Cardiac Pathways Reports Results for Third Fiscal Quarter 2000; Net Sales Increase to $1.5 Million Driven by U.S. Chilli Catheter Volume.

Business Editors

SUNNYVALE, Calif.--(BUSINESS WIRE)--April 27, 2000

Cardiac Pathways Corporation (NASDAQ: CPWY), today reported results for its third fiscal quarter and nine months ended March 31, 2000.

Sales for the third quarter increased 14% to $1,511,000 compared to $1,323,000 for the third quarter of fiscal 1999. The company recorded a net loss for the third quarter of $5,817,000, an increase of 34% compared to a net loss of $4,339,000 in the year ago period. Losses incurred during the current quarter include approximately $700,000 of costs related to new product introduction and a discontinued product line, and approximately $1,400,000 of non-recurring charges against operating expenses and other income. Net loss applicable to common stockholders for the third quarter of $6,697,000 or $3.29 per share compared to a net loss of $4,339,000 or $2.17 per share for the third quarter of fiscal 1999. Results for the quarter ended March 31, 2000 reflect the accrual of dividends related to the issue of Series B preferred stock in July 1999. On a proforma basis, the loss per share with Series B preferred stock converted to equivalent shares of common stock at the end of the period would be $0.79 per share for the third quarter and, if the preferred Series B stock had been issued and outstanding, $0.52 per share for the third quarter of fiscal 1999.

"During the third quarter, we took aggressive steps to ensure the company is positioned to achieve profitable growth in the future," stated Thomas M. Prescott, President and CEO. "We already see the benefits of a refocused organization in the growth of our Chilli(R) product line, now being successfully used in well over 100 electrophysiology centers. With a new leadership team in place, our revitalized organization is focused on three critical imperatives; substantial expansion of the Chilli franchise, successful launch of our breakthrough Real Time Position Management (TM) (RPM) Tracking System, and ramping up manufacturing capacity to meet anticipated demand."

      Key Progress on Strategic Initiatives

      --  Cardiac Pathways has completed rebuilding of the senior
        leadership team and has added outstanding talent at all levels
        of the organization.

      --  The company has focused its resources on two key growth
        platforms; expansion of Chilli and launch of RPM. The company
        has discontinued the Mercator Atrial Mapping Basket product
        line and has placed several long-term clinical development
        initiatives on hold.

      --  The company has reduced spending on research and development
        and has invested in expansion of marketing, sales and customer
        support.

      --  Cardiac Pathways has received FDA 510k clearance to begin
        marketing the new RPM Tracking System. This proprietary
        technology, developed by the company, can be used in most
        diagnostic electrophysiology procedures for real-time
        visualization of catheters utilizing ultrasound technology.
        The RPM Tracking System is expected to assist physicians in
        precisely manipulating catheters within the heart during
        procedures, offering the potential for reductions in procedure
        times and improved economic benefit to the hospital and
        physician.

      --  The company has received FDA PMA (Pre-market approval)
        clearance to market its new Chilli(R)RPM cooled ablation
        catheters incorporating the company's unique RPM navigation
        technology. Implementing a number of significant design
        improvements to Cardiac Pathway's popular Chilli cooled
        ablation catheters, the new 7 French platform includes a
        bi-directional steering capability and integrates the
        Company's ultrasound transducer technology for dynamic
        real-time catheter navigation and visualization. New models
        for the Chilli with and without the navigation visualization
        technology were approved with this PMA.

      --  The company received CE mark approval to market our RPM
        Tracking System, and reference and ablation catheters
        incorporating RPM tracking technology in Europe.

      Operating Results

      --  In the third quarter, sales increased 14% to $1,511,000
        compared with $1,323,000 in the year earlier period driven
        primarily by 48% growth in the Chilli cooled ablation catheter
        and 36% for growth in Radii catheter product lines.

      --  Gross margins for the third quarter were ($393,000) negative
        compared to $332,000 positive in the year earlier period.
        Gross margin decline resulted from approximately $250,000 of
        costs associated with discontinuing the Mercator Atrial
        Mapping Basket product line, and approximately $450,000 of
        costs associated with introduction of the RPM product line and
        production increases for the Chilli product line.

      --  Research and development expenses declined 44% to $1,713,000
        compared to $3,070,000 in the third quarter of fiscal 1999 due
        primarily to reducing the portfolio of engineering projects to
        concentrate on RPM and Chilli/7 French catheter development
        initiatives.


      --  Selling, general and administrative expenses were $3,643,000
        in the third quarter compared to $1,596,000 in the year
        earlier period. Approximately $1,000,000 of non-recurring
        expenditures were incurred in the current quarter related to
        severance, recruiting/relocation, settlement of disputed fees
        with a professional search firm and new product launch.
        Additional expense growth quarter over quarter resulted
        primarily from increased marketing and sales infrastructure
        supporting the North American and European markets.

