Advanced Orthopedic Technologies Announces Record Second Quarter Results; Second Quarter Net Income Increases 95.7% on 32.2% Increase in Revenues.

WEST HEMPSTEAD, N.Y.--(BUSINESS WIRE)--July 31, 1996--Advanced Orthopedic Technologies, Inc. (Nasdaq Small Cap Issues: AOTI) ("AOTI"), a leading national provider of orthotic and prosthetic ("O&P") patient care services, today announced financial results for the three and six month periods ended June 30, 1996.

For the three months ended June 30, 1996, sales increased 32.2% to a record $4,525,000 from $3,422,000 for the same period in 1995. Operating income for the quarter rose 64.9 % to $638,000 compared to $387,000 for the comparable 1995 period. Net income for the second quarter increased 95.7% to $315,000, or $.06 per share, versus net income of $161,000, or $.04 per share, for the same period in 1995.

For the six months ended June 30, 1996, sales increased 25.1% to a record $8,455,000 from $6,759,000 for the same period in 1995. Operating income for the six month period rose 58.9 % to $1,041,000 from $655,000 for the comparable 1995 period. Net income for the first half of 1996 increased 96.0 % to $494,000, or $.10 per share, versus net income of $252,000, or $.06 per share, for the same period last year.

Andrew H. Meyers, President and Chief Executive Officer of AOTI, commented, "We are very encouraged by the results for the first half of 1996, and believe that they reflect our commitment to the growth of AOTI both internally and through strategic acquisitions. Our record sales for the three and six month periods primarily reflect the inclusion of sales from Med-Tech O&P Services, whose operating assets were acquired by AOTI in January, and increased patient volume. The pursuit of managed care agreements as an avenue to expand our internal growth remains a high priority. During the second quarter we entered into 14 national and/or regional specific managed care agreements, bringing to 101 the total number of such agreements entered into by AOTI. Management's ongoing commitment to achieving improved operating efficiencies is reflected in an overall gross margin of 51.3% for the 1996 second quarter, up from 50.6% in the prior year period. Selling, general and administrative expenses as a percentage of revenues in the 1996 second quarter decreased to 37.2 % from 39.3% in the second quarter of 1995."

Mr. Meyers concluded, "We continue to believe that the O&P marketplace offers significant opportunities for growth, and that AOTI is well-positioned to continue to expand its industry presence."

Advanced Orthopedic Technologies is one of the nation's leading providers of patient care services to the orthotic (design, fabrication and fitting of custom-made braces and other devices) and prosthetic (design, fabrication and fitting of artificial limbs) rehabilitation markets. Currently, the Company operates 35 patient care centers in California, New Mexico, New Jersey, New York, Virginia and West Virginia.

This press release contains forward looking statements which involve numerous risks and uncertainties. The Company's actual results could differ materially from those anticipated in such forward looking statements as a result of certain factors, including those set forth in the Company's filings with the Securities and Exchange Commission. -0-

ADVANCED ORTHOPEDIC TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

                         Three Months Ended      Six Months Ended
                              June 30,                June 30,
                          1996        1995        1996        1995

Sales                 $4,525,000  $3,422,000  $8,455,000  $6,759,000

Gross Profit           2,322,000   1,730,000   4,240,000   3,443,000

Operating income         638,000     387,000   1,041,000     655,000

Income before provision
 for income taxes        556,000     294,000     874,000     465,000

Provision for income
 taxes                   241,000     133,000     380,000     213,000

Net income            $  315,000  $  161,000  $  494,000  $  252,000

Earnings per
 common share               $.06        $.04        $.10        $.06

Shares used in earnings
 per common share
 computation           4,931,067   4,465,089   4,931,067   4,465,089

CONTACT: Advanced Orthopedic Technologies

Andrew H. Meyers, Chief Executive Officer

[phone]

or

INVESTOR RELATIONS COUNSEL:

The Equity Group Inc.

Devin Sullivan, [phone]

Robert Goldstein, [phone]