable, microprocessor-based analyzer that
employs single-use, disposable cartridges to perform simultaneously several of
the most frequently ordered blood tests in a simple 90-second procedure.

        The Company's first disposable electrochemical cartridge, introduced in
May 1994, performs three of the most frequently ordered blood tests for critical
care patients--the measurement of oxygen, carbon dioxide and acidity (the "blood
gases"). In June 1995, the Company expanded the IRMA System test menu with the
introduction of its electrolyte cartridge which measures inorganic compounds
including sodium, potassium and ionized calcium. The Company further expanded
its critical or "stat" test menu during the third quarter of 1996 with the
release of the second-generation system, IRMA SL, and the addition of the
measurement of hematocrit (i.e., the concentration of red blood cells in whole
blood) to its electrolyte cartridge. With the addition of hematocrit, the IRMA
SL System is able to perform the majority of the critical or stat tests
performed annually in the United States, comprising an estimated $1.2 billion
annual market. In 1997, the Company introduced its third-generation system, IRMA
SL Series 2000, and a new combination cartridge. The combination cartridge is
based upon the Company's new "snapfit" cartridge design and gives clinicians the
ability to perform all critical blood gas, electrolyte and hematocrit tests
using one small blood sample and one single-use cartridge. During 1998, the
Company expanded the test menu of the IRMA System by integrating the LifeScan (a
Johnson & Johnson company) SureStepPro glucose strip testing module into the
analyzer. Also under development in 1998 and 1999 were two additional blood
tests, blood urea nitrogen ("BUN") and chloride, currently undergoing beta
clinical trials, and a reusable version of the single use disposable cartridge,
called IRMA-M.

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        In the fourth quarter of 1996, the Company expanded its product line
with the introduction of a number of new products through the acquisition of
Biomedical Sensors, Ltd. ("BSL"), a Pfizer company. With the acquisition of BSL
(now known as Diametrics Medical, Ltd.), the Company acquired a world-class
continuous monitoring fiberoptic technology platform, which complements the
Company's existing electrochemical sensor intermittent testing platform. This
product line includes indwelling continuous monitoring systems, consisting of a
monitor, calibration system and intravascular disposable sensors. Primary
products include the Trendcare monitoring system, consisting of Paratrend 7,
which provides direct continuous monitoring of blood gases and temperature in
critically ill adult and pediatric patients, and Neotrend, which provides direct
continuous monitoring of blood gases and temperature in critically ill newborn
babies; and the Neurotrend monitoring system, which measures oxygen, carbon
dioxide, acidity and temperature in brain tissue and fluids as an indication of
cerebral ischemia (i.e., deficient blood supply to the brain) and hypoxia (i.e.,
inadequate oxygenation of the blood) in patients with severe head injury and in
patients undergoing surgical intervention in the brain.

        The Company has obtained clearances under Section 510(k) of the Food
Drug and Cosmetic Act (the "FDC Act") to market the IRMA SL System to test blood
gases, electrolytes, glucose, BUN and hematocrit in whole blood in hospital
laboratories and at the point-of-care, and the Paratrend 7 and Neotrend to
monitor blood gases and temperature. Additionally, in the first quarter of 1998,
the Company received clearance from the United States Food and Drug
Administration (the "FDA") to market the new IRMA-M multi-use cartridge for its
IRMA SL System. In November 1999, the Company received clearance from the FDA to
market the Neurotrend monitoring system.

        In October 1998, the Company entered into an exclusive distribution
agreement with CODMAN, a Johnson & Johnson company, for worldwide market
development and distribution of the Company's Neurotrend monitoring system. The
term of the agreement is for six years and is renewable for two years. If
minimum sales levels and marketing expenditure levels are not achieved by
CODMAN, certain payments will be due to the Company. Also, CODMAN has the right
of first refusal to market new continuous monitoring products developed for the
neuro market. In addition, Johnson & Johnson Development Corporation ("JJDC")
committed to purchase up to $5 million of the Company's Common Stock at the
Company's option over the twelve-month period ended September 30, 1999 at the
then current market value. The Company exercised approximately $4 million of the
available Put Option resulting in the issuance of 773,184 shares of the
Company's Common Stock to JJDC at a per share price of $5.17.

        On June 7, 1999, the Company and Hewlett Packard Company ("HP")
announced that HP had signed an exclusive worldwide distribution agreement to
market, sell and distribute the Company's Trendcare continuous blood-gas
monitoring systems and the IRMA SL point-of-care blood analysis system. Under
the terms of the distribution agreement, the Company transferred full
responsibility for marketing, sales and distribution of these products to HP.
The initial term of the distribution agreement is three and a half years, with
the option for extensions. Concurrently with the execution of the distribution
agreement, HP agreed to acquire $9.5 million of the Company's Common Stock at
$7.00 per share, with a warrant to purchase 452,381 shares of Common Stock at
$8.40 per share. The sale of shares of Common Stock to HP for $9.5 million was
completed on June 28, 1999. In addition to HP's equity investment, the
distribution agreement also provides for minimum purchase commitments, market
development commitments, research and development funding and royalty payments
over the initial term of the agreement, as well as funding of sales and
marketing costs during a sales transition period. In November 1999, HP assigned
the distribution agreement, with all its related rights and obligations, and its
equity investment with the Company to Agilent Technologies, Inc. ("Agilent"), a
leading provider of test and measurement solutions and communications
components. Agilent was formed as a new company and subsidiary of HP in November
1999. HP plans to spin-off its ownership in Agilent to HP shareholders during
2000.

