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VITAL IMAGES AGREES IN PRINCIPLE TO MERGER INTO BIO-VASCULAR, INC.

 ST. PAUL, Minn., Oct. 20 /PRNewswire/ -- Bio-Vascular, Inc. (NASDAQ:BVAS) and Vital Images, Inc., a private company based in Fairfield, Iowa, today announced an agreement in principle under which Vital Images would become a wholly owned subsidiary of Bio-Vascular.
 The agreement contemplates a tax-free exchange of stock, with the exchange ratio to be negotiated as part of the definitive merger agreement. Completion of the merger is subject to certain conditions, including the completion of due diligence, signing of a definitive agreement, availability of pooling-of-interests accounting, and approval by the shareholders of Vital Images.
 Bio-Vascular also announced that it has cancelled the stock repurchase program recently authorized by its board of directors. The company said no shares had been repurchased under the authorization.
 Vital Images develops, markets and supports software products for interactive visualization and analysis of three-dimensional image data in medical, industrial and scientific applications. The company's software products are designed to run on general purpose graphics workstations and are capable of some of the fastest imaging speeds in the industry. More than 250 of the company's systems are in use in hospitals, universities and corporations for applications in medical imaging, biomedical research, and oil and gas exploration.
 Vital Images has annual sales of approximately $2 million and reported a loss of $745,000 in 1992.
 Bio-Vascular, Inc., based in St. Paul, is a manufacturer and marketer of proprietary consumable medical products for cardiac and vascular surgery. For the nine months ended July 31, 1993, the company reported sales of $3,502,039 and net income of $506,016.
 "Vital Images has proven technology in biomedical research and oil and gas exploration which will present exciting new applications in the medical field. We believe it offers an excellent opportunity to accelerate our growth rate while its activities in other industries provide a buffer to the rapidly changing medical environment," said James F. Lyons, chairman of the board and CEO of Bio-Vascular. "At the same time, Bio-Vascular's existing product base continues to produce increasing sales and strong earnings that will help to fund ongoing development of both organizations' technology, which we believe will find broad applications in several segments of the medical marketplace."
 Vincent Argiro, chairman and CEO of Vital Images, said, "Bio- Vascular has the expertise in medical marketing and in regulatory matters that is necessary to bring our medical technology to a broader marketplace, and its management organization will be important as we seek to maximize our growth potential. We believe these strengths will enable us to quickly take advantage of the opportunities we see in the medical field."
 -0- 10/20/93
 /CONTACT: Curt Swenson of Swenson/Falker Associates Inc., 612-371-0000, for BioVascular and Vital Images/
 (BVAS)


CO: Bio-Vascular, Inc.; Vital Images, Inc. ST: Minnesota IN: MTC SU: TNM

AL-DS -- MN006 -- 4422 10/20/93 09:19 EDT
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Publication:PR Newswire
Date:Oct 20, 1993
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