ALARIS Medical to Tell Analysts That Sales Growth is On Track; Higher Costs Should Reduce Adjusted EBITDA.

SAN DIEGO--(BUSINESS WIRE)--June 15, 1999--

ALARIS Medical Inc. (NASDAQ:ALRS) will tell analysts in meetings later Tuesday that company sales are on track to meet expectations of 7 percent to 8 percent growth for the quarter ending June 30, 1999, compared with the same quarter last year.

ALARIS also will tell analysts that the company expects adjusted EBITDA to be lower than the $20,858,000 reported for the first quarter of 1999. The lower-adjusted EBITDA is due to greater-than-expected costs related to manufacturing issues with infusion therapy disposable sets and an estimated $2.5 million write-down of inventory of these products.

ALARIS Chief Executive Officer William J. Mercer said, "Our reputation for quality, service and innovation is among our greatest assets, and so it is imperative that we take whatever steps are necessary to meet clinician requirements to provide the best possible care." Mercer said that they are taking steps to ensure that adjusted EBITDA will be "back on track for the rest of the year."

Mercer said that the manufacturing issues are being resolved to eliminate the potential for higher ALARIS costs in future quarters related to these issues. Commenting on the expected inventory write-down, Mercer said, "This is a setback for our financial results, but a very large and visible indication of our commitment to our customers and their patients."

ALARIS Vice President and Chief Financial Officer William C. Bopp said that the higher costs as well as reduced contribution from disposable products to overall results "will lower gross margins in the quarter to the 44-46 percent range, compared with almost 49 percent a year ago."

Bopp said that he expects SG&A and integration spending to be about the same as the first quarter, and R&D spending will be up slightly. As a result, the second-quarter pretax loss will exceed that of the first quarter. The net loss for the second quarter will approximate the pretax loss.

ALARIS Medical, through its operating company, ALARIS Medical Systems Inc., is known for its IMED(R) and IVAC(R) brand names of intravenous infusion therapy systems and Instromedix(R) cardiac event recorders and pacemaker follow-up systems. The company's principal line of business is the design, manufacture and marketing of intravenous infusion therapy products, patient monitoring instruments and related disposables. The company's products are distributed to more than 120 countries worldwide. In addition to its San Diego world headquarters and manufacturing facility, the company also operates manufacturing facilities in Creedmoor, N.C.; Hillsboro, Ore.; Basingstoke, Hampshire, U.K.; and Tijuana, Mexico. Additional information on ALARIS Medical can be found at www.alarismed.com.

Forward-Looking Statements

This news release contains forward-looking statements that are based largely upon the company's expectations for demand and acceptance of new and existing products, technologies and opportunities, regulatory approvals and market and industry segment growth. Actual results could vary materially from these expected results due to a variety of factors, including, without limitation, changes in the market, competition, government regulation and foreign operations. Such risk factors are detailed in the Securities and Exchange Commission filings of ALARIS Medical Inc. including form 10-K for the year ended Dec. 31, 1998.