        The Company's principal executive office is located at 2658 Patton Road,
Roseville, Minnesota 55113, and its telephone number is (651) 639-8035.

Principal Products

        Additional information regarding the Company's principal products is
provided below:

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        IRMA SL Series 2000 Blood Analysis System. The IRMA SL Series 2000
("IRMA SL System"), the third generation IRMA analysis system, was released in
the third quarter 1997, and provides the necessary foundation for current and
future product enhancements. The IRMA SL System is comprised of the IRMA SL
analyzer and a variety of electrochemical-based disposable cartridges which
simultaneously perform select combinations of the most frequently ordered
critical care diagnostic tests of blood gases, electrolytes and hematocrit in a
simple 90-second procedure. The IRMA SL System also features electronic quality
control, as an alternative to aqueous quality control measures, which eliminates
the need for this costly and time-consuming process for many customers.

        The IRMA SL analyzer is a battery or AC operated, portable,
microprocessor-based instrument weighing approximately four pounds, and includes
an on-board printer. The analyzer can be easily linked for data downloading
purposes to a hospital's laboratory or information system.

        In conjunction with a marketing alliance reached in 1997 with LifeScan,
the Company incorporated blood glucose monitoring into the IRMA platform by
integrating LifeScan's SureStepPro Glucose Module into the IRMA SL System. The
Company began marketing the new integrated workstation during the first half of
1998.

        IDMS - The IRMA Data Management System. Released in the third quarter of
1996, IDMS, an advanced data management software program, provides a
comprehensive data management system for point-of-care testing technologies.
Developed initially for the IRMA SL System, IDMS is network compatible and
features an open architecture design that provides for the integration of IDMS
data with other laboratory or clinical information systems.

        Capillary Collection Device. The Capillary Collection Device was
introduced in the third quarter of 1996 as a feature for use on the IRMA SL
System, which provides the capability to collect and test a capillary blood
sample. The Capillary Collection Device is used with the IRMA SL System's single
use cartridges to perform blood gas, electrolyte, and hematocrit testing. The
capillary collection capability of the IRMA SL System is useful in such patient
areas as neonatal and pediatric intensive care, and in other situations where a
capillary sample is preferred over an arterial or venous sample.

        AVOXimeter 4000. Under a distribution agreement initiated in the third
quarter of 1996 with A-VOX Systems, Inc., the Company exclusively distributes
the AVOXimeter 4000 in the United States. The AVOXimeter 4000 is a battery-
operated and easily portable system which provides an accurate and timely
assessment of the levels of hemoglobin and calculated oxygen content in a
patient's blood. The Company has exclusive distribution rights for the
AVOXimeter 4000 through April 2000.

        Trendcare Continuous Blood Gas Monitoring System. The Trendcare
Continuous Blood Gas Monitoring System ("Trendcare"), consists of a monitor,
patient data module and calibration system which provides the platform for the
Paratrend 7 and Neotrend intravascular disposable sensors (described below). The
Trendcare monitor displays trended patient data which allows constant
surveillance of the patient's condition, while the patient data module stores
critical calibration and patient information which moves with the patient during
transfers.

               Paratrend 7. Paratrend 7 is the Company's second generation
        sensor for its continuous monitoring products, and is the only multi-
        parameter sensor for direct continuous monitoring of blood gases
        (oxygen, carbon dioxide and acidity) and temperature in critically ill
        adult and pediatric patients. Inserted via an arterial catheter, the
        sensor provides constant, precise measurement of vital blood gas
        parameters. The new technology uses a fluorescent optical sensor for
        monitoring oxygen, replacing the electrochemical version of its
        predecessor.

               Neotrend. Based upon the new fluorescent optical sensor
        technology introduced with the Paratrend 7, Neotrend is the only multi-
        parameter system for direct continuous monitoring of blood gases
        (oxygen, carbon dioxide and acidity) and temperature in critically ill
        newborn babies. Neotrend was introduced in the United Kingdom in
        November 1997 and

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        the Company received FDA clearance to market Neotrend in the United
        States in December 1997.

        Neurotrend Cerebral Tissue Monitoring System. The Neurotrend Cerebral
Tissue Monitoring System ("Neurotrend") is designed for direct continuous
monitoring of oxygen, carbon dioxide, acidity and temperature in brain tissue
and fluids as an indication of cerebral ischemia and hypoxia in patients with
severe head injury, and also for use during surgical intervention in the brain.
Neurotrend continuously measures these parameters through a small fiberoptic
sensor placed directly into the brain tissue or fluids. CE Mark approval was
received in the second quarter 1998, allowing the system to be marketed in
Europe, and the Company received clearance from the FDA in November 1999,
allowing the system to be marketed in the United States.


Regulatory Status

        Human diagnostic products are subject, prior to clearance for marketing,
to rigorous pre-clinical and clinical testing mandated by the FDA and comparable
agencies in other countries and, to a lesser extent, by state regulatory
authorities. The Company and its products are regulated by the FDA under a
number of statutes including the FDC Act. The FDC Act provides two basic review
procedures for medical devices. Certain products may qualify for a submission
authorized by Section 510(k) of the FDC Act, wherein the manufacturer gives the
FDA a pre-market notification of the manufacturer's intention to commence
marketing the product. The manufacturer must, among other things, establish that
the product to be marketed is substantially equivalent to another legally
marketed product. Marketing may commence when the FDA issues a letter finding
substantial equivalence. If a medical device does not qualify for the 510(k)
procedure, the manufacturer must file a pre-market approval ("PMA") application.
This procedure requires more extensive prefiling testing than the 510(k)
procedure and involves a significantly longer FDA review process.

