Medstone Reports Q2 2000 Results.

Business Editors

ALISO VIEJO, Calif.--(BUSINESS WIRE)--July 27, 2000

Medstone International Inc. (NASDAQ:MEDS) today reported revenues of $5,983,105 for the second quarter of 2000, an 8% decrease as compared to revenues of $6,492,651 for the second quarter of 1999.

Net income for the quarter was $554,988, or $0.12 per diluted share, as compared to net income of $633,290, or $0.12 per diluted share, for the comparable quarter in 1999.

For the six months ended June 30, 2000 revenues were $12,092,464, an increase of 6% as compared to revenues of $11,396,652 for the six months ending June 30, 1999. Net income for the six month period was $1,477,264, or $0.32 per diluted share, as compared to net income of $1,165,662, or $0.22 per diluted share, for the comparable period in 1999.

"In light of the changes in the industry, new product introductions and product development costs, the operational results for the second quarter of 2000 were to be expected," stated David V. Radlinski, chairman and chief executive officer. "We have successfully introduced our STS-T lithotripter, started producing and selling our new transportable urologic and pain management tables, and received a purchase order for the delivery of our new and innovative fixed urologic table. These new products, along with the potential of adding the ability to treat gallstones to our lithotripter product line, allows us to look forward to adding significantly to our revenue stream."

"We have submitted our data to the FDA to support the label for utilizing our lithotripter to treat gallstones. This is one more step required before final approval to treat gallstones," Radlinski added.

"It is estimated that 7 million Americans with gallstones match the criteria to be treated by a combination of lithotripsy and drug therapy," stated Eva Novotny, executive vice president of sales and marketing. "For the average person with gallstones, it is a compelling option to have the possibility of being cured of the disease and still retain a functioning and intact gallbladder for another 30 years of life."

About Medstone International Inc.

Medstone is the leading distributor, manufacturer and fee-per-procedure service provider of lithotripters in the United States. Lithotripsy is a non-invasive cost-effective and proven treatment that uses shock waves to break down kidney stones. Medstone manufactures its extracorporeal shockwave lithotripters for sale to third parties and use within its own shared services program. In addition, it manufactures and distributes a transportable urology table, and a broad line of X-ray equipment. Medstone recently introduced its new fixed cysto table at the AUA in Atlanta in April 2000, and is developing new applications for its shock wave technology. For more information, visit the company's Web site at www.medstone.com.

Forward-looking statements in this news release, including without limitation, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties including those related to the company's ability to continue to expand its operations, obtaining approval for gallstone lithotripsy and market acceptance of new products. Other risks and uncertainties related to the company's operations and financial condition are indicated in the company's most recent Annual Report on Form 10-K and in the company's other filings with the Securities and Exchange Commission.

                     MEDSTONE INTERNATIONAL, INC.
               CONDENSED COMPARATIVE OPERATING RESULTS
                            June 30, 2000


                                          For the three months ended
                                        June 30, 2000    June 30, 1999
                                          (unaudited)      (unaudited)

Revenues                                  $ 5,983,105      $ 6,492,651

Operating income                          $ 1,153,526      $ 1,239,183
Income before taxes                       $   944,978(1)   $ 1,087,290

Net income                                $   544,988      $   633,290
Basic earnings per share:
     Net income                           $      0.12      $      0.12
Diluted earnings per share:
     Net income                           $      0.12      $      0.12
Number of shares used in the computation
     of earnings per share:
     Basic                                  4,590,025        5,070,143
     Diluted                                4,591,319        5,221,813



                                          For the six months ended
                                        June 30, 2000    June 30, 1999
                                          (unaudited)     (unaudited)

Revenues                                  $12,092,464      $11,396,652

Operating income                          $ 2,897,261      $ 2,254,089
Income before taxes                       $ 2,497,254(2)   $ 1,969,062

Net income                                $ 1,477,264      $ 1,165,662
Basic earnings per share:
     Net income                           $      0.32      $      0.23
Diluted earnings per share:
     Net income                           $      0.32      $      0.22
Number of shares used in the computation
     of earnings per share:
     Basic                                  4,606,359        5,067,796
     Diluted                                4,611,010        5,211,477


   (1)   Includes a gain from sale of investments of $298,000.
   (2)   Includes a gain from sale of investments of $1,081,000.