Candela's Skin Care Center Start-up Expenses Result in Q4 Loss.

WAYLAND, Mass.--(BUSINESS WIRE)-- August 6, 1997 -- Candela Corporation (NASDAQ:CLZR) announced today that revenues for the fourth fiscal quarter and full fiscal year ended June 28, 1997 rose to $9,671,000 from $9,056,000 and to $35,505,000 from $30,413,000 one year ago, respectively. The company stated that the increased revenue came from continued higher sales in its primary cosmetic and medical laser equipment business.

For the quarter, the company reported a net loss for the period of $1,310,000, or 23 cents per share, compared to a profit of $651,000, or 12 cents per share, for the same quarter a year ago.

For the full fiscal year, Candela reported net income of $238,000, or 04 cents per share, compared to net income of $1,245,000, or 22 cents per share.

Commenting on the company's performance, Gerard E. Puorro, President and Chief Executive Officer, said, "The solid performance of our cosmetic and medical laser device business continues to generate the basic operating profitability which permits us to invest in our high-potential LaserSpaT skin care treatment centers.

"As reflected in this quarter's results, we have taken the necessary steps to aggressively address the start-up and operating cost issues for our laser treatment locations, and we are bolstering our marketing programs. These steps are first beginning to take hold during the current quarter. We expect to operate profitably at the Boston, MA, and Cairo, Egypt, locations by the end of this calendar year, with similar results achieved in Scottsdale, AZ by the middle of next year," Mr. Puorro said.

"Meanwhile," he continued, "our core cosmetic and medical device business remain strong, with dollar sales for our laser systems increasing 17%. At the close of fiscal 1997, we began shipping the new SKINLIGHT erbium laser and our Dynamic Cooling Device (DCD). The DCD is a unique skin cooling device which selectively cools the top layers of the skin during laser treatments. This reduces the amount of pain a patient feels, to enable more -- and more comfortable -- laser therapy in each session. Products such as these enable Candela to distinguish our capabilities in the highly competitive arena of vascular laser equipment," Mr. Puorro stated. He also noted that the DCD "will help set us apart from our competitors when we introduce our hair removal laser next spring."

"We anticipate continued success in our device businesses. In addition to strong demand for the new SKINLIGHT laser, which the FDA cleared for general skin ablation earlier this year, we are encouraged by the general trend toward improving health, well-being and appearance that our company is well positioned to serve," 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 conditions 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 Asia.

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.

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                        CANDELA CORPORATION (Nasdaq:CLZR)

(in thousands except per share data)

                For the three months ended:    For the year ended:

               June 28, 1997 June 29, 1996  June 28, 1997 June 29, 1996

Revenue         $    9,671    $   9,056    $    35,505   $     30,413
Cost of sales        5,904        4,806         18,650         16,833

Gross profit         3,767        4,250         16,855         13,580

Operating expenses:
 Research and
  development         751           681          2,488          1,818
 Selling, general &
  administrative    4,477         2,681         13,680          9,873

Total operating
 expenses           5,228         3,362         16,168         11,691

Income (loss) from
 operations        (1,461)          888            687          1,889

Other income (expense):
 Interest income       16            27             84             93
 Interest expense     (40)          (21)          (107)           (49)
 Other income
 (expense)            211           (75)           (26)          (207)

 Total other income
 (expense)            187           (69)           (49)          (163)

Income (loss) before
 income taxes      (1,274)           819            638         1,726

Provision for income
 taxes                 36            161            400           481

Net income (loss) $(1,310)    $      658        $   238    $    1,245

Net income (loss)
 per share        $ (0.23)    $     0.12        $  0.04    $     0.22

Weighted average number of
    common and common equivalent
    shares
    outstanding     5,654          5,662          5,668         5,563


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                         CANDELA CORPORATION
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                           (In thousands)

                                    June 28,      June 29,
                                     1997          1996
Assets

Current assets:
 Cash                        $       2,674    $   3,041
 Accounts receivable                 8,848        6,444
 Notes receivable                    1,284        1,956
 Inventory                           6,776        5,627
 Other current assets                  521          352

Total current assets                20,103       17,420

Property and equipment, net          3,523        1,183

Other assets                         1,210          731

                              $     24,836     $ 19,334


Liabilities and Stockholders' Equity

Current liabilities:
 Current portion of long-term
  debt                       $       1,827    $     708
 Deferred income                     2,071        1,943
 Accounts payable                    5,880        3,162
 Accrued payroll and related
  expenses                             833          748
 Accrued warranty                    1,338          897
 Accrued income taxes                  516          350
 Other accrued liabilities             608        1,004
Total current liabilities           13,073        8,812

Long-term debt                       1,519          557

Stockholders' equity
 Common stock                           54           53
 Additional paid-in capital         17,223       17,069
 Retained deficit                   (6,887)      (7,123)
 Accumulated translation adjustment   (146)         (34)
Total stockholders' equity          10,244        9,965

                              $     24,836     $ 19,334

CONTACT: F. Paul Broyer 508-358-7400, x435,

Candela Corporation

or

Stuart Pearlman 212-370-4940,

Phase Two Strategies