        The Company has obtained clearances under Section 510(k) of the FDC
Act to market the IRMA SL System to test blood gases, electrolytes, hematocrit,
glucose and BUN in whole blood in hospital laboratories and at the point-of-
patient care. The IRMA-M cartridge, which allows multiple test panels to be
performed on a single cartridge, received clearance during 1998. Continuous
monitoring products which have been cleared under Section 510(k) include the
monitoring systems used with the Paratrend 7 sensor for direct continuous
monitoring of blood gases and temperature in adults and pediatric patients, the
Neotrend sensor for monitoring of blood gases and temperature in critically ill
newborn babies, and the Neurotrend sensor designed for direct continuous
monitoring of oxygen, carbon dioxide, acidity and temperature in brain tissue or
fluids as an indication of cerebral ischemia and hypoxia in patients with severe
head injury and also for use during surgical intervention in the brain.

        A 510(k) clearance is subject to continual review, and later discovery
of previously unknown problems may result in restrictions on the product's
marketing or withdrawal of the product from the market. The Company's long-term
business strategy includes development of cartridges and sensors for performing
additional blood and tissue chemistry tests, and any such additional tests will
be subject to the same regulatory process. No assurance can be given that the
Company will be able to develop such additional products or uses on a timely
basis, if at all, or that the necessary clearances for such products and uses
will be obtained by the Company on a timely basis or at all, or that the Company
will not be subjected to a more extensive prefiling testing and FDA approval
process. The Company also markets its products in several foreign markets.
Requirements vary widely from country to country, ranging from simple product
registrations to detailed submissions such as those required by the FDA.
Manufacturing facilities are also subject to FDA inspection on a periodic basis
and the Company and its contract manufacturers must demonstrate compliance with
current Good Manufacturing Practices promulgated by the FDA.

        The Company's intermittent testing products are affected by the Clinical
Laboratory Improvement Act of 1988 ("CLIA") which has been implemented by the
FDA. This law is intended to assure the quality and reliability of all medical
testing in the United States regardless of where tests are performed. The
regulations require laboratories performing blood chemistry tests to meet
specified

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standards in the areas of personnel qualification, administration, participation
in proficiency testing, patient test management, quality control, quality
assurance and inspections. The regulations have established three levels of
regulatory control based on test complexity; "waived," "moderate complexity" and
"high complexity." The tests performed by the Company's IRMA SL System have been
categorized under CLIA as "moderate complexity" tests by the FDA, which places
this system in the same category as most other commercially available blood gas
and blood chemistry testing instruments. The glucose test is categorized as a
"waived" test, which places this test in the same category as most other
commercially available point-of-care glucose testing systems. The Company's
continuous monitoring products are not affected by CLIA.


Research and Development

        The Company owns two complementary technology platforms; an
electrochemical platform, on which IRMA intermittent testing products are based,
and a fiberoptic platform, on which the Paratrend 7, Neotrend and Neurotrend
continuous monitoring products are primarily based. The Company is pursuing
product line extensions from both of these core technology platforms.

        The Company intends to continue to expand its cartridge and test menus
available on the IRMA SL System. Currently undergoing beta clinical trials is
the H4 cartridge which tests sodium, potassium, hematocrit, chloride and BUN
using one single-use cartridge. Commercial release of the H4 cartridge is
scheduled for 2000. In addition to the single-use cartridge, the Company is
developing a multi-use cartridge that will incorporate the Company's current
sensor and calibration technologies into products that can perform multiple
blood test panels over a period of days before disposal. A multi-use system will
serve the needs of high volume critical care centers where rapid patient
throughput and a low cost per test panel are required. The multi-use module was
initially scheduled for commercial release in 1999; however, feedback from
customer focus groups has lead to further enhancements to its design, with
commercial release scheduled for the last half of 2000. The Company is also in
the design stages for new additions to the IRMA SL's cartridge blood test menu,
including glucose, lactate and creatinine. The Company believes that the IRMA SL
System and related core technologies provide a flexible platform which, with a
limited amount of additional development, will be capable of performing an even
wider variety of blood chemistry tests.

        The Company plans to continually improve the IRMA SL System through
software upgrades, manufacturing process improvements and equipment redesign,
based on the results of ongoing marketing studies and field experience.

        Development activities for the continuous monitoring platform are
currently focused on improving the access for the Paratrend 7 with a non-kinking
catheter, providing compatibility of the Neotrend system with a standard
umbilical artery catheter and improving the bolt access and insertion devices
for Neurotrend. Studies are also underway to apply the continuous monitoring
technology to new neurological and tissue applications. The Company's future
development plans also include further expansion of the blood and tissue
analysis test menu available on the continuous monitoring platform.

        Another new application initiative under development is the integration
of the Company's point-of-care intermittent testing and continuous monitoring
product lines into Agilent's patient monitoring platforms. The integration of
these technologies will create a communications interface that facilitates
monitor display of both biochemical and physiological information at the
patient's bedside.

        The Company has incurred research and development expenses of
approximately $4,847,000, $6,466,000 and $7,232,000 for the years ended December
31, 1999, 1998 and 1997, respectively.

