ArthroCare Launches ENT Business; Move Completes First Phase of Company's Strategic Growth Plan.

SUNNYVALE, Calif.--(BUSINESS WIRE)--May 6, 1998--ArthroCare Corp. (NASDAQ:ARTC) today announced that it is entering the otorhinolaryngology market and that it has formed a new division, called ENTec(TM), to commercialize its patented Coblation(TM) technology in this field.

Otorhinolaryngology, commonly known as ear, nose and throat medicine or ENT, represents the second direct market expansion by ArthroCare. In April the company announced the international launch of its Visage(TM) Cosmetic Surgery System. The ENTec Surgery System (ESS) will be introduced next week at the annual spring meeting of the American Academy of Otolaryngology in Palm Beach, Florida.

"Because many ENT specialists also perform cosmetic and reconstructive surgery, moving into head and neck at this time will enable us to capitalize on marketing and distribution synergies across the two markets," said Michael Baker, ArthroCare's president and chief executive officer. "And since the ENTec products are compatible with our arthroscopy operating system, we will also be able to tap into the more than 2,000 units already in place worldwide."

ENTec estimates that 1.4 million head and neck surgeries will be performed this year worldwide; approximately one-quarter of these will be for the treatment of chronic sinusitis or nasal polyposis. The ESS currently is indicated for use in such procedures as well as for head and neck surgery in general. ENTec projects that the ENT market will grow 10 percent annually over the next five years, and the company believes that the ESS may offer advantages over current surgical options for these procedures, many of which are now often accompanied by very painful recoveries.

ENTec's products use ArthroCare's patented method of tissue removal, called Coblation(TM), that is designed to improve the effectiveness and safety of standard surgical methods. Coblation uses radiofrequency (RF) energy to remove tissue through a significantly cooler process than that of traditional electrosurgery or lasers. The Coblation approach disintegrates tissue layer by layer, giving the surgeon excellent control to remove and sculpt tissue while causing minimal damage to surrounding healthy tissue. This technology also can be used to shrink tissue, a common requirement in ENT surgery. As a result, Coblation-assisted surgery has the potential to improve the operative precision and efficiency of standard techniques, thereby reducing pain and speeding recovery.

The entry into ENT marks the completion of the first phase of ArthroCare's strategic plan to commercialize its technology in markets other than arthroscopy. In addition to the recent Visage launch in cosmetic surgery, ArthroCare earlier this year signed an exclusive licensing agreement with the SciMed division of Boston Scientific Corporation for that company to develop and market Coblation-based devices for use in myocardial revascularization, a new treatment for heart disease. The company also formed a European subsidiary to manage its entry into new surgical markets in regions outside the United States.

"We said at the end of last year that the we intended to change the face of the company, and in the past few months we have delivered on that promise," Mr. Baker noted. "Now that we've created this foundation for growth, our focus in the near term is to rapidly build these businesses into strong commercial ventures."

ArthroCare Corporation is a medical device company redefining the standard in soft tissue surgery by developing, manufacturing, and marketing novel Coblation(TM) technology that allows surgeons to operate with increased precision and accuracy, with minimal damage to surrounding tissue. The company's systems are being used to perform many types of closed joint surgery and have recently been introduced for use in cosmetic surgery and ear, nose and throat (ENT) surgery. ArthroCare's long-term strategy includes applying its patented technology to a broad range of surgical fields, including cardiology, urology, gynecology, and oral and general surgery.

This press release contains forward looking statements that involve risks and uncertainties, including but not limited to quarterly fluctuations in results, the management of growth, the competitive environment and risks as detailed from time to time in the Company's Securities and Exchange Commission filings, including ArthroCare's Form 10-K for the year ended January 3, 1998.

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