HPSC, INC. REPORTS PROFITABLE THIRD QUARTER ANNOUNCES STOCK REPURCHASE.

BOSTON, Mass.--(BUSINESS WIRE)--Nov. 2, 1994--HPSC, Inc. (HPSC:NASDAQ) today reported improved earnings results for the third quarter and first nine months of 1994 over 1993. The company announced that it has agreed to repurchase, in conjunction with outside investors, 1,949,182 shares of HPSC common stock that have been pledged to a group of banks and held by Healthco International, Inc. (Healthco), as debtor-in-posession and later by the Chapter 7 Trustee for Healthco, subject to the pledge, since the 1993 bankruptcy filing by Healthco, the dental equipment supplier that had previously owned the shares.

Net income for the third quarter of 1994 was $70,000 or $.01 per share, compared to a net loss of ($678,000), or ($.14) per share for the same period last year. Third quarter earned income on leases and notes was $2,776,000 down from $3,836,000 for the third quarter of 1993. For the nine months ended September 24, 1994, net income was $416,000 or $.08 per share and earned income on leases and notes was $9,443,000 compared to net income of $258,000 or $.05 per share, and earned income of $13,482,000 for the first nine months of 1993.

HPSC intends to repurchase a minimum of 1,000,000, shares, with the balance to be purchased by investors. The transaction, which carries a total price of $9,000,000, will also settle all claims between HPSC and the bank group regarding intercompany transactions between HPSC and Healthco, which had previously supplied the company with equipment and finance opportunities. On completion of the minimum share repurchase by HPSC, the Company's pro-forma book value per share would be approximately $8.50, an increase of $.90 per share over September 24, 1994, book value.

"This is a major step in our continuing transition to an independent, open-market leasing and finance company, and it comes at a time when the Company is making progress on a number of fronts, " said John W. Everets, Chairman and CEO. "Our origination of leases and notes for the quarter ended September 24, 1994, totals $9,200,000, the highest level of new business in 15 quarters, and represents a 46 percent increase over the previous quarter. Our referral business from customers and vendors has grown and our bookings for the first nine months of 1994 were $20,129,000, a 74.5 percent increase over the first nine months of last year."

Mr. Everets also said that, while earnings have improved over last year, the impact of the Healthco bankruptcy is still being felt. The third quarter decline in earned income is due to a continuing but declining runoff in HPSC's portfolio, lower bookings in 1993 in the wake of the Healthco bankruptcy, as well as reduced finance rates charged to its customers. These lower rates were partially offset by reduced interest expense resulting from a lower cost of capital, lower level of borrowing, and a lower provision for losses.

"We are making real and continuing advances as we overcome the impact of the Healthco bankruptcy," Mr. Everets said. "Our focus on conservative management, our continued investment in sales and support personnel, and our efforts to broaden our financial services markets are all showing results."

Operating Performance:

              (In thousands, except for per-share data)

                  Three Months Ended     Nine Months Ended

                Sept. 24,   Sept. 25,   Sept. 24,  Sept. 25,
                  1994        1993        1994       1993
               (Unaudited) (Unaudited) (Unaudited) (Unaudited)

Revenues
 Earned income   $2,776       $3,836      $9,443    $13,482
 Provision
  for losses       (164)      (1,037)       (524)    (3,103)
                 -------      -------     -------    -------
Net revenue       2,612        2,799       8,919     10,379
Selling,
 general and
 administrative  1, 705        1,657       5,237      3,067
Interest, net       792        2,246       2,998      6,872
                -------      -------     -------    -------
Income before
 Income Taxes       115       (1,104)        684        440
Provision for
 Income Taxes        45         (426)        268        182
                 ------       -------     ------    -------
Net income      $    70       $ (678)    $   416    $   258
                =======       =======    =======    =======
EARNINGS PER
 SHARE          $   .01       $ (.14)     $  .08    $   .05
                 ======       =======     ======    =======
Share used to
 compute
 earnings
 per share    4,994,964     4,923,415  4,987,022  4,925,575


                             Selected Financial Data
                        Sept. 24, 1994     December 25, 1993
Cash and
 cash equivalents             $    626            16,600
Restricted Cash                  9,215                 0
Net investment in
 leases and notes               89,883           109,752
Senior notes and notes
 payable to banks               53,752            57,130
Subordinated debt,
 less unamortized discount        ----            19,962
Stockholders' equity            37,767            37,621

CONTACT: John Everets, HPSC, Inc.

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