Chad Therapeutics reports year end results.

CHATSWORTH, Calif.--(BUSINESS WIRE)--May 27, 1997--Chad Therapeutics Inc. (ASE:CTU), producer and distributor of oxygen conserving devices and portable oxygen systems used by pulmonary patients who need supplementary oxygen, Tuesday announced operating results for the fiscal year and fourth quarter ended March 31, 1997.

Sales for the year were $26,161,000, an increase of $5,802,000 or 29% over last year. For the quarter ended March 31, 1997, sales were $5,077,000, a decrease of $94,000 or 2% from last year's quarter.

The company's net earnings for the year increased 17% to $5,035,000, 49 cents per share, compared with $4,310,000, 42 cents per share, last year. For the quarter ended March 31, 1997, net earnings were $702,000, 7 cents per share, compared with $1,394,000, 13 cents per share, for the same period last year, a decrease of $692,000 or 50%.

Per share earnings and comparisons for the year and quarter reflect a restatement for the 3% stock dividend distributed on Oct. 15, 1996, to shareholders of record on Oct. 1, 1996.

Charles R. Adams, chairman and chief executive officer stated, "While the company's annual sales growth rate remained strong, fourth quarter sales were affected by several factors. Sales to national chain accounts decreased by 13% from the previous year's fourth quarter as programs to convert patients to more cost effective systems have not recurred in the current period. Moreover, sales to national chain accounts as well as independent dealers have also been impacted by increased competitive factors and uncertainties regarding the size of potential cuts in Medicare home oxygen reimbursement, which are again being discussed as part of the Federal budget process."

Adams indicated that earnings for the quarter were lower than anticipated primarily due to the lower sales for the quarter and resulting lower gross profit.

Finally, Adams noted that while these conditions and uncertainties will likely continue to influence quarterly comparisons during the next two quarters, Chad remains well positioned in the home oxygen market with its highly efficient and cost effective products. -0-

                   Chad Therapeutics Inc.
                  Selected Financial Data

                            Year Ended         Three Months Ended
                             March 31,              March 31,
                         1997        1996       1997          1996

Net Sales           $26,161,000  $20,359,000  $5,077,000  $5,171,000
Interest Income         113,000       97,000      24,000      22,000
Earnings Before
 Income Taxes         8,413,000    7,072,000   1,193,000   2,225,000
Net Earnings          5,035,000    4,310,000     702,000   1,394,000
Net Earnings Per
 Share                49 cents     42 cents    7 cents     13 cents


                                     Balance As of
                                       March 31,
                                   1997         1996

Cash & Marketable Securities   $ 2,289,000   $ 2,838,000
Total Assets                    15,861,000    10,778,000
Shareholders' Equity           $15,110,000   $ 9,775,000

CONTACT: Chad Therapeutics Inc., Chatsworth

Earl L. Yager, 818/882-0883