Criticare Systems reports second quarter operating results.

MILWAUKEE--(BUSINESS WIRE)--Feb. 7, 1997--Criticare Systems Inc. (NASDAQ:CXIM), a developer, manufacturer and marketer of medical monitoring equipment, today announced its results for the second quarter of fiscal year 1997.

For the three months ended Dec. 31, 1996, the company reported net sales of $6.6 million compared with $8.7 million in the corresponding period of the previous fiscal year. The company incurred a net loss for the second quarter of fiscal 1997 of $297,128 (4 cents per share) compared with a net loss of $2,374,519 (35 cents per share) for the second quarter ended Dec. 31, 1995, which included a special charge of $2,500,000 (37 cents per share) related to the company's 1995 investment in Immtech International Inc.

For the six months ended Dec. 31, 1996, the company reported net sales of $13.1 million compared to $15.7 million in the corresponding period of the previous fiscal year. The company incurred a net loss of $245,725 (3 cents per share) compared to a net loss of $2,310,401 (34 cents per share) in the six months ended Dec. 31, 1995, which included a special charge of $2,500,000 (37 cents per share) related to the company's 1995 investment in Immtech International Inc.

Gerhard Von der Ruhr, Criticare's president and CEO, stated, "This second quarter of fiscal 1997 represents the final stages of corporate transitioning to the new medical environment created by health care reform. Two positive events that concluded near the end of the quarter are the strongest evidence that Criticare is entering the most exciting and challenging chapter of its corporate life."

Von der Ruhr further stated, "On Dec. 10, 1996, Criticare received FDA certification to market its Multiple Parameter Telemetry (MPT(TM)) monitor, which we will believe will be our flagship product of the future. It is currently in beta site evaluation. Additionally, the company concluded a supply and distribution agreement with IVAC Medical Systems, a subsidiary of Advanced Medical Inc. on Jan. 7, 1997, for sales of select vital signs monitors in the United States and Canadian hospital markets.

"In conjunction with FDA approval of the MPT remote monitoring product, the company is taking steps to further develop the technology as it relates to other patient related hospital functions. Believing itself to be in an industry-leading position with the MPT, it will be the intent of Criticare to maintain and maximize that position.

"To fund the accelerated development of the MPT technology, Criticare has completed a private placement of convertible debentures in the amount of $2.5 million. The placement was made on Feb. 3, 1997 to a single accredited investor. The debentures are convertible into Criticare stock over a 22-month period beginning 60 days from the issue date, at a 20-25% discount to then-current market price.

"We believe the MPT product provides Criticare with a vital leadership in a highly competitive industry. The Advanced Medical alliance importantly leverages our R&D capabilities and expands the national sales presence of our new product line. These two events are characteristic of steps that we will continue to take on behalf of our shareholders."

Criticare Systems Inc. designs, manufactures and markets cost-effective patient monitoring systems and noninvasive sensors for a wide range of hospitals and alternate health care environments throughout the world.

Statements in this news release regarding the MPT monitor, the IVAC supply and distribution agreement and the expected impact of these developments on Criticare's results are forward-looking statements that involve risk and uncertainties. For instance, unforeseeable developments in the MPT beta site evaluations could delay the introduction of that product into the market. Additional risk factors, including without limitation changes in the market and competition, are detailed in the Securities and Exchange Commission filings of Criticare Systems Inc. for the year ended June 30, 1996. -0-

                            CRITICARE SYSTEMS INC.
                         CONSOLIDATED INCOME STATEMENT
                                  UNAUDITED

                         Three Months Ended Dec. 31, 1996
                        (With Comparative Figures for 1995)

                                1996              1995

Net Sales                   $6,581,192         $8,736,012
Cost of Goods Sold           3,520,406          4,376,124
Gross Profit                 3,060,786          4,359,888

Operating Expenses           3,211,775          4,073,209
Operating Profit (Loss)       (150,989)           286,679

Net Interest Expense           146,139             84,198
Equity in Loss of Investments        0          2,500,000
Total Non-Operating Expenses   146,139          2,584,198

Income (Loss) Before Income
 Taxes                        (297,128)        (2,297,519)
Income Tax Provision                 0             77,000
Net Income (Loss)             (297,128)        (2,374,519)

Earnings Per Share               (0.04)             (0.35)

Average Shares Outstanding   7,128,272           6,712,754


                               Six Months Ended Dec. 31, 1996
                             (With Comparative Figures for 1995)

                                 1996                1995

Net Sales                    $13,059,357         $15,694,342
Cost of Goods Sold             6,874,832           8,022,563
Gross Profit                   6,184,525           7,671,779

Operating Expenses             6,105,868           7,203,449
Operating Profit (Loss)           78,657             468,330

Net Interest Expense             300,382             158,731
Equity in Loss of Investments     24,000           2,500,000
Total Non-Operating Expenses     324,382           2,658,731

Income (Loss) Before Income
 Taxes                          (245,725)         (2,190,401)
Income Tax Provision                   0             120,000
Net Income (Loss)              ($245,725)        ($2,310,401)

Earnings Per Share                ($0.03)             ($0.34)

Average Shares Outstanding     7,128,272           6,712,754

CONTACT: Criticare Systems Inc.

Gerhard Von der Ruhr, 414/798-8282

or

CCRI Corporation

Malcolm McGuire, 800/828-0406