<PAGE>


                                  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 period ended June 30, 2000.

                                       or

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934. For the transition period from ____________ to
      ____________.

                        Commission File Number: 000-20931

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

         Delaware                                                94-2976937
(State or other jurisdiction of                               (I.R.S. employer
incorporation or organization)                               identification no.)

         3865 North Business                                        85705
             Center Drive                                         (Zip Code)
             Tucson, AZ
(Address of principal executive offices)

       Registrant's telephone number, including area code: (520) 887-2155

                                 Not Applicable
    (Formal name, former address and former fiscal year, if changed from last
                                    report)

         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 [ ]


                     Applicable Only to Issuers Involved in
         Bankruptcy (Formal name, former address and former fiscal year,
                          if changed from last report)

         Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by the court. Yes [X]  No [ ]


                      Applicable Only to Corporate Issuers

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date. Common Stock, $0.001
par value --- 15,223,960 shares as of July 31, 2000.

<PAGE>


                          VENTANA MEDICAL SYSTEMS, INC.


                               INDEX TO FORM 10-Q
                               ------------------


Part I.      Financial Information

        Item 1. Financial Statements

                Condensed Consolidated Balance Sheets
                   June 30, 2000 (Unaudited) and December 31, 1999

                Condensed Consolidated Statements of Operations Three
                   and six months ended June 30, 2000 and 1999
                   (Unaudited)

                Condensed Consolidated Statements of Cash Flows
                   Six months ended June 30, 2000 and 1999 (Unaudited)

                Notes to Condensed Consolidated Financial Statements

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

Part II.     Other Information

        Item 1. Legal Proceedings

        Item 6. Exhibits and Reports on Form 8-K

Signature


                                       2
<PAGE>
                          VENTANA MEDICAL SYSTEMS, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (in thousands except share data)


                                                         June 30,   December 31,
                            ASSETS                         2000         1999
                                                        ----------    ----------
                                                        (Unaudited)     (Note)

Current assets:
   Cash and cash equivalents                            $  43,417     $   1,787
   Accounts receivable                                     18,404        20,776
   Inventories (Note 2)                                     6,093        13,474
   Prepaid Expenses                                           660           574
   Deferred tax benefit, current portion                    1,692         1,692
   Other current assets                                       722           722
                                                        ----------    ----------
Total current assets                                       70,988        39,025
Property and equipment, net                                15,383        14,441
Intangibles, net                                           11,395        14,178
Other assets                                                2,216         1,084
Deferred tax benefit, long term portion                     5,674         4,433
                                                        ----------    ----------
Total assets                                            $ 105,656     $  73,161
                                                        ==========    ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable                                     $   3,961     $   4,017
   Other current liabilities                                9,225         6,600
                                                        ----------    ----------
Total current liabilities                                  13,186        10,617
Long term debt                                              1,975         2,044
Stockholders' equity
   Common stock - $.001 par value; 50,000,000 shares
     authorized; 15,157,887 and 13,593,640 shares
     issued and outstanding at June 30, 2000 and
     December 31, 1999, respectively                           15            14
   Additional Paid-In Capital                             132,998        80,542
   Accumulated deficit                                    (41,839)      (19,341)
   Cumulative other comprehensive income                      (79)         (115)
   Treasury Stock - 40,000 shares, at cost                   (600)         (600)
                                                        ----------    ----------
Total stockholders' equity                                 90,495        60,500
                                                        ----------    ----------
Total liabilities and stockholders' equity              $ 105,656     $  73,161
                                                        ==========    ==========


Note:    The consolidated balance sheet at December 31, 1999 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


                                       3
<PAGE>
<TABLE>

                               VENTANA MEDICAL SYSTEMS, INC.
                      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                           (in thousands except per share data)
                                        (Unaudited)

<CAPTION>

                                                Three Months Ended         Six Months Ended
                                                      June 30                   June 30
                                               ----------------------    ----------------------
                                                 2000         1999         2000          1999
                                               ---------    ---------    ---------    ---------
<S>                                            <C>          <C>          <C>          <C>
Sales:
  Instruments                                  $  5,436     $  4,726     $ 11,264     $  9,846
  Reagents and other                             12,304       11,589       24,305       22,101
                                               ---------    ---------    ---------    ---------
    Total net sales                              17,740       16,315       35,569       31,947

