APACHE Medical Systems Restates Fiscal 1998 Second and Third Quarters.

MCLEAN, Va.--(BUSINESS WIRE)--Jan. 21, 1999--APACHE Medical Systems, Inc. (NASDAQ:AMSI), a leading provider of health care management systems and services, today reported that it will be restating the Company's financial results for the second and third quarters of fiscal 1998.

The next generation of the Company's Critical Care Series Product, a major initiative for which APACHE Medical accepted orders beginning in 1997, reached technological feasibility during March of 1998. FASB No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed" requires that the cost of software development be capitalized, once the program has become technologically feasible. Accordingly, the software development costs of $177,000 and $197,000, which were previously expensed during the second and third quarters of 1998, will be restated. Per FASB No. 86, the second and third quarters, together, will now reflect a total expense of $22,000, related to the amortization of capitalized development costs. Consequently, the Company's net loss for the second and third quarters will be reduced by $171,000 and $181,000, respectively, reflecting a reduction in the total net loss for the two quarters of $352,000 or $0.05 per share.

Peter Gladkin, President and Chief Executive Officer, stated, "The new Critical Care Series represents a milestone product for APACHE. While conducting a thorough internal operations and quality review, we recognized a disparity with FASB No. 86 which has caused us to make the restatement. Clearly, the accounting regulation which, in essence, prescribes the matching of development costs with the related revenues, is supportive of the R&D efforts that we, and others in our industry, have undertaken."

APACHE Medical Systems, Inc. is the recognized leader in the development of risk-adjustment models, clinical decision support tools and quality improvement programs for the care of high-risk, high-cost patients. The Company's products and consulting services 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's programs are 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.