Advanced Medical reports financial results for quarter and six months ended June 30, 1996; six-month pretax income from operations increases 20 percent.

SAN DIEGO--(BUSINESS WIRE)--Aug. 15, 1996--Advanced Medical Inc. (ASE:AMA) Thursday announced that sales for the second quarter ended June 30, 1996, were $28,105,000, compared with sales of $29,166,000 for the second quarter of 1995.

Sales for the six months ended June 30, 1996, were $53,870,000, compared with $57,756,000 for the first six months of 1995. The decline in sales was due primarily to lower unit shipments of the company's infusion pumps in the United States. In addition, last year's sales reflected shipments associated with several large transactions.

Joseph W. Kuhn, Advanced Medical president, noted that international sales continued to increase during the second quarter of 1996. Sales outside the United States increased nearly 10 percent during the quarter and continue to be a critical factor in implementing Advanced Medical's growth strategies, he said.

In June, Advanced Medical announced that its wholly owned IMED Corp. subsidiary had entered into an agreement with Pharmacia & Upjohn to acquire the European distribution rights to its IMED line of intravenous infusion pumps and related disposable administration sets.

The transaction, which is expected to close by Aug. 31, 1996, is projected to increase IMED's European sales and operating income by approximately $7 million and $2.5 million, respectively, on an annualized basis.

Pretax income from operations for the quarter increased nearly 4 percent, to $2,326,000 from $2,244,000 for the prior year. Net income was $987,000, or 3 cents per fully diluted common share, compared with $1,876,000, or 6 cents per fully diluted common share, before an extraordinary gain for last year's second quarter.

The effective tax rate for the second quarter of 1996 was approximately 50 percent, compared with 9 percent in the second quarter of 1995, as the company has utilized all of its available tax loss carryforwards.

For the six months ended June 30, 1996, pretax income from operations increased nearly 20 percent, to $4,065,000 from $3,396,000. Net income before extraordinary gains in the first half of 1996 was $1,684,000, or 6 cents per fully diluted share, compared with $2,736,000, or 9 cents per fully diluted share, for the first half of 1995.

The effective tax rate for the first half of 1996 was approximately 50 percent, compared with 10 percent for the first half of 1995.

Gross margins improved to 45.0 percent of sales in the first half of 1996, compared with 42.1 percent of sales in the first half of 1995. The improvement in margins results from the company's continuing efforts to reduce manufacturing costs through outsourcing molded parts and components, negotiated price reductions from suppliers and the favorable effects of increased manufacturing volume.

As of June 30, the company reported working capital of $32,166,000, a current ratio of 2.4-to-1, net borrowings of $70,208,000 and stockholders' equity of $30,635,000.

The company notes that the above forward-looking statements are subject to change based on factors including, without limitation, changes in the market and competition. Additional information on potential factors that could affect the company's financial results are included in the company's annual report on Form 10-K as filed with the Securities and Exchange Commission.

Advanced Medical, through its IMED subsidiary, is one of the largest developers and manufacturers of intravenous infusion pumps and proprietary disposable products in the United States and has sales in 38 foreign countries. -0-

               ADVANCED MEDICAL INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                           (Unaudited)
   (Dollar and share amounts in thousands, except per-share data)

                            Three months ended    Six months ended
                                 June 30,              June 30,
                             1995       1996       1995       1996

