Candela Posts Record Fiscal First Quarter.

WAYLAND, Mass.--(BUSINESS WIRE)--Oct. 19, 1998--

Laser Device Company Earned 16 Cents per Diluted Share;

GentleLASE(TM) Hair Removal System Sales Led 37% Revenue Increase

Citing continued strong sales of its advanced, low-cost GentleLASE(TM) hair removal system, Candela Corporation (Nasdaq:CLZR) today reported record results for its fiscal 1999 first quarter ended September 26, 1998.

Revenue rose 37% to $10,738,000, compared with $7,822,000 for the same period a year ago. Net income was $910,000 for this year's fiscal first three months, or 16 cents per diluted share. One year ago, the company had a net loss of $851,000, or 16 cents, largely from costs associated with a now-discontinued skin care centers venture.

Gerard E. Puorro, president and chief executive officer, commented on the company's results as follows: "The marketing excitement and customer acceptance of our GentleLASE(tm) product line here in the United States were clearly the primary reasons for our solid first quarter. We are now continuing to work hard to maintain this momentum domestically and spread it throughout the world." Candela derives about half of its sales and service revenues from non-U.S. customers.

"Our recent results -- both at home and abroad -- reaffirm for us that the nature of our commitment to our markets, our physician/customers and their patients is on target," Mr. Puorro stated. "We are developing and delivering advanced products and capabilities, and our strategy to build aesthetic and medical laser systems that are smaller, faster, better and less expensive is hitting the mark, giving us a true competitive advantage. Also, recent developments in protecting and advancing our technological edge, along with ensuring a stronger financial posture for the company, encourage us as we move through and beyond our 1999 fiscal year," Mr. Puorro said.

Last week, Candela and the University of California-Irvine jointly reaffirmed the company's exclusive license -- involving all medical and non-medical uses -- for the state-of-the-art Dynamic Cooling Device(tm) developed by the University's Beckman Laser Institute. "That agreement," Mr. Puorro said, "enables us to continue to set the laser industry's standard for how to deliver safe, efficacious treatment that permits practitioners to do much better work more quickly, with added safety and comfort."

Discussing his company's balance sheet, Mr. Puorro noted that the $3.7 million financing via the Massachusetts Capital Resource Company (MCRC), also announced last week, "enhances our working capital so that we have the added financial strength we needed to capitalize more fully on our opportunities." Under terms of the agreement with two other investors and MCRC, a privately owned limited partnership funded by seven Massachusetts-based life insurance companies, Candela issued eight-year, 9.75% subordinated notes and 370,000 common stock warrants. The notes are due October  2006, with interest payable quarterly.

"When we review the developments and current trends in our business and in our markets," Mr. Puorro concluded, "we are gratified and we are stimulated to do even better. We believe we are now better armed to be competitive than at any recent time in our 30-year history, as we work together toward the next levels of achievement that are needed to deliver enhanced value to our shareholders."

About Candela: Candela 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. Founded near Boston in 1970, Candela markets and services its products in over 40 countries from offices in the United States, Europe and Asia. Candela established the aesthetic laser market 11 years ago. With an installed base of over 2,000 lasers worldwide, more than 500,000 aesthetic laser procedures are performed annually with Candela laser systems. For more information about Candela, visit the company's web site at http://www.clzr.com

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)
           Consolidated Statements of Operations (UNAUDITED)

(amounts in thousands, except per share amounts)

                             For the three months ended:

                       September 26, 1998          September 27, 1997
                       ------------------          ------------------

Revenue                 $10,738                         $7,822
Cost of sales             5,674                          4,502
                         ------                          -----

Gross profit              5,064                          3,320

Operating expenses:
 Research and development   688                            578
 Selling, general and
  administrative          3,333                          3,394
                         ------                          -----

Total operating expenses
                          4,021                          3,972
                         ------                          -----

Income (loss) from
 operations               1,043                          (652)

Other income (expense):
    Interest income          11                             8
    Interest expense        (78)                          (65)
    Other income (expense)   34                           (64)
                            ---                           ----

    Total other income
     (expense)              (33)                         (121)
                            ----                         -----

Income (loss) before
 income taxes              1,010                         (773)

Provision for income taxes   100                           78
                            ----                           --

Net income (loss)           $910                        $(851)
                            ====                         =====

Basic earnings (loss)
 per share                 $0.17                       $(0.16)


Diluted earnings
 (loss per share)          $0.16                        (0.16)
                          ======                        ======

Weghted average shares
 outstanding               5,479                         5,426

Adjusted weighted average
 shares outstanding        5,566                         5,426
                          ======                         =====

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                            CANDELA CORPORATION
                 CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
                            (dollars in thousands)

                           September 26,             June 28,
                              1998                     1997

Assets

Current assets:
 Cash and cash equivalents   $2,463                   $1,615
 Accounts receivable, net     8,434                    8,419
 Notes receivable             1,548                    1,486
     Inventories              7,133                    7,241
     Other current assets       553                      200
                             ------                   ------

Total current assets         20,131                   18,961

Property and equipment, net   2,812                    3,120

Other assets                    481                      523
                             ------                   ------
Total assets                $23,424                  $22,604
                             ======                   ======

Liabilities and Stockholders'
 Equity

Current liabilities:
 Accounts payable            $4,013                   $4,292
 Accrued payroll and
  related expenses            1,417                    1,319
 Accrued warranty             2,123                    2,012
 Income taxes payable           423                      335
 Restructuring reserve        1,929                    1,995
  Other accrued liabilities   1,333                      957
  Current portion of long-term
   debt                       3,310                    3,649
     Deferred income          1,663                    1,763
                             ------                   ------
Total current liabilities    16,211                   16,322

Long-term debt                  492                      887

Stockholders' equity
     Common stock                55                       55
     Additional paid-in
      capital                17,415                   17,407
     Accumulated deficit    (10,428)                 (11,337)

     Cumulative translation
      adjustment               (321)                    (730)
                             ------                   ------
Total stockholders' equity    6,721                    5,395
                             ------                   ------
Total liabilities and
 stockholders' equity        23,424                   22,604
                             ======                   ======

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