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Sales and Marketing

        The Company markets and distributes its products primarily through two
global partnerships with CODMAN and Agilent, and on an interim basis, certain
third-party distributors where pre-existing contracts apply until the
distribution rights are transitioned to Agilent. The Company also continues to
sell direct to end-users in the veterinary market which is not subject to an
exclusive distribution agreement. Additionally, the Company's marketing strategy
is to pursue partnerships with market leaders who will help identify and promote
future applications in continuous monitoring.

        Effective October 1, 1998, the Company entered into an exclusive
distribution agreement with CODMAN for worldwide market development and
distribution of the Company's Neurotrend monitoring system. Additionally, on
June 7, 1999, the Company entered into an exclusive distribution agreement with
Agilent for worldwide market development and distribution of the Company's
Trendcare continuous blood gas monitoring systems and the IRMA SL blood analysis
system. Information concerning the Company's export sales is contained in the
financial section of the Company's Annual Report to Shareholders for the year
ended December 31, 1999, under note 16 of Notes to Consolidated Financial
Statements, and is incorporated herein by reference.

        Prior to entering into the exclusive distribution agreements described
above, the Company's marketing efforts for its blood analysis systems focused on
acute care hospitals. Under the Company's new distribution agreements, near term
end-user sales of the Company's products are expected to continue to come from
hospital critical care departments where blood tests are frequently requested on
a stat basis. The Company's distributors' objectives will also include
penetration of smaller hospitals and alternate-site markets, such as emergency
medical facilities, home healthcare agencies, outpatient clinics, skilled
nursing homes and doctors' offices or clinics. The Company believes that the
advantages of its blood analysis and monitoring systems will help overcome the
possible reluctance of acute care hospitals to change standard operating
procedures for performing blood testing or incur additional capital expenses.

        The Company's established arrangements with hospital systems, healthcare
facilities and other influential healthcare buying groups which established the
Company as a sole, preferred or dual source supplier of its blood analysis
systems are now administered by Agilent. These organizations include Columbia
HCA, Vencor, Inc., Health Services Corporation of America and University
Healthsystem Consortium (now part of Novation). The Company expects its
distribution partners to continue to enter into arrangements with other buying
groups and customers with respect to purchases of its blood and tissue analysis
systems.


Manufacturing

        The Company's manufacturing facilities support its intermittent testing
and continuous monitoring platforms and are located in Roseville, Minnesota and
High Wycombe, United Kingdom, respectively. The Company manufactures its IRMA
electrochemical thick-film sensors in its Roseville, Minnesota facility.
Components for the Company's continuous monitoring sensors used in the Paratrend
7, Neotrend and Neurotrend products are sourced from a variety of outside
vendors, but the unique assembly and testing of the sensing elements is
performed in the Company's High Wycombe facility. The sub-assembly of external
plastic assemblies is sub-contracted to outside vendors. The Company uses
external manufacturers to produce a range of hardware items, including the
Trendcare and Neurotrend monitors. The Company assembles in-house the IRMA SL
analyzer and the continuous monitoring calibrator at the Roseville and High
Wycombe facilities, respectively. These devices could be manufactured by a
number of microelectronics assembly companies, using primarily off-the-shelf
components. Software for the IRMA SL analyzer is developed and maintained by the
Company, and software for the continuous monitoring products is jointly
developed with an external source, with acceptance and validation performed by
the Company.

        The majority of the raw materials and purchased components used to
manufacture the Company's products are readily available. Most of the Company's
raw materials are or may be obtained

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from more than one source. A small number of these materials, however, are
unique in their nature, and are therefore single sourced. Plans are ongoing to
add additional second sourcing where appropriate.

        The Company's manufacturing facilities include four clean rooms in
Roseville which range from Class 1,000 to Class 100,000, and two clean rooms in
High Wycombe, both rated as Class 10,000. The Company believes its current
facilities can support production of required cartridges and sensors for the
foreseeable future.

        The Company maintains a comprehensive quality assurance and quality
control program, which includes complete documentation of all material
specifications, operating procedures, maintenance and equipment calibration
procedures, training programs and quality control test methods. To control the
quality of its finished product, the Company utilizes ongoing statistical
process control systems during the manufacturing process and comprehensive
performance testing of finished goods.

        The Company continues to successfully undergo required inspections of
its manufacturing facilities by the FDA (most recently in October 1998 and
October 1999 for Roseville and High Wycombe facilities, respectively), and by
the British Standards Institution for the High Wycombe facility (most recently
in August 1999). As a result of these inspections, the Company's manufacturing
facilities and documentation and quality control systems are deemed satisfactory
and in compliance with Good Manufacturing Practices.

Patents and Proprietary Rights

        The Company has implemented a strategy of pursuing patent applications
to provide both design freedom and protection from competitors. This strategy
includes evaluating and seeking patent protection both for inventions most
likely to be used in its blood and tissue analysis systems and for those
inventions most likely to be used by others as competing alternatives.

         For its intermittent testing platform, the Company currently maintains
three patents issued for its calibration technology, three patents related to
its sensor technology and three for companion technology. In addition, two
patents have been issued and maintained covering the IRMA SL analyzer and
disposable cartridge designs. Additionally, the Company has submitted patent
applications pertaining to an enzymatic sensor, coagulation measurement
technology and an analyzer with multiple test modules. Overseas, the Company has
foreign patent applications pending, filed under the Patent Cooperation Treaty,
designating various jurisdictions, including Canada, the major European
countries, Brazil, Australia and Japan, corresponding to one or more U.S.
applications. The Company maintains 15 foreign patents; two issued in the United
Kingdom, two in Germany, two in France, five in Canada and four in Japan.

