_______________________________________________

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549

                                    FORM 10-Q


               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                      THE SECURITIES EXCHANGE ACT OF 1934.

                  For the quarterly period ended April 30, 1997


 Commission File Number 0-944
                              POSSIS MEDICAL, INC.

                          9055 Evergreen Boulevard N.W.

                        Minneapolis, Minnesota 55433-8003

                                 (612) 780-4555


     A Minnesota Corporation               IRS Employer ID No. 41-0783184

                        _________________________________


     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing  requirements  for the past 90 days.  Yes X No___  The  number  of shares
outstanding of the Registrant's Common Stock, $.40 par value, as of June 2, 1997
was 12,126,890.

                        ________________________________
<PAGE>





                              POSSIS MEDICAL, INC.

                                      INDEX


                                                                          PAGE
PART I.           FINANCIAL INFORMATION

     ITEM 1.      Financial Statements

                  Consolidated Balance Sheets, April 30, 1997
                  and July 31, 1996.......................................  3

                  Consolidated Statements of Operations for three
                  months and nine months ended April 30, 1997 and 1996....  4

                  Consolidated Statements of Cash Flows for the
                  nine months ended April 30, 1997 and 1996 ..............  5

                  Notes to Consolidated Financial Statements..............  6

     ITEM 2.      Management's Discussion and Analysis of Financial
                  Condition and Results of Operations..................... 7-9



PART II.          OTHER INFORMATION

     ITEM 6.      Exhibits and Reports on Form 8-K........................ 10

     SIGNATURES........................................................... 11

<PAGE>
<TABLE>
                      POSSIS MEDICAL, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
<CAPTION> 
ASSETS                                                                               April 30, 1997          July 31, 1996
                                                                                       (Unaudited)                       
<S>                                                                                    <C>                    <C>
 
CURRENT ASSETS:
     Cash and cash equivalents..............................................           $  6,910,881           $  7,688,507
     Marketable securities..................................................             10,893,068             15,838,543
     Receivables:
        Trade (less allowances for doubtful accounts of $65,000 and
        $60,000, respectively) .............................................                853,214                389,983
        Other...............................................................                156,331                218,154
     Inventories:
        Parts...............................................................                811,632                755,081
        Work-in-progress....................................................                884,943                898,721
        Finished goods......................................................              1,047,879                466,985
     Prepaid expenses and other assets......................................                277,222                207,156
                Total current assets                                                     21,835,170             26,463,130
PROPERTY:
     Leasehold improvements.................................................              1,157,948              1,090,935
     Machinery and equipment................................................              3,079,946              2,782,287
     Assets-in-construction.................................................                187,349                 92,743
                                                                                          4,425,243              3,965,965
        Less accumulated depreciation.......................................             (1,809,661)            (1,482,233)
                Property - net..............................................              2,615,582              2,483,732
OTHER ASSETS:
     Goodwill...............................................................                359,922                413,922
TOTAL ASSETS................................................................            $24,810,674            $29,360,784

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
     Trade accounts payable..................................................               448,953                317,905
     Accrued salaries, wages, and commissions................................               714,168                725,988
     Current portion of long-term debt.......................................                19,917                 73,386
     Clinical trial accrual..................................................               627,772                378,638
     Other liabilities.......................................................               395,432                187,675
                 Total current liabilities..................................              2,206,242              1,683,592

DEFERRED REVENUE............................................................                 --                     41,768
LONG-TERM DEBT..............................................................                 29,234                 38,569

SHAREHOLDERS' EQUITY:
     Common stock - authorized 100,000,000 and 20,000,000 shares,
        respectively, of $.40 par value each; issued and outstanding,
        12,126,890 shares and 12,052,644 shares, respectively...............              4,850,756              4,821,058
     Additional paid-in capital.............................................             41,067,044             40,688,535
     Unearned compensation .................................................                 (9,739)              (102,690)
     Unrealized loss on investments.........................................                (73,885)              (145,276)
     Retained deficit.......................................................            (23,258,978)           (17,664,772)
                 Total shareholders' equity.................................             22,575,198             27,596,855

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY..................................            $24,810,674            $29,360,784
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>

                      POSSIS MEDICAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<CAPTION>
                                                                     For Three Months Ended             For Nine Months Ended      
                                                                  April 30,1997  April 30, 1996    April 30, 1997   April 30, 1996
<S>                                                               <C>            <C>               <C>              <C>
REVENUES:
      Medical product sales................................       $ 1,075,229    $    138,885      $  1,628,319     $    576,048
      Sales agreement and other............................           247,330         200,000         1,997,330          200,000
              Total revenue................................         1,322,559         338,885         3,625,649          776,048
 