Cost of goods sold                               18,464        4,765       24,598        9,753
                                               ---------    ---------    ---------    ---------
Gross (loss) profit                                (724)      11,550       10,971       22,194

Operating expenses:
  Research and development                        3,461        1,908        5,445        3,537
  Selling, general and administrative            14,930        7,875       22,890       15,274
  Non-recurring expenses (Note 8)                 4,519            -        4,519            -
  Amortization of intangibles                       391          258          669          511
                                               ---------    ---------    ---------    ---------
(Loss) income from operations                   (24,025)       1,509      (22,552)       2,872
Other income (expense)                              452          (22)         404            2
                                               ---------    ---------    ---------    ---------
Pretax (loss) income                           $(23,573)    $  1,487     $(22,148)    $  2,874
(Benefit) provision for income tax (Note 5)        (106)        (138)         350            -
                                               ---------    ---------    ---------    ---------
Net (loss) income                              $(23,467)    $  1,625     $(22,498)    $  2,874
                                               =========    =========    =========    =========
Net (loss) income per share (Note 3)
  Basic                                        $  (1.55)    $   0.12     $  (1.57)    $   0.21
                                               =========    =========    =========    =========
  Diluted                                      $  (1.55)    $   0.11     $  (1.57)    $   0.20
                                               =========    =========    =========    =========

See accompanying notes
</TABLE>

                                       4
<PAGE>
<TABLE>

                               VENTANA MEDICAL SYSTEMS, INC.
                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                      (in thousands)
                                        (Unaudited)


<CAPTION>

                                                                           Six Months Ended
                                                                                June 30
                                                                         ----------------------
                                                                            2000         1999
                                                                         ---------    ---------
<S>                                                                      <C>          <C>
OPERATING ACTIVITIES:
Net (loss) income                                                        $(22,498)    $  2,874
Adjustments to reconcile net (loss) income to cash (used in) provided
   by operating activities:
   Change in deferred tax benefit                                          (1,241)           -
   Depreciation and amortization                                            2,617        1,431
   Non-cash intangibles and property and equipment charges                  7,914            -
   Changes in operating assets and liabilities                             11,085       (1,544)
                                                                         ---------    ---------
Net cash (used in) provided by operating activities                        (2,123)       2,761

INVESTING ACTIVITIES:
Purchase of property and equipment                                         (6,279)      (4,922)
Purchase of intangible assets                                              (2,390)        (502)
                                                                         ---------    ---------
Net cash used in investing activities                                      (8,669)      (5,424)

FINANCING ACTIVITIES:
(Repayment) issuance of debt                                                  (71)       1,700
Issuance of stock                                                          52,457        1,002
                                                                         ---------    ---------
Net cash provided by financing activities                                  52,386        2,702

Effect of exchange rate change on cash                                         36            -
                                                                         ---------    ---------
Net increase in cash and cash equivalents                                  41,630           39

Cash and cash equivalents, beginning of period                              1,787        2,424
                                                                         ---------    ---------
Cash and cash equivalents, end of period                                 $ 43,417     $  2,463
                                                                         =========    =========

See accompanying notes
</TABLE>

                                       5

<PAGE>


                          VENTANA MEDICAL SYSTEMS, INC.

              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

1.   SIGNIFICANT ACCOUNTING POLICIES

The accompanying condensed consolidated financial statements are unaudited. They
have been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission and are subject to year-end audit by
independent auditors. Certain information and footnote disclosure normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. It is suggested that the condensed consolidated financial
statements be read in conjunction with the financial statements and notes
included in the Company's Annual Report and Form 10-K for the year ended
December 31, 1999.

The information furnished reflects all adjustments which, in the opinion of
management, are necessary for a fair presentation of results for the interim
periods. Such adjustments consisted of normal recurring items as well as
non-recurring charges recognized in the second quarter of 2000 (see footnote 8).
It should also be noted that results for the interim periods are not necessarily
indicative of the results expected for the full year or any future period.

The presentation of these consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.


2.  INVENTORIES

Inventories consist of the following:
                                                       June 30,     December 31,
                                                         2000          1999
                                                       -------       -------
                                                             (in thousands)

         Raw material and work-in-process              $ 3,206       $ 5,729
         Finished goods                                  2,887         7,745
                                                       -------       -------
                                                       $ 6,093       $13,474
                                                       ========      ========


The June 30, 2000 inventory balance was impacted by second quarter 2000 charges
totaling $8,059,000 related primarily to various quality issues and
discontinuance of certain product lines.