        As it relates to its continuous monitoring platform, the Company
currently maintains nine U.S. patents associated with the design and manufacture
of its sensor technology platforms, and has filed two patent applications. These
patents are at various patent process stages in the major European countries and
Japan.

        Material patents have expirations ranging from the year 2006 to 2017.
The Company is not currently a party to any patent litigation.

        The Company has federally registered the trademarks "IRMA SL,"
"Diametrics Medical, Inc.," "IRMA Data Management System (IDMS)," "Neocath,"
"Paratrend," "Tissutrak," "Paratrend 7+," "Neotrend," "Trendcare," "Neurotrend,"
"CAL-POD," "TOM 2000" and claims trademark rights in "When Stat Isn't Fast
Enough."

Competition

        The Company believes that potential purchasers of point-of-care blood
and tissue analysis systems will base their purchase decision upon a combination
of factors, including the product's test menu, ease of use, accuracy, price and
ability to manage the data collected. The Company is aware of one company, i-
STAT, that is marketing a portable point-of-care blood analysis system. The
Company believes

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that the IRMA SL System possesses distinct competitive advantages over i-STAT's
products including ease of use, closed instead of open handling of blood samples
and room temperature instead of refrigerated storage of reagents.

        The Company also competes with companies that market near-patient multi-
use blood analysis systems. These companies include AVL Scientific Corporation,
Radiometer, Inc., Instrumentation Laboratories and Bayer (with their acquisition
of Chiron Diagnostics). However, the Company believes that to be successful in
the point-of-care market, a device must not only be able to perform a variety of
commonly ordered blood chemistry tests, but also be very portable to facilitate
ease of use at the patient's bedside.

        The Company's blood analysis systems also compete with manufacturers
providing traditional blood analysis systems to central and stat laboratories of
hospitals. Although these laboratory-based instruments provide the same tests
available with the Company's products, they are complex, expensive and require
the use of skilled technicians. The Company believes that its blood analysis
systems offer several advantages over these laboratory-based instruments
including immediate or continuous results, ease-of-use, reduced opportunity for
error and cost effectiveness. The Company believes that its multi-parameter
continuous arterial blood gas and tissue monitoring systems are currently the
only products of its kind commercially available.

        The Company's products are competitively priced with other point-of-care
product offerings. While competitive cost data is not easily attainable, the
high volume, centralized testing labs can provide testing at a lower cost per
test, but do not provide the convenience and fast turnaround time for test
results that point-of-care products offer. Their costs are also highly dependent
on volume, given the large investment required for facilities, equipment and
trained personnel.

        Many of the companies in the medical technology industry have
substantially greater capital resources, research and development staffs and
facilities than the Company. Such entities may be developing or could in the
future attempt to develop additional products competitive with the Company's
blood and tissue analysis systems. Many of these companies also have
substantially greater experience than the Company in research and development,
obtaining regulatory approvals, manufacturing and marketing, and may therefore
represent significant competition for the Company. There can be no assurance
that the Company's competitors will not succeed in developing or marketing
technologies and products that will be more effective or less expensive than
those being sold by the Company or that would render the Company's technology
and products obsolete or noncompetitive.

Executive Officers

      Name                Age      Position
      ----                ---      --------

David T. Giddings         56        President, Chief Executive Officer and
                                    Chairman

Roy S. Johnson            47        Executive Vice President and
                                    President and Managing Director of
                                    Diametrics Medical, Ltd.

Laurence L. Betterley     46        Senior Vice President and
                                    Chief Financial Officer

James R. Miller           46        Senior Vice President of Sales and
                                    Marketing and Commercial Development

          Mr. Giddings was appointed Chairman of the Board of Directors,
President and Chief Executive Officer of the Company in April 1996. Mr. Giddings
was formerly President and Chief Operating Officer of the United States
operations of Boehringer Mannheim Corporation ("BMC"), a U.S.

                                       9
<PAGE>

subsidiary of Corange Ltd., a private global healthcare corporation. He joined
BMC in 1992 after a 26-year career with Eastman Kodak Company, where he held a
number of senior management positions, including General Manager and Vice
President of Marketing and Sales, clinical products division. He also served as
Vice President and General Manager of Kodak's imaging information system group
and of its printing and publishing division.

          Mr. Johnson joined the Company in November 1996 as an Executive Vice
President, and the President and Managing Director of DML, a subsidiary of the
Company established in conjunction with the acquisition in November 1996 of BSL.
DML markets a line of indwelling monitoring systems for continuous blood and
tissue assessment of critically ill patients. Beginning in 1977, Mr. Johnson
served in a number of management positions for the predecessors of the BSL
business, most recently as President and Chief Executive Officer while it was a
subsidiary of Orange Medical Instruments, Inc. and later when it was an
operating unit of Pfizer Inc. Mr. Johnson started his career in 1974 with
Burroughs Wellcome in pharmaceutical production management and was the head of
manufacturing in Burroughs' Sydney, Australia subsidiary.

          Mr. Betterley has been Senior Vice President of the Company since
October 1996 and Chief Financial Officer since August 1996. Prior to this, he
was with Cray Research, Inc. in various management and financial positions
including Chief Financial Officer from 1994 to 1996, Vice President of Finance
from 1993 to 1994 and Corporate Controller from 1989 to 1993. Cray Research
develops, manufactures and sells high performance computing systems used for
computational research.