      --  Other income and expense includes a $340,000 reserve against
        loans to a former officer of the company.

Sales for the nine months ended March 31, 2000, were $4,755,000 compared to $3,427,000 for the first nine months of fiscal 1999. Net loss was $12,250,000 for the nine months ended March 31, 2000 with a net loss applicable to common stockholders of $15,630,000 or $7.74 per share, compared to a net loss of $13,949,000 or $7.04 per share for the first nine months of fiscal 1999. The nine months ended March 31, 2000 results reflect the discount or beneficial conversion feature as well as the accrual of dividends related to the issuance of Series B preferred stock in July 1999. On a proforma basis, the loss per share with Series B preferred stock converted to equivalent shares of common stock at the end of the period would be $1.86 per share for the nine months ended March 21, 2000 and, if the Preferred Series B stock had been issued and outstanding, $1.66 per share for the first nine months of fiscal 1999.

In May 1999, the company's Board of Directors authorized a 1-for-5 reverse stock split, which was effected in July 1999 following stockholder approval. All share and per share amounts contained in this release have been retroactively adjusted to reflect the reverse stock split.

Cardiac Pathways develops, manufactures and markets minimally invasive systems to diagnose and treat cardiac tachyarrhythmias (abnormally rapid heart rhythms). The company is a pioneer and leader in the development of complete integrated mapping and ablation systems for the diagnosis and treatment of heart rhythm disturbances.

This release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward looking statements as a result of certain factors, including actions relating to regulatory matters, the extent to which the company's products (including the Chilli product line and RPM Tracking System) gain acceptance, the costs and timing of expansion of product development, manufacturing, marketing and sales activities and competitive developments. Further information on potential factors that may impact future operations are included in the company's form 10-K for the year ended June 30, 1999 and quarterly reports in Form 10-Q filed with the Securities and Exchange Commission. Cardiac Pathways Corporation undertakes no obligation to release the results of any revision to these forward-looking statements to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events.

FINANCIAL HIGHLIGHTS FOLLOW

                     CARDIAC PATHWAYS CORPORATION
              Consolidated Statement of Operations Data


                             Three months ended     Nine months ended
(Amounts in thousands)            March 31,              March 31,
                            --------------------  --------------------
                              2000       1999        2000      1999
                            ---------  ---------  ---------  ---------
                                (unaudited)           (unaudited)

Net sales                    $ 1,511   $ 1,323     $ 4,755   $ 3,427
Cost of goods sold             1,904       991       4,832     3,111
                            ---------  ---------  ---------  ---------
   Gross margin (deficit)       (393)      332         (77)      316
Operating expenses:
   Research and development    1,713     3,070       5,365     9,783
   Selling, general
    and administrative         3,643     1,596       7,337     4,670
                            ---------  ---------  ---------  ---------
    Total operating expenses   5,356     4,666      12,702    14,453
                            ---------  ---------  ---------  ---------
Loss from operations          (5,749)   (4,334)    (12,779)  (14,137)
Other income (expense):
   Interest income               283       141         801       653
   Interest expense              (11)     (157)        (59)     (497)
   Other, net                   (340)       11        (213)       32
                            ---------  ---------  ---------  ---------
    Total other income
     (expense), net              (68)       (5)        529       188
                            ---------  ---------  ---------  ---------
Net loss                      (5,817)   (4,339)    (12,250)  (13,949)
Preferred stock dividend         880       -         2,420       -
Beneficial conversion
 feature related to the
 issuance of the Series
 B preferred stock                -        -           960       -
                            ---------  ---------  ---------  ---------
Net loss applicable
 to common stockholders      $(6,697)  $(4,339)   $(15,630) $(13,949)
                            =========  =========  =========  =========

Net loss per share --
 basic and diluted            ($3.29)   ($2.17)     ($7.74)   ($7.04)
                            =========  =========  =========  =========

Shares used in computing
    net loss per share --
     basic and diluted         2,033     1,995       2,020     1,982
                            =========  =========  =========  =========

                    Consolidated Balance Sheet Data

                                      March 31,    June 30,
                                    ------------ -----------
                                        2000         1999
                                    ------------ -----------
                                          (unaudited)

Cash and short term investments       $ 17,143     $ 2,340
Working capital                         14,382        (445)
Total assets                            25,901       8,906
Long-term obligations                    2,578       2,974
Stockholders' equity                    17,279        (395)

The nine months ended March 31, 2000 results reflect the discount or beneficial conversion feature related to the issuance of the Series B preferred stock. The three months and nine months ended March 31, 2000 results reflect the accrual of dividends related to the Series B preferred stock.

The company has reclassified certain prior-year balances to conform with current-year presentations.