COST OF SALES AND OTHER EXPENSES:
      Cost of medical products.............................         1,230,375       1,381,891         3,605,514        3,636,859
      Selling, general and administrative..................         1,298,160       1,104,050         2,990,395        2,202,588
Research and development...................................         1,380,018         587,209         3,515,954        2,111,597
Interest expense...........................................             1,028           3,110             4,790           11,717
              Total cost of sales and other expenses.......         3,909,581       3,076,260        10,116,653        7,962,761

Operating loss.............................................        (2,587,022)     (2,737,375)       (6,491,004)      (7,186,713)

Interest income............................................           253,051         368,881           778,150          993,040
Gain on sale of marketable securities......................            --              --                 7,109               --    

Loss from continuing operations............................        (2,333,971)     (2,368,494)       (5,705,745)      (6,193,673)

Income from discontinued operations-net....................           --               64,996           111,539          342,767

Net loss...................................................       $(2,333,971)    $(2,303,498)      $(5,594,206)     $(5,850,906)

Weighted average number of common
      shares outstanding...................................        12,126,397      12,002,419        12,091,076       11,463,264

Earnings (loss) per common share:
      Continuing operations................................       $      (.19)    $      (.20)      $      (.47)     $      (.54)
      Discontinued operations .............................                --             .01               .01              .03
      Net loss.............................................       $      (.19)    $      (.19)      $      (.46)     $      (.51) 
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>



                      POSSIS MEDICAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<CAPTION>   
                                                                                        For Nine Months Ended  
                                                                                     April 30, 1997  April 30, 1996
<S>                                                                                  <C>             <C>

OPERATING ACTIVITIES:
Net loss .......................................................................     $(5,594,206)    $(5,850,906)
Adjustments to reconcile net loss to net
  cash used in operating activities:
     Gain on sale of marketable securities......................................          (7,109)           --
     (Gain) loss on asset disposal .............................................          (1,526)            808
     Depreciation...............................................................         355,149         288,609
     Amortization of goodwill...................................................          54,000          54,000
     Stock compensation.........................................................          70,751         379,086
Increase in receivables.........................................................        (401,409)       (535,420)
Increase in inventories.........................................................        (655,400)     (1,120,253)
(Increase) decrease in other assets.............................................         (70,066)         45,892
Increase in trade accounts payable..............................................         131,048         215,609
Increase in accrued and other current liabilities...............................         403,304          23,687
Net cash used in operating activities...........................................      (5,715,464)     (6,498,888)

INVESTING ACTIVITIES:
Proceeds from discontinued operations...........................................          --             589,441
Additions to plant and equipment................................................        (474,694)       (629,142)
Proceeds from the disposal of assets............................................          20,954           1,892
Purchase of marketable securities...............................................      (1,987,665)    (15,987,224)
Proceeds from sale/maturity of marketable securities............................       7,011,641       1,275,000
Net cash provided by (used in) investing activities.............................        4,570,236    (14,750,033)

FINANCING ACTIVITIES:
Repayment of long-term debt.....................................................         (62,805)        (61,498)
Proceeds from issuance of stock and exercise of options.........................         430,407      26,893,150   
Net cash provided by financing activities.......................................         367,602      26,831,652
 
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS ....................................................................        (777,626)      5,582,731
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD..........................................................       7,688,507       5,450,057
CASH AND CASH EQUIVALENTS AT END OF
 PERIOD  .......................................................................      $6,910,881     $11,032,788

SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid...................................................................      $    4,790     $    11,717
Inventory transferred to fixed assets...........................................          31,733          19,983
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>





                      POSSIS MEDICAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   BASIS OF PRESENTATION

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been included.  The  accompanying  consolidated  financial  statements and notes
should be read in conjunction  with the audited  financial  statements and notes
thereto included in the Company's 1996 Annual Report.

2.   INTERIM FINANCIAL STATEMENTS

     Operating results for the three and nine month periods ended April 30, 1997
are not necessarily  indicative of the results that may be expected for the year
ending July 31, 1997.


3.   RECENTLY ISSUED ACCOUNTING STANDARD

     In February 1997, the Financial Accounting Standards Board issued Statement
of  Financial  Accounting  Standards  No.  128,  Earnings  per  Share,  which is
effective for interim and annual  reporting  periods ending after December 1997.
SFAS No. 128 supersedes Accounting Principles Board Opinion No. 15, Earnings per
Share,  and  replaces  the  presentation  of primary  earnings  per share with a
presentation of basic earnings per share. It also requires dual presentation for
all entities  with complex  capital  structures  and provides  guidance on other
computational  changes.  The  implementation  of SFAS No. 128 is not expected to
have a material impact on earnings per share


4.   EARNINGS (LOSS) PER SHARE

     The  Company's  outstanding  stock  options  and  stock  warrants  were not
included in the  computation  of earnings  per share since the impact would have
been anti-dilutive because of the net loss.