          Mr. Miller joined the Company in March 1995 as Vice President of Sales
and Marketing, was Senior Vice President of Commercial and Business Development
since July 1996, and Senior Vice President of Sales and Marketing and Commercial
Development since January 1998. From 1991 to early 1995, Mr. Miller was Vice
President of Sales and Marketing at IMED Corporation, where he had global sales
and marketing responsibility for infusion and monitoring products for hospital
and alternate site markets.

Employees

          As of December 31, 1999, the Company had a total of 146 full-time
employees, including 43 persons engaged in research and development activities.
None of the Company's employees are covered by a collective bargaining
agreement, and Diametrics believes it maintains good relations with its
employees.

Forward-Looking Statements

          This Form 10-K Annual Report and the Company's financial statements,
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" in Item 7 and other documents incorporated by reference contain
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. These forward-looking statements represent our expectations or
beliefs, including, but not limited to, our current assumptions about future
financial performance, anticipated problems, and our plans for future
operations, which are subject to various risks and uncertainties. When used in
this Form 10-K and in future filings by the Company with the Securities and
Exchange Commission, in our press releases, presentations to securities analysts
or investors, in oral statements made by or with the approval of an executive
officer of the Company, the words or phrases "believes," "may," "will,"
"expects," "should," "continue," "anticipates," "intends," "will likely result,"
"estimates," "projects," or similar expressions and variations thereof are
intended to identify such forward-looking statements. However, any statements
contained in this Form 10-K that are not statements of historical fact may be
deemed to be forward-looking statements. We caution that these statements by
their nature involve risks and uncertainties, certain of which are beyond our
control, and actual results may differ materially depending upon a variety of
important factors, including those described in Exhibit 99 to this Form 10-K.

                                       10
<PAGE>

Item 2. Properties

        The Company's principal properties are as follows:
<TABLE>
<CAPTION>

Location of                               Use of                      Approximate               Lease
Property                                 Facility                   Square Footage          Expiration Date
-----------------------------------------------------------------------------------------------------------------------------
<S>                            <C>                                  <C>                      <C>
Roseville, Minnesota           Manufacturing, research                 43,300                 February 2004
                                and development, sales,
                                marketing and administration

Malvern, Pennsylvania          Research and development                 2,000                 March 2002

High Wycombe,                  Manufacturing, process                  14,500                 September 2005
 United Kingdom                 engineering, purchasing
                                and distribution

High Wycombe,                  Sales, marketing and                     5,500                 January 2015 (1)
 United Kingdom                 administration

High Wycombe,                  Research and development                 6,000                 April 2004 (2)
 United Kingdom
</TABLE>

     (1)  Lease can be terminated without penalty at the Company's sole
          discretion in July 2002 and January 2005.
     (2)  Lease can be terminated without penalty at the Company's sole
          discretion in April of 2001, 2002 and 2003.

The Company believes that its facilities are sufficient for its projected needs
through 2001.


Item 3. Legal Proceedings

        The Company is currently not subject to any material pending or
threatened legal proceedings.

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

        No matters were submitted to a vote of security holders during the
fourth quarter of the year ended December 31, 1999.


                                    PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

        The Company's Common Stock, $.01 par value, trades on The Nasdaq
National Market under the symbol "DMED." The information contained under the
heading "Stock Information" on page 35 in the Company's Annual Report to
Shareholders for the year ended December 31, 1999 (the "Annual Report to
Shareholders"), is incorporated herein by reference.

                                       11
<PAGE>

Item 6.   Selected Financial Data

          The information contained under the heading "Selected Five-Year
Financial Data" on page 13 in the Annual Report to Shareholders is incorporated
herein by reference.

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

          The information contained under the heading "Management's Discussion
and Analysis of Results of Operations and Financial Condition" on pages 13
through 18 in the Annual Report to Shareholders is incorporated herein by
reference.

Item 7.a. Quantitative and Qualitative Disclosures About Market Risk

          The information contained under the heading "Market Risk" on page 17
in the Annual Report to Shareholders is incorporated herein by reference.

Item 8.   Financial Statements and Supplementary Data

          The information contained under the headings "Consolidated Statements
of Operations," "Consolidated Balance Sheets," "Consolidated Statements of
Shareholders' Equity," "Consolidated Statements of Cash Flows" and "Notes to
Consolidated Financial Statements" on pages 19 through 32 and "Report of
Independent Auditors" on page 33 in the Annual Report to Shareholders is
incorporated herein by reference.

Item 9.   Changes in and Disagreements with Accountants on Accounting and
          Financial Disclosure

          None.

                                   PART III

Item 10.  Directors and Executive Officers of the Registrant

       Directors of the Registrant

       The information contained under the heading "Election of Directors" in
the Company's definitive Proxy Statement for its 2000 Annual Meeting of
Shareholders to be held on May 17, 2000, which definitive Proxy Statement will
be filed within 120 days after the close of the fiscal year ended December 31,
1999 (the "Proxy Statement"), is incorporated herein by reference.

       Executive Officers of the Registrant

       See Part I, Item 1 of this Report for information on Executive Officers
of the Company.

       The information contained under the heading "Compliance with Section
16(a) of the Securities Exchange Act of 1934" in the Proxy Statement is
incorporated herein by reference.

Item 11.  Executive Compensation

       The information contained under the heading "Executive Compensation" in
the Proxy Statement is incorporated herein by reference, except that, pursuant
to Item 402(a)(8) of Regulation S-K, the subsections under "Executive
Compensation" entitled "Report of Compensation Committee on Executive
Compensation" and "Comparative Stock Performance" provided in response to
paragraphs (k) and (l) of Item 402 are not incorporated by reference herein.

