BEI Medical Systems Completes $7.2 Million Private Placement Financing.

Business Editors

TETERBORO, N.J.--(BUSINESS WIRE)--Sept. 5, 2001

BEI Medical Systems Company, Inc. (NASDAQ: BMED), announced today that it has completed the sale of 1,952,273 shares of common stock and short-term warrants to purchase 1,093,261 shares of common stock at $3.688 per unit in a private placement, resulting in gross cash proceeds to the company of approximately $7.2 million.

The financing was led by Brookside Capital Partners Fund, LP, an affiliate of Bain Capital. Investors who participated in this financing, who also participated in the company's convertible preferred financing that was completed in February 2001, included Radius Venture Partners I, LP and Delta Opportunity Fund, Ltd. The new investors in the syndicate included entities affiliated with ProMed Management and HealthSouth Corporation, one of the nation's leading healthcare providers, which operates one of the largest networks of outpatient surgical centers in the United States.

Richard W. Turner, president and chief executive officer of BEI, commented, "We are extremely pleased with this financing and believe it represents a significant milestone for the company. This exceptional group of investors has substantial experience and a proven record with medical device companies, and we look forward to their participation with BEI in the future. I am also pleased that both Radius Ventures and Delta Opportunity Fund are return investors in this round, which demonstrates their continuing confidence in our company."

Matt McPherron, director of Brookside Capital Partners, stated, "We are confident that BEI's HTA system has the opportunity to become the market leader in the emerging market for the minimally invasive treatment of menorrhagia, or excessive uterine bleeding. Furthermore, we believe that the HTA is a clinically effective and fairly priced solution for the treatment of menorrhagia, offering clear advantages to the gynecologist and their patients compared to other available methods of treatment. The state-of-the-art procedure is safe, cost effective and may be performed on an out-patient basis in their office."

The financing included a total of 1,093,261 warrants exercisable at $3.688, of which warrants to purchase 624,722 shares will terminate after one year and warrants to purchase 468,539 shares will terminate after two years. Additionally, the company has agreed to register for resale on Form S-3 under the Securities Act of 1933 the shares of common stock sold in the financing and the shares of common stock issuable upon exercise of the warrants. Following the financing, the company intends to expand its board of directors from six members to seven.

Use of proceeds from this financing will be applied to support the sales and marketing of the company's Hydro ThermAblator(R) ("HTA(R)") system for the treatment of menorrhagia and for general working capital. The HTA received FDA approval to market in the United States in April 2001. Approximately 2.5 million women a year seek medical treatment from their gynecologist for abnormal uterine bleeding. The HTA is now able to offer many of these women an effective treatment option.

About BEI Medical Systems

BEI Medical Systems Company, Inc. is a company focused on gynecology. The company received approval from the FDA to market in the United States its sole product, the Hydro ThermAblator, or HTA, a proprietary system that is intended to treat menorrhagia, or dysfunctional uterine bleeding. BEI Medical Systems(R), Hydro ThermAblator(R) and HTA(R) are registered trademarks of BEI Medical Systems Company, Inc. in the United States and certain foreign countries.

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. Such forward-looking statements may be deemed to include information that is not historical, including without limitation, statements based on our current expectations, assumptions, estimates and projections about our company and our industry, including statements with respect to the timely acceptance, commercialization and pricing of our Hydro ThermAblator or HTA, the establishment of a qualified sales representative network, the impact of our cost reduction programs on the cost of the HTA procedure set, the impact of competitive products and pricing, the ability of the Company to satisfy the conditions of the FDA approval and on-going regulatory requirements and general economic conditions as they affect our customers. Readers are cautioned that the forward-looking statements reflect management's analysis only as of the date hereof, and we assume no obligation to update these statements. Actual events or results may differ materially from the results discussed in or implied by the forward-looking statements. In addition to the factors set forth elsewhere in this press release, factors that might cause such a difference include, but are not limited to, risks related to the Company's ability to raise additional capital, and those risks and uncertainties discussed from time to time in the Company's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the period ended September 30, 2000 and the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2001.