Cardiotronics Systems Inc. announces third quarter results.

CARLSBAD, Calif.--(BUSINESS WIRE)--Nov. 8, 1996--Cardiotronics Systems Inc. (NASDAQ:CDIO) Friday announced that sales for the nine months ended Sept. 30, 1996, increased 18 percent to $7,277,694 from $6,191,706 for the same period last year.

Net loss for the nine months ended Sept. 30, 1996, improved to $752,886 or $1.58 per share, from $3,555,537, or $7.54 per share, for last year's first nine months.

For the quarter ended Sept. 30, 1996, net loss was $180,500 or 38 cents per share, on sales of $2,340,776. This compares with a net loss of $859,685, or $1.82 per share, on sales of $2,369,211 for the same period last year.

Noting that the gross margin for the third quarter increased to 51 percent of sales from 46 percent a year earlier, President and Chief Executive Officer Ronald R. Bromfield, said: "Cardiotronics is benefiting from operational enhancements and improvements in manufacturing efficiency that resulted from last year's consolidation of the R2 facility from Illinois to California.

"Revenue came in below plan for the quarter, primarily due to a weakness in our direct sales to hospitals. Based on continued strong interest in Cardiotronics products among our current and potential customers, we remain optimistic about the company's future growth."

Cardiotronics Systems develops, manufactures and markets medical devices for the acute management of heart rate disorders. When applied to a patient's chest, the company's disposable stimulation electrodes replace traditional defibrillator paddles and facilitate external defibrillation and pacing.

Heart rate disorders are suffered by millions of patients each year who are experiencing a heart attack or who are undergoing an interventional heart procedure such as coronary angioplasty, cardiac arrhythmia ablation, or open heart surgery. -0-

                 CARDIOTRONICS SYSTEMS INC. AND SUBSIDIARY
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                             (Unaudited)

                     Three months ended           Nine months ended
                           Sept. 30,                  Sept. 30,
                        1996         1995          1996         1995

Net sales        $ 2,340,776  $ 2,369,211   $ 7,277,694  $ 6,191,706
Cost of sales      1,157,379    1,283,899     3,738,436    3,283,343

  Gross margin     1,183,397    1,085,312     3,539,258    2,908,363

Selling and
 marketing
 expenses            518,930      754,711     1,552,956    2,201,846
General and
 administrative
 expenses            403,614      651,598     1,326,009    2,038,016
Research and
 development
 expenses            120,108       98,515       370,503      273,217
Patent litigation
 expenses             11,027      102,316       131,600      950,820
Amortization of
 intangible assets   172,948      234,981       516,258      704,726

 Total operating
  expenses         1,226,627    1,842,121     3,897,326    6,168,625

 Loss from
  operations         (43,230)    (756,809)     (358,068)  (3,260,262)

Other income
 (expense)
  Interest income      3,779       10,747        19,701       35,403
  Interest expense  (139,052)    (113,623)     (419,235)    (330,678)
  Other, net          (1,997)        --           4,716         --

                    (137,270)    (102,876)     (394,818)    (295,275)

Net loss          $ (180,500)  $ (859,685)   $ (752,886) $(3,555,537)

Net loss per
 common share     $  (0.38)    $   (1.82)    $   (1.58)  $   (7.54)

Weighted average
 number of common
 shares
 outstanding (a)     475,878      471,802       475,393      471,802

(a) Excludes preffed stock convertible into 2,892,031 shares of common stock in 1996 and 1995. -0-

CONTACT: Cardiotronics Systems Inc., Carlsbad

Scott P. Youngstrom, 619/431-9446