<PAGE>


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

Results of Operations
Three and Nine Month Periods Ended April 30, 1997 and 1996

     Total  revenues for the three and nine month  periods  ended April 30, 1997
were $1,323,000 and $3,626,000,  respectively.  This was an increase of $984,000
and $2,850,000  from the same periods in the previous  year.  Third quarter 1997
sales  agreement and other  revenue  included  $200,000  from Baxter  Healthcare
Corporation  for the first  anniversary  payment  due Possis  under a supply and
distribution   agreement  for  the  Perma-Flow  Coronary  Bypass  Graft  and  an
additional  $47,000  from  the  termination  and  settlement  of  the  Company's
Perma-Seal  Dialysis  Access Graft Supply and  Distribution  Agreement.  Product
sales for the  third  quarter  and nine  month  period  ending  April  30,  1997
increased  $936,000  and  $1,066,000,  respectively.  On December  6, 1996,  the
Company was notified  that it had  received  U.S.  Food and Drug  Administration
(FDA)  clearance to commence U.S.  marketing of the AngioJet Rapid  Thrombectomy
System  with  labeling  claims for  removal of blood  clots from  grafts used by
patients  on kidney  dialysis.  The  AngioJet  System  drive unit is  considered
capital  equipment  and  currently  lists for  $80,000  to U.S.  hospitals.  The
purchasing cycle for the AngioJet System drive unit, the Company believes,  will
take up to nine  months.  The  Company  offers a program  for system  evaluation
lasting  up to 90 days  during  which  time the  hospital  purchases  disposable
products.  Short-term  drive unit rental options are also  available.  Through a
third party,  the Company offers  attractive  drive unit financing plans such as
prime interest rate capital leases,  operating leases, and a plan to acquire the
drive unit  through the  purchase of a minimum  number of  disposable  products.
AngioJet  System  disposable  product  sales in the U.S.  during  the 1997 third
quarter  and  through  nine months were  $651,000  and  $741,000,  respectively.
Foreign sales of the AngioJet System, drive units and disposable products,  were
$405,000  and  $721,000  during  the same  three and nine  month  periods.  U.S.
AngioJet System disposable  product sales are growing and the Company expects to
sell its first U.S.  AngioJet  System drive units in the fourth  quarter  ending
July 31, 1997.

     During the three and nine month  periods  ended  April 30,  1997 there were
$20,000 and $43,000,  respectively,  of Perma-Flow Coronary Bypass Graft product
sales  compared to $(2,000) and $12,000,  respectively,  for the same periods in
1996. Baxter Healthcare  Corporation,  the Company's  Perma-Flow  Coronary Graft
distributor,  has developed  marketing  materials to support the non-U.S.  sales
effort and has  increased its marketing  budget for the  Perma-Flow  Graft going
forward.  Due to the  termination of the Company's  Perma-Seal  Dialysis  Access
Graft  distributor  in January 1997,  there were no sales of this product during
the six months ended April 30, 1997. The Company recorded Perma-Seal Graft sales
of $124,000 in the three  months  ended  October 31, 1996 and $163,000 in the 12
months ended July 31, 1996.  The Company  intends to select  another  partner to
market this product and is in discussions with several potential companies.

<PAGE>


     Possis is  planning  for  continued  growth in product  sales in the fourth
quarter of fiscal 1997 and beyond and believes  that for the next several  years
most  of  this  growth  will  come  from  AngioJet  System  sales  in  the  U.S.
marketplace.

     Cost of medical  products  decreased 11% and 1% in the three and nine month
periods,  respectively,  over the same prior year periods.  Production  expenses
relating to vascular grafts in the three and nine month periods ending April 30,
1997 decreased $204,000 and $840,000,  respectively, over the same 1996 periods.
During most of fiscal 1997 the Company has worked to validate the vascular graft
production  processes and has not been  producing  graft  products.  The cost of
product and process  validation  activity is  considered  by the Company to be a
research and development expense.  Current year AngioJet System production costs
for  the  three  and  nine  month  periods   increased   $34,000  and  $764,000,
respectively.  The increase is primarily due to  significant  growth in AngioJet
System product sales.  In April 1997 the Company  received full ISO 9001 quality
system certification. ISO certification is issued by the International Standards
Organization  and  incorporates   standards  of  quality  excellence  recognized
worldwide in design, development, production, installation and service.

