APACHE Medical Reports Fourth Quarter and Fiscal 1998 Results.

MCLEAN, Va.--(BUSINESS WIRE)--February 19, 1999--APACHE Medical Systems, Inc. (NASDAQ: AMSI) a leading provider of health care management systems and consulting services, today reported results for the fourth quarter and fiscal year ended December 31, 1998.

Total revenues for the fourth quarter increased by 60% to $2.3 million compared with $1.4 million for the same period a year ago. Total expenses of $3.2 million represent a 33% reduction from last year's $4.8 million. The combined impact of strong revenue growth and aggressive expense management resulted in a $2.5 million reduction in the Company's operating loss to $0.9 million. The net loss for the quarter of $0.8 million, or $.12 per share, also improved significantly from $3.2 million, or $.45 per share, for the fourth quarter of 1997.

APACHE's Critical Care Series 3 Product Line, introduced during the first quarter of 1998, continues to lead the Company's product offerings. These new systems have now been certified Y2K compliant  and are being very well received by existing clients. As a result, the accelerating 4th quarter order rate exceeded the Company's original expectations.

Total revenues for fiscal year ended December 31, 1998 were $10.2 million, an 18% increase from $8.6 million for fiscal 1997. The impact of ongoing corporate restructuring and company-wide expense management efforts resulted in a 38% reduction in total expenses to $13.8 million compared with $22.1 million, excluding a restructuring charge and the write-off of acquired in-process research and development costs in the year earlier period. Accordingly, the Company's operating loss of $3.6 million was substantially reduced from last year's $16.7 million, inclusive of the aforementioned charge and write-off. The net loss for fiscal 1998 was $3.2 million, or $.44 per share, and showed dramatic improvement from fiscal 1997's $15.9 million loss, or $2.20 per share.

Peter Gladkin, President and Chief Executive Officer said, "The fourth quarter of 1998 represents one of the strongest operating quarters in APACHE history. The quarter's increased sales momentum for both critical care systems and consulting services was manifested in growing revenues and an increasing backlog of orders, thereby strengthening APACHE's position as we move into 1999."

Gladkin added, "During 1998, employee productivity continued to increase as revenues per employee nominally grew by 25% from the previous year. Not only did cash flow significantly improve, but the APACHE team has been demonstrably successful in keeping expenses under tight control. The 1998 operating loss, approximately 20% of what it was the previous year, is an early validation of APACHE's operating plan which focuses on the goal of achieving profitability for APACHE products and consulting services. The proven combination of tight operational focus coupled with revenue growth and real time expense management will continue to be key elements of successfully executing our plan."

Gladkin concluded, "APACHE begins 1999 with a strong client base, a talented employee team, and a significant product and consulting services backlog. This combination provides a solid foundation for the successful implementation of APACHE's business plan."

APACHE Medical Systems, Inc. is a recognized leader in clinical decision support systems and consulting services for the care of high-risk, high-cost patients. The Company's products, programs and health outcomes research enable health systems, hospitals and providers to apply an evidence-based approach to achieve clinical performance excellence, reduce cost and compete effectively under managed care. The Company is helping providers to better manage the clinical, financial and patient satisfaction outcomes of high-risk, high-cost patients in critical, acute, cardiovascular, HIV/AIDS and sub-acute care.

Statements in this press release which are not historical facts are forward-looking statements under provisions of the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve risks and uncertainties. The Company wishes to caution readers that the following important factors, among others, in some cases have affected, and in the future could affect, the Company's actual results and could cause its actual results in fiscal 1998 and beyond to differ materially from those expressed in any forward-looking statements made by, or on behalf of the Company.

Important factors that could cause actual results to differ materially include but are not limited to the Company's having sufficient sales and timely collections to meet cash requirements and achieve profitability; ability to attract and retain key employees; success of its strategy to concentrate its product offerings on high-risk, high-cost patients; ability to timely develop new products and enhance existing products; ability to compete in the competitive and rapidly evolving healthcare information technology industry; ability to correctly estimate and manage its Year 2000 costs and liabilities; success of its marketing and consulting efforts and ability to effectively utilize its direct sales force; ability to protect proprietary information and to obtain necessary licenses on commercially reasonable terms; and ability to comply with and adopt products and services to potential regulatory changes. -0-

                      APACHE MEDICAL SYSTEMS, INC.
                 Consolidated Statements of Operations
                              (unaudited)
                 (In thousands, except per share data)

                          Fourth Quarter Ended     Year to Date
                              December 31,         December 31,
                           1998        1997       1998       1997

Revenue:                  2,303      1,439      10,206       8,628

Expenses:
  Cost of systems,
   support and
    services              1,413      1,133       4,378       5,404
  Selling, general
   and
   administrative         1,530      3,095       8,145      14,028
  Research and
    development             283        606       1,317       2,704
  Restructuring charge       --         --          --       1,623
  Write-off of
   acquired in-process
   research and
   development costs         --         --          --       1,612
                       --------   --------    --------    --------
    Total expenses        3,226      4,834      13,840      25,371

Loss from operations       (923)    (3,395)     (3,634)    (16,743)
Other income (expense):
  Interest income            83        164         477         859
  Interest expense          (11)       (11)        (38)        (44)
  Other net                  --         --           2          10
                        --------   --------    --------    --------
Total other
 income (expense)            72        153         441         825

Net loss               $   (851)  $ (3,242)   $ (3,193)   $(15,918)
                       ========   ========    ========    ========

Net loss per share     $  (0.12)  $  (0.45)   $  (0.44)   $  (2.20)
                       ========   ========    ========    ========

Weighted average
 number of shares
 used for
 calculation of
 net loss per
 share                    7,323      7,264       7,301       7,251
                       ========   ========    ========    ========


                        Condensed Balance Sheets
                            (in thousands)

                                    December 31,
                                   1998     1997
Assets
  Cash and short-term
    investments                   6,532    11,317
  Accounts receivable, net        2,972     1,235
  Other current assets              749       456
  Property, plant and
    equipment, net                  885     1,260
  Capitalized software
    development costs, net          506
  Other assets                      498       668
                                -------   -------
                                $12,142   $14,936
                                =======   =======

Liabilities and Stockholders'
  Equity
  Current liabilities             8,134     7,874
  Long-term debt and capital
    leases                          206        79
  Deferred rent                      62       117
  Stockholders' equity            3,740     6,866
                                -------   -------
                                $12,142   $14,936
                                =======   =======