                                       6
<PAGE>


                          VENTANA MEDICAL SYSTEMS, INC.

              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

3.   EARNINGS PER SHARE

The following sets forth the computation of basic and diluted earnings per share
for the periods indicated (in thousands except per share data).
<TABLE>
<CAPTION>

                                              Three Months Ended        Six Months Ended
                                                    June 30,                June 30,
                                            ----------------------   ----------------------
                                              2000         1999        2000         1999
                                            ---------    ---------   ---------    ---------
<S>                                         <C>          <C>         <C>          <C>
Net (loss) income                           $(23,467)    $  1,625    $(22,498)    $  2,874
Weighted average common shares
  outstanding, basic                          15,097       13,462      14,366       13,440
Add: dilutive stock options and warrants           -        1,304           -        1,218
                                            ---------    ---------   ---------    ---------
Weighted average common shares
  outstanding, diluted                        15,097       14,766      14,366       14,658
                                            =========    =========   =========    =========
Net (loss) income per share, basic          $  (1.55)    $   0.12    $  (1.57)    $   0.21
                                            =========    =========   =========    =========
Net (loss) income per share, diluted        $  (1.55)    $   0.11    $  (1.57)    $   0.20
                                            =========    =========   =========    =========
</TABLE>



                                       7
<PAGE>


                          VENTANA MEDICAL SYSTEMS, INC.

              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

4.       COMPREHENSIVE INCOME

The components of comprehensive income for the three and six month periods
ending June 30, 2000 and 1999 are as follows (in thousands):
<TABLE>
<CAPTION>

                                             Three Months Ended        Six Months Ended
                                                   June 30,                June 30,
                                            ----------------------   ----------------------
                                              2000         1999        2000         1999
                                            ---------    ---------   ---------    ---------
<S>                                         <C>          <C>         <C>          <C>
Net (loss) income                           $(23,467)    $  1,625    $(22,498)    $  2,874
Foreign currency translation                       6            -          36            -
                                            ---------    ---------   ---------    ---------
Comprehensive (loss) income                 $(23,461)    $  1,625    $(22,462)    $  2,874
                                            =========    =========   =========    =========
</TABLE>


Accumulated other comprehensive (loss) income consists exclusively of foreign
currency translation adjustments.

5.       PROVISION FOR INCOME TAXES

The tax benefit in the second quarter of 2000 is a result of a revision in the
full year tax expense estimate resulting from the $22.5 million of charges taken
in the second quarter of 2000 and expected loss for the year. The tax benefit
recorded in the second quarter of 1999 was a reversal of a prior quarter
estimate.

6.       LINE OF CREDIT

The Company had up to $10 million available under a line of credit arrangement
with a bank which is subject to renewal on March 31, 2001. Borrowings under the
line are collateralized by the Company's receivables, inventories, machinery and
equipment, and intellectual property. The line contains certain financial
covenants (measured quarterly) with which the Company must comply which, among
other things, prohibits the payment of dividends on the Company's stock and
limits the number of treasury shares the Company may purchase. The line of
credit arrangement also provides for quarterly payment of unused line commitment
fees. No amounts were outstanding under this agreement at June 30, 2000 or
December 31, 1999.



                                       8

<PAGE>

7.       OPERATING SEGMENT AND ENTERPRISE DATA

The Company has two reportable segments: North America (the United States and
Canada) and International (primarily France, Germany, and Japan). Segment
information for the three and six months ended June 30, 2000 and 1999 are as
follows (in thousands):

<TABLE>
<CAPTION>

                                                      Three months ended June 30, 2000
                                     -------------------------------------------------------------
                                          U.S.       International   Eliminations       Totals
                                     -------------   -------------   -------------   -------------
<S>                                    <C>              <C>           <C>             <C>
Sales to external customers            $ 13,434         $ 4,306       $        -      $ 17,740
Segment profit (loss)                   (22,786)           (681)               -       (23,467)


                                                       Three months ended June 30, 1999
                                     -------------------------------------------------------------
                                          U.S.       International   Eliminations       Totals
                                     -------------   -------------   -------------   -------------