                                       12
<PAGE>

Item 12.  Security Ownership of Certain Beneficial Owners and Management

     The information contained under the heading "Security Ownership of Certain
Beneficial Owners and Management" in the Proxy Statement is incorporated herein
by reference.

Item 13.  Certain Relationships and Related Transactions

     The information contained under the heading "Certain Transactions" in the
Proxy Statement is incorporated by reference.

                                    PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)  1.   Financial Statements

     The following consolidated financial statements of Diametrics Medical,
Inc., which are included in the Annual Report to Shareholders, are incorporated
by reference in Item 8 hereof:

     Report of Independent Auditors
     Consolidated Statements of Operations for each of the years in the three
          year period ended December 31, 1999
     Consolidated Balance Sheets at December 31, 1999 and 1998
     Consolidated Statements of Shareholders' Equity for each of the years in
          the three year period ended December 31, 1999
     Consolidated Statements of Cash Flows for each of the years in the three
          year period ended December 31, 1999
     Notes to Consolidated Financial Statements

     Except for the financial statements listed above and the items specifically
incorporated by reference in Items 5, 6, 7, 7.a. and 8 hereof, the Annual Report
to Shareholders is not deemed to be filed as part of this Annual Report on Form
10-K.

     2.   Financial Statement Schedules

     All schedules have been omitted because they are not applicable or not
required, or because the required information is included in the financial
statements or the notes thereto.



     3.   Exhibits

<TABLE>
<CAPTION>

Exhibit
No.                      Description                                             Method of Filing
-------                  -----------                                             ----------------
<C>        <S>                                                                   <C>
3.1        Articles of Incorporation of the Company (as amended)                        (7)

3.2        Bylaws of the Company (as amended)                                      Filed herewith

4.1        Form of Certificate for Common Stock                                         (1)

4.2        Form of Registration Rights Agreement between the
           Company and certain of its shareholders and
           warrant holders                                                              (1)

4.3        Form of Registration Rights Agreement dated as of February 3, 1995
           between the Company and certain of its shareholders                          (3)
</TABLE>

                                       13
<PAGE>

<TABLE>
<CAPTION>
<C>        <S>                                                                     <C>
4.4        Registration Rights Agreement, dated as of January 30, 1997,
           by and between the Company and purchasers of Series I Junior
           Participating Preferred Stock                                                (5)

4.5        Registration Rights Agreement, dated as of June 10, 1997,
           by and between the Company and the Purchasers                                (8)

4.6        Form of Certificate for  Series I Junior Participating Preferred Stock       (5)

4.7        Form of Stock Purchase Warrant, dated as of January 30, 1997                 (5)

4.8        Form of Stock Purchase Warrant, dated as of June 10, 1997                    (8)

10.1       Real Property Lease Agreements dated July 31, 1996, between
           Commers-Klodt, a Minnesota General Partnership, and the Company              (12)

10.2       Amendments, dated June 15, 1999, to Real Property Lease Agreements
           dated July 31, 1996, between Commers-Klodt, a Minnesota General
           Partnership, and the Company                                            Filed herewith

10.3       Master Equipment Lease Agreement dated as of June 15, 1993,
           between the Company and Phoenix Growth Capitol Corp., as
           amended by Amendment No. 1 dated June 8, 1994 (including
           form of warrant issued in connection therewith)                              (1)

10.4*      1990 Stock Option Plan (as amended and restated), including
           form of option agreement                                                     (10)

10.5*      1993 Directors' Stock Option Plan, as amended and restated                   (10)

10.6*      1995 Equalizing Director Stock Option Plan                                   (4)

10.7       1995 Employee Stock Purchase Plan (as revised and restated)                  (6)

10.8       Agreement dated January 1, 1995 between the Company and
           Vencor, Inc.                                                                 (3)

10.9       Letter agreement dated as of February 1, 1995 among
           the Company, Allstate Venture Capital and Frazier
           and Company L.P.                                                             (2)

10.10      Stock Purchase Agreement, dated as of January 30, 1997,
           between the Company and the Purchasers named therein                         (5)

10.11      Stock Purchase Agreement dated as of June 10, 1997,
           between the Company and the Purchasers named therein                         (8)

10.12      Loan and Security Agreement, dated March 31, 1998, between
           DVI Business Credit and the Company                                          (9)

10.13      Common Stock Purchase Agreement, dated June 30, 1998, between
           the Company and the Purchasers named therein                                 (10)

10.14      Form of Stock Purchase Warrant, dated August 4, 1998                         (10)
</TABLE>

                                       14
<PAGE>

<TABLE>
<CAPTION>
<C>       <S>                                                                      <C>
10.15     Note Purchase Agreement, dated August 4, 1998, between the
          Company and the Purchasers named therein                                      (10)

10.16     Form of Convertible Senior Secured Fixed Rate Note due August 4, 2003         (10)

10.17     Distribution Agreement, dated October 1, 1998, between the Company
          and Johnson & Johnson Professional, Inc.                                      (11)

10.18     Put Option and Stock Purchase Agreement, dated October 1, 1998,
          between the Company and Johnson & Johnson Development Corporation             (11)

10.19     Severance Pay Agreement (in the event of Change of Control) dated
          July 31, 1998, between the  Company and David T. Giddings                     (11)

