ALARIS Medical Updates Third Quarter Outlook; Maintains Third Quarter and Full Year EPS Guidance.

Business Editors & Health/Medical Writers

SAN DIEGO--(BUSINESS WIRE)--Sept. 12, 2002

ALARIS Medical Inc. (AMEX:AMI) today reconfirmed that the company anticipates reporting earnings per share of about $0.03 for the third quarter (ending Sept. 30, 2002) and about $0.11 for the full year (ending Dec. 31, 2002).

This compares with a 2001 third quarter loss of $0.02 per share and a full year 2001 loss of $0.17 per share.

The third quarter earnings target should be achieved with sales growth of about 5-6 percent compared with the third quarter of 2001. This growth had previously been projected at approximately 10 percent.

Dave Schlotterbeck, President and CEO, said, "At a five to six percent sales growth, we continue to grow at twice the rate of growth of our markets and to take market share. This quarter's sales of our MEDLEY(TM) Medication Safety System are not likely to reach the $10 million milestone we previously anticipated. A few large transactions that were anticipated to close in the third quarter are now expected to be completed in the fourth quarter. Our outlook for sales of our MEDLEY(TM) System and the Guardrails(R) Safety Software continues to be approximately $35 million for the full year."

Schlotterbeck continued, "Customer acceptance of our Guardrails(R) Safety Software platform for reducing medication errors at the bedside continues to be strong. Purchasing the MEDLEY(TM) System is a complex decision involving a five- to seven-year commitment including an initial capital investment of generally $1-$3 million per hospital. Accordingly, some of the sales take longer to close than we had originally anticipated. We remain very bullish on the future of the MEDLEY(TM) System."

For the full year, the company continues to anticipate approximately $0.11 in earnings per share on 10 percent sales growth. ALARIS Medical indicated that its earnings remain on target for the quarter primarily because of stronger than anticipated gross margins. William Bopp, Sr. Vice President and CFO, said, "Our manufacturing improvements, product mix and a weaker U.S. dollar should combine to increase our gross margin to above 50 percent this quarter."

The ALARIS Medical(R) MEDLEY(TM) Medication Safety System with its Guardrails(R) Safety Software provides an automatic safety net for infusion programming focused on medication error-prevention at the critical point of intravenous (IV) delivery to the patient. The Guardrails(R) Safety Software will also be available shortly for 50,000 previously-installed units of the ALARIS(R) Signature Edition(R) GOLD Infusion System. This software helps protect patients from infusion programming errors by allowing institutions to configure unique care-specific profiles with pre-defined drug dose limits and other delivery parameters to meet the particular needs of multiple patient care areas.

The Sept. 9, 2002 issue of the Archives of Internal Medicine published an article entitled, "Medication Errors Observed in 36 Health Care Facilities." Among its conclusions was that medication errors occur in nearly 1 of every 5 doses given to patients in the typical hospital. The Guardrails(R) Safety Software is designed to catch infusion administration errors before the medication is given to protect the health and safety of the patient receiving the medication.

This new report follows by three years an Institute of Medicine Report that stated that more than 50,000 people die annually from medical errors. Since then, there has been a growing emphasis on preventing errors in the delivery of health care. A large percentage of the most costly medical errors are medication errors related to powerful drugs that are delivered, or infused, directly into a patient's veins. Studies from leading medical institutions in the United States indicate that the delivery of intravenous drugs accounts for about 31 percent of all the serious and life-threatening medication errors. The health care industry as a whole has put new emphasis on revising patient safety protocols to prevent loss of life, decrease length of hospital stay, and reduce litigation and negative publicity. ALARIS Medical created the MEDLEY(TM) Medication Safety System and the Guardrails(R) Safety Software to help prevent IV medication administration errors and raise the standards of patient safety.

ALARIS Medical Inc. (AMEX:AMI), through its wholly owned operating company, ALARIS Medical Systems Inc., develops practical solutions for medication safety at the point of care. The company designs, manufactures and markets intravenous (IV) medication delivery and infusion therapy devices, needle-free disposables and patient monitoring equipment. ALARIS Medical's "smart" technology, tools and services are designed to reduce the risks and costs of medication errors, and safeguard patients and clinicians. The company provides its products, professional and technical support and training services to over 5,000 hospital and health care systems, as well as alternative care sites in more than 120 countries through its direct sales force and distributors. Headquartered in San Diego, ALARIS Medical employs approximately 2,600 people worldwide and operates manufacturing facilities in the United States, Mexico and the United Kingdom.

This news release contains forward-looking statements as defined in the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Persons reading this release are cautioned that such forward-looking statements involve risks and uncertainties, including the effect of legislative and regulatory changes affecting the health care industry, the potential of increased levels of competition, technological changes, the dependence of ALARIS Medical upon the success of new products (including its proprietary Guardrails(R) Safety Software and the MEDLEY(TM) Medication Safety System) and ongoing research and development efforts including obtaining regulatory approvals, restrictions contained in the instruments governing the Company's indebtedness, and the significant leverage to which the Company is subject. Such risk factors are detailed in the Securities and Exchange Commission filings of ALARIS Medical, Inc. and ALARIS Medical Systems, Inc., including Forms 10-K for the year ended December 31, 2001, and other filings. The Company assumes no obligation to update any forward-looking statements as a result of new information or future events or developments.