Sales to external customers            $ 13,340          $  2,975     $        -      $ 16,315
Segment profit (loss)                     1,883              (248)           (10)        1,625


                                                       Six months ended June 30, 2000
                                     -------------------------------------------------------------
                                          U.S.       International   Eliminations       Totals
                                     -------------   -------------   -------------   -------------
Sales to external customers            $ 26,981          $ 8,588      $        -      $ 35,569
Segment profit (loss)                   (22,139)            (359)              -       (22,498)
Segment assets                          120,165           15,674         (30,183)      105,656


                                                       Six months ended June 30, 1999
                                     -------------------------------------------------------------
                                          U.S.       International   Eliminations       Totals
                                     -------------   -------------   -------------   -------------
Sales to external customers             $26,266          $ 5,681      $        -      $ 31,947
Segment profit (loss)                     3,370             (527)             31         2,874
Segment assets                           74,509            9,444         (22,995)       60,958
</TABLE>



8.       NON-RECURRING EXPENSES

The Company reviewed the utility of its intangible assets in the second quarter
and recognized an impairment of $4.5 million. This write-down was a direct
result of the Company's decision to discontinue the electron microscopy product
line purchased in the 1998 BioTechnology Tools, Inc. acquisition ($1.4 million),
as well as the launch of the Company's new BenchMark product line in the second
half of 2000, which necessitated write-off of the remaining value of the
goodwill and a significant portion of the developed technology acquired in the
1996 Biotek Solutions, Inc. acquisition ($3.1 million).

                                       9
<PAGE>

9.       FACILITY CLOSING

The Company recognized charges of $2.6 million relating to closure of its
production facility in Gaithersburg, Maryland. The Gaithersburg facility was
acquired in late 1998 with the acquisition of all the oncology assets of Oncor,
Inc. The plant produces a small number of reagent products, which can be more
cost effectively produced in the Company's Tucson, Arizona reagent manufacturing
facilities and by outside contractors.



                                       10
<PAGE>


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

The following discussion of the financial condition and results of operations of
Ventana Medical Systems, Inc. ("Ventana" or "the Company") should be read in
conjunction with the Condensed Consolidated Financial Statements and related
Notes thereto included elsewhere in this Form 10-Q. This Report on Form 10-Q
contains certain forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Actual events or results may differ materially from those anticipated by
such forward-looking statements as a result of the factors described herein and
in the documents incorporated herein by reference.

OVERVIEW

Ventana develops, manufactures and markets proprietary instrument/reagent
systems that automate tissue preparation, immunohistochemistry ("IHC") tests,
special stains ("SS") tests and IN SITU hybridization ("ISH") tests for the
analysis of cells and tissues on microscope slides.

RESULTS OF OPERATIONS

NET SALES

Net sales for the three and six months ended June 30, 2000 as compared to the
same periods in 1999 increased 9% and 11% to $17.7 million and $35.6 million
from $16.3 million and $31.9 million, respectively. The increases in net sales
were attributable to 15% and 14% increases in instrument sales for the three
month and six month periods and 6% and 10% increases in reagent and other sales
for the same timeframe. Revenue growth was at a slower rate than we have
historically reported as our sales force focused on our existing customer base
to deal with dispenser quality issues, which were identified during the second
quarter of 2000. This focus on existing customers is expected to continue for
the next several months, which in turn is expected to result in lower growth
rates in the third and fourth quarters of 2000 than were experienced in the
third and fourth quarters of 1999. Instrument sales increased primarily due to
strong international growth in all instrument types. Reagent revenue, despite
the dispenser quality issues, continued to advance due to a growing installed
base, while service revenue also increased due to the expanding number of
instruments coming off warranty. Sales increased in the 2000 three and six month
periods compared to the same periods in 1999 in both geographic segments: 1% and
3% in the U.S. ($13.4 million and $27.0 million versus $13.3 million and $26.3
million), and 43% and 51% internationally ($4.3 million and $8.6 million versus
$3.0 million and $5.7 million).