Sales                      $29,166    $28,105    $57,756    $53,870
Cost of sales               16,383     15,756     33,414     29,651
Gross margin                12,783     12,349     24,342     24,219
License fees revenue           110        111        220        221
Selling expenses             4,694      4,655      8,914      8,862
General and administrative
 expenses                    2,328      2,579      5,201      5,545
Research and development
 expenses                    1,905      1,977      3,991      3,789
Total operating expenses     8,927      9,211     18,106     18,196
Income from operations       3,966      3,249      6,456      6,244
Other income (expense):
Interest income                626        957      1,189      1,914
Interest expense            (2,354)    (2,184)    (4,096)    (4,399)
Other, net                       6        304       (153)       306
                            (1,722)      (923)    (3,060)    (2,179)
Income before income
 taxes and
 extraordinary item          2,244      2,326      3,396      4,065
Provision for income taxes     206      1,176        335      2,056
Income before
 extraordinary item          2,038      1,150      3,061      2,009
Extraordinary item --
 gain on early retirement
 of debt, net of taxes       6,370         --     15,177         --
Net income                   8,408      1,150     18,238      2,009
Dividends and accretion
 on mandatorily redeemable
 preferred stock               162        163        325        325
Net income applicable
 to common stock            $8,246       $987    $17,913     $1,684
Income per common share
 assuming no dilution:
Income before
 extraordinary item          $0.12      $0.06      $0.18      $0.10
 Extraordinary item           0.40         --       1.01         --
Net income per common
 share assuming no
 dilution                    $0.52      $0.06      $1.19      $0.10
Income per common share
 assuming full dilution:
Income before
 extraordinary item          $0.06      $0.03      $0.09      $0.06
Extraordinary item            0.20         --       0.48         --
Net income per common
 share assuming
 full dilution               $0.26      $0.03      $0.57      $0.06
Weighted average common
 shares outstanding
 assuming no dilution       15,942     16,402     15,018     16,432
Weighted average common
 shares outstanding
 assuming full dilution     32,560     42,593     31,743     42,589

-0-

                ADVANCED MEDICAL INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEETS
                           (Unaudited)
   (Dollar and share amounts in thousands, except per-share data)

                                 Dec. 31,    June 30,
                                   1995        1996
Assets

Current assets:
Cash and cash equivalents         $1,862      $2,108
Restricted cash and
 investment securities             2,218       2,274
Securities available for sale      6,975       4,649
Receivables, net                  27,023      23,984
Inventories                       15,829      17,964
Prepaid expenses and other
 current assets                    3,651       4,736
Total current assets              57,558      55,715
Restricted cash                   25,000      12,500
Net investment in sales-type
 and direct financing leases      15,179      14,055
Property, plant and
 equipment, net                   12,653      13,116
Other non-current assets          11,834      10,494
Intangible assets, net            47,406      47,197
                                $169,630    $153,077

Liabilities and
Stockholders' Equity

Current liabilities:
Current portion of
 long-term debt                     $322        $149
Accounts payable                   7,881       7,416
Accrued expenses and other
 current liabilities              17,417      15,984
Total current liabilities         25,620      23,549
Long-term debt                    86,789      84,667
Other non-current
 liabilities                       6,972       6,683
                                  93,761      91,350
Minority interests in
 consolidated subsidiaries        11,500          --
Contingent liabilities:
Mandatory redeemable
 equity securities                 7,217       7,543
Non-redeemable preferred
 stock, common stock and
 other stockholders' equity:
Preferred stock, authorized
 6,000 and 3,000 shares at
 $.001 and $.01 par value,
 respectively; issued and
 outstanding -- none
Common stock, authorized
 75,000 shares at $.01 par
 value; issued and
 outstanding -- 16,214 shares
 and 16,221 shares at Dec.
 31, 1995, and June 30, 1996,
 respectively                        162         162
Capital in excess of par value    62,965      61,654
Accumulated deficit              (34,468)    (32,459)
Treasury stock                      (734)       (734)
Unrealized holding gains
 from securities available
 for sale, net of tax              3,577       1,800
Other equity                          30         212
Total non-redeemable
 preferred stock, common
 stock and other
 stockholders' equity             31,532      30,635
                                $169,630    $153,077

CONTACT: Advanced Medical Inc., San Diego

Barbara Burkett, 619/566-9000, ext. 2283 or ext. 2429

or

Financial Relations Board

Timothy Kent, 310/442-0599 (general information)

Kathy Brunson, 312/266-7800 (analyst contact)