CompuMed and Varian sign development agreement for new generation of digital x-ray bone densitometers.

MANHATTAN BEACH, Calif.--(BUSINESS WIRE)--Dec. 16, 1996-- CompuMed Inc. (Nasdaq Small Cap: CMPD) today announced the signing of a technology development agreement with Varian Imaging Products, the healthcare division of Varian Associates (NYSE:VAR) of Palo Alto, Calif.

The agreement covers CompuMed's use of Varian's new amorphous silicon sensor array in a new generation of affordable, all-digital x-ray bone densitometers.

As part of the deal with Varian, CompuMed will receive exclusive worldwide marketing rights to Varian's amorphous silicon technology for use in appendicular bone mass measurement and automated arthritis detection, based upon certain financial terms and sales targets. Varian will also supply technical and engineering assistance for incorporating its amorphous silicon x-ray detectors into CompuMed's products.

Varian, a worldwide leader in diagnostic x-ray technology, has developed a new digital imaging system based on amorphous silicon to replace the use of x-ray film and expensive image intensifiers in a variety of x-ray devices. In early 1997, CompuMed will be among the first companies chosen by Varian to receive pre-510(k)-registration amorphous silicon evaluation units for incorporation into new, filmless diagnostic imaging products.

CompuMed, developer of the unique OsteoGram(R) x-ray test for bone mineral density, plans to use Varian's amorphous silicon technology in a new generation of digital x-ray bone densitometers. CompuMed's goal is to develop an accurate and affordable imaging device that can be used for economical, point-of-care assessment of osteoporosis and other musculoskeletal diseases, such as rheumatoid arthritis. The high relative cost of current bone densitometers has in part inhibited widespread, point-of-care testing for osteoporosis. CompuMed believes that its new generation of x-ray bone densitometers, based upon digital technologies such as amorphous silicon, could finally make reliable, low-cost bone densitometry available to a wider user base, including primary care physicians, managed care, and specialty radiology practices.

"CompuMed was selected for this cooperative development arrangement because of their commitment to developing affordable bone densitometry devices for today's healthcare market, which is focused increasingly on cost-effective methods for diagnosing, monitoring, and managing disease," said David Gilblom, general manager of Varian Imaging Products. "In addition, CompuMed's Osteo-Gram(R) licensing agreement with Merck, and CompuMed's ability to develop telemedicine networks, as evidence by its current telecardiology business, make CompuMed the ideal development partner for digital x-ray bone densitometry."

"CompuMed is pleased to be selected by Varian as a technology development partner in the fields of bone mass measurement and arthritis evaluation," said Rod N. Raynovich, president and chief executive officer of CompuMed. "Our strategy of developing medical information services around networkable, point-of-care diagnostic devices, such as bone densitometers and cardiac monitors, is advanced by this exciting relationship with a world leader in digital imaging technology."

Varian Associates, based in Palo Alto, Calif., is a diversified international high-technology company with annual sales of $ 1.6 billion. Varian has core businesses in healthcare systems, semiconductor manufacturing equipment, and analytical instruments. Varian is the world's leading manufacturer of medical accelerators and related radiotherapy products for the treatment of cancer. Varian is also the largest manufacturer of x-ray tubes used in CT scanners and mammography and other medical imaging systems.

CompuMed, based in Manhattan Beach, Calif., is an emerging medical information technology and service company focused on the diagnosis, monitoring, and management of costly diseases, such as cardiovascular disease and osteoporosis. CompuMed's core businesses include telecardiology services and developing medical imaging technology and services for the quantitative assessment of bone health. With its OsteoGram(R) test for bone mineral density, CompuMed is an innovator in development of affordable and widely available tests for osteoporosis, a disease characterized by excessive bone loss that affects more than 20 million women in the United States, at an estimated cost of more than $10 billion per year. CompuMed's OsteoGram(R) test is currently promoted to thousands of physicians throughout the United States via an exclusive licensing agreement with Merck.

This news release contains forward-looking statements based upon current expectations that involve a number of business risks and uncertainties that are described in the Prospectus, dated March 13, 1996, to CompuMed's Registration Statement filed with the U.S. Securities and Exchange Commission (SEC) on Form SB-2 (Reg. No. 333-01453).

Editor's Note: This release is available on the Internet at http://www.compumed.net and http://www.noonanrusso.com.

Additional information about CompuMed was available at its exhibit booth, number 1062, during the recent Radiological Society of North America Annual Meeting at McCormick Place in Chicago, Ill.

CONTACT: CompuMed Inc., Manhattan Beach

Rod N. Raynovich, 310/643-5106, ext. 119

e-mail:[e-mail]

or

Noonan/Russo Communications Inc., New York 

212/696-4455

Susan Noonan (investor), ext. 203

Rich Tammero (media), ext. 222

e-mail: [e-mail]