                                       11
<PAGE>

GROSS PROFIT

Gross (loss) profit for the three and six months ended June 30, 2000 decreased
to $(0.7) million and $11.0 million, respectively, from $11.6 million and $22.2
million for the same periods in 1999. The Company's gross margin for the three
and six months ended June 30, 2000 decreased to (4)% and 31% from 71% and 69%
for the same periods of the prior year. The significant decline in gross (loss)
profit in 2000 compared to 1999 was caused primarily by $11.8 million of charges
recorded in the second quarter of 2000. These charges include provisions for
quality- related inventory and warranty expenses ($4.1 million), costs
associated with discontinued product lines ($4.1 million), shutdown of the
Company's Gaithersburg, Maryland reagent manufacturing facility ($2.6 million)
and write-down of certain instrument inventory due to new product launches ($1
million).

RESEARCH AND DEVELOPMENT

Research and development expenses for the three months and six months ended June
30, 2000 were $3.5 million and $5.4 respectively. These amounts represent an 81%
increase for the three-month period and a 54% increase for the six-month period
over the prior year. The increase results primarily from substantial development
work on new products.

SELLING, GENERAL AND ADMINISTRATIVE ("SG&A")

Presented below is a summary of SG&A expense for the three and six months ended
June 30, 2000 and 1999.
<TABLE>
<CAPTION>

                                 Three Months Ended                 Six Months Ended
                                      June 30,                          June 30,
                           -----------------------------     -----------------------------
                               2000            1999              2000             1999
                           -------------   -------------     -------------   -------------
                                     %               %                 %               %
                           $       Sales   $       Sales     $       Sales   $       Sales
                           -------------   -------------     -------------   -------------
                                                  ($ in thousands)
<S>                        <C>       <C>   <C>       <C>     <C>       <C>   <C>       <C>
Sales and marketing        $10,904   61%   $ 6,364   39%     $17,272   48%   $12,428   39%
Administration               4,026   23%     1,511    9%       5,618   16%     2,846    9%
                           -------------   -------------     -------------   -------------
Total                      $14,930   84%   $ 7,875   48%     $22,890   64%   $15,274   48%
                           =============   =============     =============   =============
</TABLE>

SG&A expense for the three and six months ended June 30, 2000 increased to $14.9
million and $22.9 million from $7.9 million and $15.3 million for the same
periods of the prior year, respectively. The most significant increases in SG&A
expenses compared to 1999 were charges of $4.6 million due to write-downs of
instrument fixed assets as a result of product line discontinuance and new
product launches. Aside from these charges, total SG&A expenses increased in
absolute terms due primarily to the Company's expanding international business
base plus costs associated with implementing new administrative systems and
functions.

NON-RECURRING EXPENSES

The Company reviewed the utility of its intangible assets in the second quarter
and recognized an impairment of $4.5 million. This write-down was a direct
result of the Company's decision to discontinue the electron microscopy product
line purchased in the 1998 BioTechnology Tools, Inc. acquisition ($1.4 million),
as well as the launch of the Company's new BenchMark product line in the second
half of 2000, which necessitated write-off of the remaining value of the
goodwill and a significant portion of the developed technology acquired in the
1996 Biotek Solutions, Inc. acquisition ($3.1 million).

                                       12
<PAGE>

AMORTIZATION OF INTANGIBLES

Intangible assets consist primarily of goodwill, customer base, and supply
agreements resulting from acquisitions and patents. Such assets are amortized
over estimated useful lives of 5 to 17 years resulting in quarterly costs
approximating $0.4 million. Additionally, the Company will continue to review
the utility of these assets and recognize any impairment should the Company
determine such a condition exists.

SECOND QUARTER 2000 CHARGES

Second quarter 2000 results were negatively impacted by $22.5 million in
write-offs and accruals relating to several different issues. These charges were
reflected in the Statement of Operations as follows (in thousands):

Cost of goods sold                                     $11,789
Research and development                                   537
Selling, general and administrative                      5,679
Non-recurring expenses                                   4,519
                                                       -------
Total charges                                          $22,524


Charges of $5.4 million were related to quality problems with the Company's
dispensers and reagents used with the majority of its IHC & ISH staining
instruments. Dispensers are a core component used to store and dispense
reagents. In the second quarter of 2000, the Company became aware of a potential
problem by noticing a disruption in the customer base. Reports were received
that some of the dispensers leaked during shipment to customers or were reported
to be short of the standard number of tests per dispenser. The problem was
traced to a single part procured from an outside supplier who was immediately
advised, and working with the Company, resolved the problem. New quality control
procedures were also implemented in the Company's manufacturing processes and
there is a high level of confidence that only high-quality dispensers are now
being shipped to customers and have been since early June when the new quality
control procedures were implemented. As a result of the above issues, charges
were taken to write-off inventory and set up reserves to cover product
replacements, returns, and warranty matters.