10.20     Form of Severance Pay Agreement (in the event of Change of Control)
          dated July 31, 1998, between the Company and its executive officers           (11)

10.21     Form of Severance Pay Agreement (in the event of Termination Without
          Cause) dated July 31, 1998, between the Company and its executive
          officers                                                                      (11)

10.22     Distribution Agreement, dated June 6, 1999, between the Company
          and Hewlett-Packard Company                                                   (13)

10.23     Common Stock Purchase Agreement, dated June 6, 1999, between the
          Company and Hewlett-Packard Company                                           (13)

10.24     Stock Purchase Warrant, dated effective as of June 28, 1999                   (13)

13        Portions of the Company's Annual Report to Shareholders
          for the year ended December 31, 1999 incorporated by reference
          in this Form 10-K                                                        Filed herewith

21        List of Subsidiaries                                                     Filed herewith

23        Consent of KPMG LLP                                                      Filed herewith

24        Powers of Attorney (included in signature page of Report)                Filed herewith

27        Financial Data Schedule (electronic filing only)                         Filed herewith

99        Cautionary Statements Under the Private Securities Litigation
          Reform Act                                                               Filed herewith
</TABLE>
___________________

*         Management compensatory plan filed pursuant to Item 601(b)(10)(iii)(A)
          of Regulation S-K.

(1)       Incorporated by reference to the Company's Registration Statement on
          Form S-1 (Registration Number 33-78518) (the "Registration
          Statement").

(2)       Incorporated by reference to the Company's 1994 Annual Report on Form
          10-K.

(3)       Incorporated by reference to the Company's Registration Statement on
          Form S-1 (Registration Number 33-94442).

(4)       Incorporated by reference to the Company's 1995 Annual Report on Form
          10-K.

                                       15
<PAGE>

(5)  Incorporated by reference to the Company's Current Report on Form 8-K filed
     March 25, 1997.

(6)  Incorporated by reference to the Company's 1996 Annual Report on Form 10-K.

(7)  Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the Quarter ended March 31, 1997.

(8)  Incorporated by reference to the Company's Current Report on Form 8-K filed
     June 26, 1997.

(9)  Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the Quarter ended March 31, 1998.

(10) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the Quarter ended June 30, 1998.

(11) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the Quarter ended September 30, 1998.

(12) Incorporated by reference to the Company's 1998 Annual Report on Form 10-K.

(13) Incorporated by reference to the Company's Current Report on Form 8-K filed
     July 23, 1999.

(b)  Reports on Form 8-K

     No Current Reports on Form 8-K were filed by the Company during the fourth
     quarter of the year ended December 31, 1999.

(c)  See Item 14(a)(3) above.

(d)  See Item 14(a)(2) above.

                                       16
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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, in the City of
Roseville, State of Minnesota, on March 30, 2000.

                                    DIAMETRICS MEDICAL, INC.


                                    By   /s/ David T. Giddings
                                        ----------------------
                                        David T. Giddings
                                        President, Chief Executive
                                        Officer and Chairman

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on March 30, 2000.

     KNOW ALL MEN BY THESE PRESENTS, that the undersigned do hereby constitute
and appoint David T. Giddings and Laurence L. Betterley, and each of them, each
with full power to act without the other, his true and lawful attorneys-in-fact
and agents, each with full power of substitution and resubstitution, for him and
in his name, place and stead, in any and all capacities, to sign any and all
amendments to the Annual Report on Form 10-K for the year ended December 31,
1999 of Diametrics Medical, Inc. , and to file the same, with any and all
exhibits thereto, and all other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, full power and authority to do and perform each and every act and thing
requisite and necessary to be done as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all of
each of said attorneys-in-fact and agents or any of them may lawfully do or
cause to be done by virtue thereof.

     Name                           Title
     ----                           -----

     /s/ David T. Giddings          President, Chief Executive Officer and
--------------------------------
     David T. Giddings              Chairman (Principal Executive Officer)


     /s/ Laurence L. Betterley      Senior Vice President and Chief Financial
--------------------------------
     Laurence L. Betterley          Officer (Principal Financial Officer)


     /s/ Jill M. Nussbaum           Corporate Controller
--------------------------------
     Jill M. Nussbaum               (Principal Accounting Officer)


     /s/ Andre de Bruin             Director
--------------------------------
     Andre de Bruin


     /s/ Gerald L. Cohn             Director
--------------------------------
     Gerald L. Cohn


     /s/ Hans-Guenter Hohmann       Director
--------------------------------
     Hans-Guenter Hohmann


     /s/ Roy S. Johnson             Director
--------------------------------
     Roy S. Johnson


     /s/ Mark B. Knudson            Director
--------------------------------
     Mark B. Knudson, Ph.D.


     /s/ David V. Milligan          Director
--------------------------------
     David V. Milligan, Ph.D.

                                       17
<PAGE>

                                  EXHIBIT INDEX



Exhibit
No.                       Description
-------                   -----------

3.2      Bylaws of the Company (as amended)

10.2     Amendments, dated June 15, 1999, to Real Property Lease Agreements
         dated July 31, 1996, between Commers-Klodt, a Minnesota General
         Partnership, and the Company

13       Portions of the Company's Annual Report to Shareholders
         for the year ended December 31, 1999 incorporated by reference
         in this Form 10-K

21       List of Subsidiaries

23       Consent of KPMG LLP

24       Powers of Attorney (included in signature page of Report)

27       Financial Data Schedule (electronic filing only)

99       Cautionary Statements Under the Private Securities Litigation Reform
         Act