Candela's Fiscal 2nd Quarter Net Income Rose 60% on 19% growth in revenue.

WAYLAND, Mass.--(BUSINESS WIRE)--Jan. 27, 1997--Candela Corporation (NASDAQ:CLZR) today reported a 60% increase in net income on a 19% gain in revenue during the second quarter of its 1997 fiscal year.

With the continuation of strong sales of Candela's core medical/cosmetic laser systems, revenue for the quarter ended December 28, 1996, rose to $9,406,000, compared with $7,885,000 in the same quarter a year ago. Net income for the second quarter was $736,000, or 13 cents per share, compared with $461,000, or 8 cents, during last year's fiscal second quarter.

For the first six months of the current fiscal year, Candela revenue increased to $17,045,000, up 23% from last year's $13,869,000. Net income through fiscal 1997's first six months totaled $1,245,000, or 22 cents per share, compared with $356,000, or 6 cents, in the 1996 fiscal half-year. Figures for both fiscal years reflect the June 1996 acquisition of Spa Management, Inc., a wholly owned Candela subsidiary now known as Candela Skin Care Centers, Inc.

Discussing the continuing turnaround of the company, Gerard E. Puorro, president and CEO, said: "Second-quarter sales of Candela's cosmetic and medical equipment remained solid, and sales and profits were also aided by improved demand for our MDL 3000 LaserTripter(TM) device, which fragments urinary and biliary stones effectively and safely without trauma to soft tissue."

Mr. Puorro noted several key technological and marketing developments during the second quarter. Two months ago, the Japanese government approved marketing and reimbursement for use of the company's ALEXLAZR(TM) and PLTL Pigmented Lesion/TATULAZR(TM) for treating brown skin lesions native to Asians. In December, Candela gained exclusive marketing rights in the U.S. and elsewhere for the SKINLIGHT* system, an advanced, next-generation dermatology laser, which was subsequently cleared by the U.S. Food and Drug Administration earlier this month.

"Naturally," Mr. Puorro said, "we were delighted when SKINLIGHT received the FDA's blessing in mid-January. Developments such as these, augmented by increased funding of our own product research, help to reinforce our ongoing commitment to finding the best new products and doing our own innovative R&D." He noted that Candela's research and development expenditures increased approximately 50% during the first half, and he indicated that similar levels of funding were at what he termed "the heart of Candela's commitment to providing the best technology to serve our growing markets."

"We are also working hard," Mr. Puorro stated, "to capitalize on personal care and demographic trends, which should foster successful growth of our new Candela Skin Care Centers. Two major openings are imminent, and we should have one additional center in operation by the end of our fiscal year."

"The careful linkage of our personal care business to our well-established, leadership position in the laser and cryosurgical equipment business, we believe, provides Candela with substantial upside opportunities in 1997 and in the years ahead," Mr. Puorro concluded.

Candela Corporation develops, manufactures, and distributes innovative clinical solutions that enable physicians, surgeons and personal care practitioners to treat selected cosmetic and medical problems using lasers, cryosurgery and other proven technologies. In addition, the company is applying its capabilities and experience with skin care and related problems to develop a network of company-owned skin care centers and spas. Founded near Boston in 1970 as Candela Laser Corporation, Candela markets and services its products in over 40 countries from offices in the United States, Europe and the Far East. -0-

This press release includes certain forward-looking statements. Any such statements are subject to risks that could cause the actual results to vary materially, including negative developments relating to unforeseen order cancellations or push-outs, Candela's strategic relationships, the impact of intense competition, and changes in the laser industry. -0-

                           CANDELA CORPORATION
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                   (In Thousands Except Per Share Data)

                             For the three             For the six
                             months ended:             months ended:
                         Dec. 28,      Dec. 30,     Dec. 28,     Dec. 30,
                           1996          1995         1996         1995
                        (unaudited)                (unaudited)


Revenue                 $  9,406     $  7,885    $  17,045    $  13,869
Cost of sales              4,750        4,262        8,635        7,852
Gross profit               4,656        3,623        8,410        6,017

Operating expenses:
  Research and development   555          373        1,127          747
  Selling, general
    and administrative     3,031        2,526        5,537        4,549
Total operating expenses   3,586        2,899        6,664        5,296

Income (loss) from
  operations               1,070          724        1,746          721

Other income (expense):
     Interest income          16           21           31           49
     Interest expense        (15)          (9)         (31)         (20)
     Other                   (20)         (25)          33         (144)
Total other income (expense) (19)         (13)          33         (115)

Income (loss) before
   income taxes            1,051          711        1,779          606
Provision for income taxes   315          250          534          250

Net income (loss)         $  736       $  461     $  1,245       $  356

Net income (loss)
  per share               $ 0.13       $ 0.08     $   0.22       $ 0.06

Weighted average number
  of common and common
  equivalent shares
  outstanding              5,658        5,503        5,669        5,503
-0-


                              CANDELA CORPORATION
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                                (In thousands)

                              December 28,           June 29,
                                 1996                  1996
Assets                        (unaudited)

Current assets:
     Cash and equivalents      $  3,148             $  3,041
     Accounts receivable          8,131                6,444
     Notes receivable               835                1,956
     Inventory                    5,177                5,627
     Other current assets           712                  352
Total current assets             18,003               17,420

Property and equipment, net       1,866                1,183
Other assets                      1,196                  731
                               $ 21,065             $ 19,334

Liabilities and Stockholders' Equity

Current liabilities:
     Current portion of
       long-term debt          $    553             $    708
     Deferred income              1,780                1,943
     Accounts payable             4,002                3,162
     Accrued payroll and
       related expenses             721                  748
     Accrued warranty costs       1,071                  897
     Income taxes payable           797                  350
     Other accrued liabilities      597                1,004
Total current liabilities         9,521                8,812

Long-term debt                      401                  557

Stockholders' equity:
     Common stock                    53                   53
     Additional paid-in capital  17,154               17,069
     Treasury stock               -----                -----
     Retained deficit            (5,878)              (7,123)
     Accumulated translation
       adjustment                  (186)                 (34)
Total stockholders' equity       11,143                9,965
                              $  21,065            $  19,334

CONTACT: Candela Corporation

Paul Broyer, 508/358-7400 x435

or

Stuart Pearlman & Co.

Stuart Pearlman, 212/370-4940