A charge of $4.6 million was recorded to account for the Company's decision to
exit its electron microscopy (EM) product line. The market for EM sample
preparation instruments is small, not growing, lacks a consumable annuity, and
involves a different customer base from that called on by our direct sales
forces. As a result, the decision has been made to exit this product line
through discontinuation within the next several months. Charges have been taken
to write-down all EM inventory and field instruments to their net realizable
value. In addition, a portion of the goodwill recognized in the BTTI acquisition
has been written off ($1.4 million) to reflect the impact of product
discontinuance based on expected future cash flows.

                                       13
<PAGE>

Charges of $8.6 million were recorded in recognition of the decreased value of
certain instrument inventory, fixed assets and intangible assets given the
impending launch of the Company's new BenchMark advanced staining system in the
second half of 2000. In addition to performing both IHC and ISH stains, the
BenchMark also automates a series of labor-intensive slide preparation
activities including dewaxing and cell conditioning. Due to the revolutionary
nature of this product, it was deemed appropriate to write down the value of
existing parts and systems inventory for certain existing IHC and ISH stainers
as well as field demonstration and evaluation units. In addition, intangible
assets associated with the Company's 1996 acquisition of Biotek Solutions, Inc.
were written down to reflect the impact of product discontinuation on expected
future cash flows. The Techmate IHC staining system product line acquired in the
Biotek transaction is among those whose value is impacted by the launch of
BenchMark.

The Company also recognized charges of $2.6 million relating to closure of its
production facility in Gaithersburg, Maryland. The Gaithersburg facility was
acquired in late 1998 with the acquisition of all the oncology assets of Oncor,
Inc. The plant produces a small number of reagent products, which can be more
cost effectively produced in the Company's Tucson, Arizona reagent manufacturing
facilities and by outside contractors.

Other charges recognized in the second quarter of 2000 totaled $1.3 million
which included expenses related to contracted research and development being
handled by an outside company.


LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2000, the Company's principal source of liquidity consisted of
cash and cash equivalents of $43.4 million. The Company also had an unused $10
million revolving bank credit facility. Any borrowings under the Company's bank
credit facility are secured by a pledge of substantially all of the Company's
assets and bear interest at the bank's prime rate.

During the six months ended June 30, 2000, net cash used in operations and
investing activities increased to $10.8 million, versus $2.7 million in the six
months ended June 30, 1999. The increase was primarily due to spending on an
automated imaging system license and development agreement with AccuMed, Inc.($1
million), the acquisition of the assets of Quantitative Diagnostics
Laboratories, Inc. ($1.3 million), the renewal of a reagent license agreement
($1.5 million), and land purchased for the construction of a new corporate
headquarters and manufacturing facility in suburban Tucson, Arizona ($3.3
million). Additional spending on the corporate headquarters is expected to be
approximately $3 million in 2000 and $13 million in 2001.

The Company believes that its existing capital resources, together with cash
generated from product sales and available borrowing capacity under its bank
credit facilities will be sufficient to satisfy its working capital requirements
for the near future.


                                       14
<PAGE>


PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS.

