Respironics Reports Record Financial Results

Pittsburgh, PA - July 26, 2001

Respironics, Inc., a major vendor in the sleep apnea device market, as well as in the home oxygen market, recently announced financial results for the three months and fiscal year ended June 30, 2001.

Three Months Ending June 30, 2001

Net sales for the fourth quarter totaled a record $115.6 million representing an 18 percent increase compared to $98.0 million recorded in the fourth quarter a year ago. Domestic revenues increased 20 percent from $77.6 million in the fourth quarter a year ago to $92.8 million in the current year's quarter. Key drivers for the Company's domestic revenue performance include a year-over-year increase of 20 percent in domestic sleep therapy and a 32 percent increase in home oxygen system revenues. International sales, led by growth in revenues of sleep and ventilation products, were $22.8 million in the fourth quarter of fiscal year 2001 versus $20.4 million in the prior year's quarter, a 12 percent increase.

Net income for the current quarter was $10.0 million, or $0.32 per share, a 23 percent increase over the $8.1 million, or $0.27 per share, reported a year ago, excluding the impact of charges in the prior period. Results for the three months ended June 30, 2000 shown above exclude the impact of restructuring charges totaling $0.18 per share, or $7.0 million on a pre-tax basis, related to the Company's restructuring that was first communicated on July 6, 1999.

Fiscal Year Ending June 30, 2001

For the fiscal year ended June 30, 2001, net sales were $422.4 million, a 15 percent increase over the $368.2 million achieved in the prior year. Net income for the fiscal year was $33.6 million or $1.09 per diluted share, a 32 percent increase versus last year's $25.4 million or $0.85 per diluted share, excluding the impact of charges and other one-time items.

Results for the twelve months ended June 30, 2000 described above exclude the impact of charges totaling $29.2 million, or $0.63 per share, relating to the Company's restructuring that was first communicated on July 6, 1999.

Comments From Management

James W. Liken, president and chief executive officer commented; "We remained focused on our strategic objectives during fiscal year 2001 and this positioned us to achieve a year of record revenues and income and to develop a much stronger market presence for our Company. The fiscal year and fourth quarter results reflect solid increases in net revenues, gross profits, operating income and net income, all indications that our product and marketing strategies, as well as our operational strategies, are on target. For the full year, our growth was driven be our strong performance in domestic sleep therapy revenue, which posted an 18 percent gain year over year, domestic oxygen revenues, which increased by over 25 percent versus the prior year, and a 19 percent annual increase in domestic hospital revenues, as a result of increases in our ventilation system revenues. Our 10 percent increase in international sales was led by increases in sleep therapy and non- invasive ventilation revenues. I am confident in our programs and in our technology and believe that our innovative approach to the market will set a new standard for the respiratory industry," he concluded.

"Our commitment to and our success in the area of research and development is particularly noteworthy," added Mr. Liken. "During fiscal year 2001, we introduced the new REMstar® technology platform for sleep apnea devices. This new technology has enhanced our ability to address the needs of both patient and provider customers and is an excellent example of Respironics product development efforts focused on patient comfort and compliance, key elements of our Power Programs™ strategic approach to the marketplace," he concluded.

"Our new hospital ventilation system, the Esprit®, continues to gain momentum in the marketplace. This new unit, combined with our BiPAP® Vision™ Non-invasive Ventilation System, positions our hospital division for continued growth," he added. "I believe that our new technology, introduced to our various markets via our program approach, positions our Company to be a leader in the respiratory marketplace, both domestically and internationally," he concluded.

Commenting on the Company's future market opportunities, Mr. Liken stated, "Our research efforts remain focused on treating the congestive heart failure patient, leveraging our technology into other areas of sleep disorders, and expanding our penetration into the hospital and home ventilation markets. I am pleased with the performance of those technologies introduced during the fiscal year; but, more importantly, I am optimistic about the technologies on which we have chosen to focus and the opportunities that they present for building our future."

Respironics, a recognized resource in the medical device market, provides innovative products and unique programs to health care providers while helping them to grow and manage their business efficiently. The company's focus is on home care, hospital and international markets providing programs that manage sleep disordered breathing, chronic obstructive pulmonary disease, asthma, infant care and restrictive lung disorders. Globally positioned, the company employs nearly 2,000 individuals worldwide and has manufacturing facilities in several domestic and international locations. Further information on Respironics can be found on its website: www.respironics.com.