     Selling,  general and  administrative  expense in the three and nine months
periods ending April 30, 1997,  increased  $194,000 and $788,000,  respectively,
over the same  periods in the  previous  year.  The primary  factor is increased
sales and marketing  expense related to the establishment of a direct U.S. sales
organization  to sell the  AngioJet  Rapid  Thrombectomy  System and expenses of
marketing  the product in the United  States.  Based on strong  early  physician
interest,  the Company has grown the U.S.  AngioJet  System sales and  marketing
organization  from eight employees in January 1997 to 22 employees in June 1997.
Sales and  marketing  expenses are  expected to grow along with product  revenue
growth.

     Research and development expense in the three and nine month periods ending
April 30,  1997,  increased  $793,000  and  $1,404,000,  respectively,  over the
previous  year.  The increases  are due primarily to vascular  graft product and
production process validation  expenses and increased expenses of conducting the
AngioJet System coronary  clinical trial. The Company believes that research and
development  expenses will continue to increase as it completes the  development
of its  current  products,  invests in the  development  of new  AngioJet  Rapid
Thrombectomy  System   applications,   new  vascular  grafts  and  new  AngioJet
technology based products.

     Interest  income has decreased in the most recent periods due to the use of
the Company's cash reserves to fund the Company's operations

     The Company recorded the final income relating to the sale of its Technical
Service  division during the first quarter of fiscal 1997. The Company  believes
that income from  discontinued  operations  will be zero  through the  remaining
quarter of fiscal 1997.

<PAGE>


Liquidity and Capital Resources

     Cash, cash  equivalents and marketable  securities  totaled  $17,804,000 on
April 30, 1997 versus $23,527,000 at July 31, 1996.

     Net cash usage for the nine months ended April 30, 1997  averaged  $645,000
per month,  consistent with the Company's  expectations.  Most of the $5,715,000
cash used in  operations  in the most  recent  nine  month  period is due to the
$5,594,000  net loss.  The Company  believes  that product sales of the AngioJet
System in the U.S. and internationally  will yield meaningful sales growth going
forward.  At the same time,  sales and marketing  expenditures  will continue to
increase  with the sales growth and research and  development  expenditures  are
expected to grow as well. The Company anticipates reporting a loss for the final
quarter of the current  fiscal  year.  In  addition,  the Company  expects  that
increasing  working  capital   investments  in  trade  accounts  receivable  and
inventory will be required to support growing product sales.

     The Company  believes  that its existing  cash reserves will be adequate to
complete the development and commercialization of its three current products.


Forward-Looking Statements

     This  Management's  Discussion  and  Analysis of  Financial  Condition  and
Results of Operations contains certain  "forward-looking  statements" as defined
in the  Private  Securities  Litigation  Reform  Act of  1995.  Such  statements
relating to future events and financial performance, including the submission of
applications  to  the  FDA,  revenue  and  expense  levels  and  future  capital
requirements,   are   forward-looking   statements   that   involve   risks  and
uncertainties,  including  the  Company's  ability to meet its timetable for FDA
submissions,  the review time at the FDA which is out of the Company's  control,
changes in the Company's marketing strategies, changes in manufacturing methods,
market  acceptance  of the  AngioJet  System,  changes  in the levels of capital
expenditures  by hospitals,  the levels of sales of the Company's  products that
can be achieved,  and other risks  detailed  from time to time in the  Company's
various Securities and Exchange Commission filings.

<PAGE>

Part II.  OTHER INFORMATION



ITEM 6.  Exhibits and Reports on Form 8-K

     (a)  Exhibits

     Certain of the following  exhibits are incorporated by reference from prior
filings.  The form with which each  exhibit was filed and the date of filing are
indicated below.

     Exhibit       Form       Date Filed              Description 
                    

       27                                             Financial data schedule




     (b) Reports on Form 8-K

     Possis Medical,  Inc. filed no reports on form 8-K during the quarter ended
April 30, 1997.
 
<PAGE>





SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                    POSSIS MEDICAL, INC.


DATE:      June 11, 1997            BY:     /s/   Robert G. Dutcher
                                        ROBERT G. DUTCHER
                                        President and Chief Executive Officer



DATE:      June 11, 1997            BY:     /s/   Russel E. Carlson 
                                        RUSSEL E. CARLSON
                                        Vice President of Finance
                                        Chief Financial and Accounting Officer