In January 1997, four individuals who are former BioTek noteholders who held in
the aggregate approximately $1.1 million in principal amount of BioTek notes
filed an action, Tse, et al v. Ventana Medical Systems, Inc., et al. No. 97-37
("Tse Action"), against us and certain of our then current directors and
stockholders in the United States District Court for the District of Delaware.
The complaint alleges, among other things, that we violated federal and
California securities laws and engaged in common law fraud in connection with
the BioTek shareholders' consent to the February 1996 merger of BioTek into
Ventana and the related conversion of BioTek notes into Ventana notes, which
were subsequently repaid. Plaintiffs seek substantial compensatory damages
several times in excess of the principal amount of their BioTek notes, as well
as substantial punitive damages, and fees and costs. On April 25, 1997,
plaintiffs filed an Amended Complaint. The Amended Complaint makes the same
allegations as the original Complaint, and adds a claim under North Carolina
securities laws. In May of 1997, we made a motion to transfer the action to the
district of Arizona, or alternately to the Central District of California, which
was denied by the court. On December 16, 1997, we filed a motion to dismiss the
Amended Complaint. This motion was partially accepted and partially denied by
the Court. On March 8, 1999, plaintiffs filed a Second Amended Complaint. The
Second Amended Complaint makes the same allegations as the original and Amended
Complaints, deletes the claim made under North Carolina securities laws and the
claim made under California Blue Sky laws, and adds stockholders as defendants.
Based on the facts known to date, we believe that the claims are without merit
and we intend to vigorously contest this suit. After consideration of the nature
of the claims and the facts relating to the merger and the BioTek note exchange,
we believe we have meritorious defenses to the claims and that resolution of
this matter will not have a material adverse effect on our business, financial
condition and results of operations; however, the results of the proceedings are
uncertain and there can be no assurance to that effect.

In April 1999, a former BioTek noteholder filed an action, Leung, et al. v. Jack
W. Schuler, et al., No. 17089, against us and certain of our then current
directors and stockholders in the Delaware State Chancery Court, New Castle
County. The complaint, brought individually and on behalf of a purported class,
makes virtually the same allegations made in the Tse Action and seeks recovery
under breach of contract and breach of fiduciary duty theories. On May 6, 1999
we filed a motion to dismiss the complaint. On February 29, 2000, the court
issued a memorandum opinion granting our motion and dismissing the complaint in
its entirety.

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On June 15, 1999 we filed a proof of claim against Oncor, Inc. in an action
pending in the United States Bankruptcy Court for the District of Delaware
titled In re Oncor, Inc., No. 9-437 (JJF). Our claims arise out of an Asset
Purchase Agreement dated November 23, 1998 and related documents wherein we
acquired Oncor's unincorporated In Situ Hybridization Technology Division and
rights related thereto. In February 2000, we filed an amended proof of claim
alleging, inter alia, that Oncor breached the terms of the Asset Purchase
Agreement by purporting to transfer or assign to us Oncor's rights under a
license agreement, which were not transferable or assignable under the
circumstances then existing. The amended proof of claim seeks damages of no less
than approximately $7.3 million. We believe our claims are meritorious and that
we will prevail, however, the results of the proceedings are uncertain and there
can be no assurance to that effect.


On December 9, 1999 we filed an action, Ventana Medical Systems, Inc. v.
Cytologix Corp., No. CIV99-606 TUC FRZ, alleging patent infringement seeking
monetary damages and injunctive relief in the United States District Court in
Tucson. The original complaint was amended March 21, 2000 by the addition of
another patent to the litigation. We believe our claims are meritorious and that
we will prevail, however, because the action is relatively new, results of the
proceedings are uncertain and there can be no assurance to that effect.

In March 2000, we filed an action in the Circuit Court for Montgomery County,
Maryland, No. 208383, VENTANA MEDICAL SYSTEMS, INC. V. JONATHAN COHEN, alleging
misappropriation of a provisional patent application by a former employee and
patent counsel. The suit alleges breach of fiduciary duty, promissory estoppel,
unjust enrichment, and usurpation of corporate opportunity. The remedies sought
include damages, injunctive relief, constructive trust and/or an equitable lien
over the provisional patent application, which was filed on September 24, 1999,
and relates to a business method for use of a high throughput screening system
for evaluating the clinical utility of molecular targets in tissue samples. The
Defendant filed a counterclaim against Ventana in the action in May 2000, for
damages resulting from alleged breach of contract, unjust enrichment, breach of
fiduciary duty and interference with business expectancy, based on allegations
that Ventana breached an agreement to develop the business method with Defendant
as a joint venture. We believe our claims and defenses are meritorious and that
we will prevail, but the results of the proceedings are uncertain and there can
be no assurance to that effect.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          (a) Exhibits

              27.1 Financial Data Schedule.

          (b) Reports on Form 8-K.

              No reports were filed on Form 8-K during the quarter ended June
              30, 2000.


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                                    SIGNATURE



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

                                             Ventana Medical Systems, Inc.




Date: August 14, 2000                        By: /s/ Jay Meridew
                                                --------------------------
                                                Jay Meridew
                                                Vice President of Finance