Possis Medical, Inc. Reports First Quarter Results; Company Meets EPS Guidance; Peripheral Revenue Up 71% Year-Over-Year; Total Revenue Slightly Below Guidance

Net income per diluted share for the first quarter of fiscal 2006,on a generally accepted accounting principles (GAAP) basis, was$266,000 or $0.01 per diluted share, which includes stock-basedcompensation expense of $702,000, net of tax, or $0.04 per dilutedshare, due to the implementation of FAS 123(R). Net income prior tofiscal 2006 did not include stock-based compensation expense.Including the pro forma stock-based compensation expense previouslydisclosed in Possis' financial statement footnotes, net income for thefirst quarter of fiscal 2005 would have been $1.6 million or $0.08 perdiluted share, and net income for the fourth quarter of fiscal 2005would have been $68,000 or $0.00 per diluted share.

Non-GAAP (pro forma) net income for the first quarter of fiscal2006 was $968,000 or $0.05 per diluted share, compared with $2.2million or $0.11 per diluted share in the first quarter of fiscal2005, and compared to $1.3 million or $0.07 per diluted share for thefourth quarter of fiscal 2005. Please refer to the non-GAAP (proforma) Consolidated Statements of Income and Comprehensive Income onpage 6; and the table on page 8 reconciling net income per dilutedshare on a GAAP basis to net income per share on a non-GAAP (proforma) basis.

Robert G. Dutcher, CEO of Possis Medical, said, "As outlined lastquarter, we had anticipated that revenue levels in the first quarterwould be down sequentially due to seasonality factors and downyear-over-year largely due to the results from our AiMI studyannounced a year ago. Actual revenue for the quarter of $15.5 millionjust missed our guidance range of $15.9 to $16.2 million due to thecombined factors of Hurricanes Katrina and Rita, higher than expectedsales force turnover, increased competition, and continuingcontroversy concerning the role of thrombectomy and embolic protectionin treating STEMI (ST segment elevation myocardial infarction)patients. On a franchise basis, coronary sales were most impacted anddown somewhat from the stabilized level achieved during the prior twoquarters. AV Access sales were also down slightly from the priorquarter. On a much more positive note, peripheral sales exceeded ourexpectations and continued to lead the way in catheter sales growth.Sales were positively impacted by increasing therapy adoption and theintroduction of the new high-power DVX(TM) catheter. Year-over-year,the peripheral franchise showed impressive first quarter revenuegrowth of 71 percent and sequential quarterly growth of 21 percent.Our earnings per share was within our guidance range, both includingand excluding expensing stock-based compensation per FAS 123 (R)."

The Company sold 47 AngioJet System drive units in the firstquarter, compared to 57 drive units one year ago and 50 drive units inthe previous quarter. Said Dutcher, "We are pleased with the continueddemand for our AngioJet Thrombectomy System from new customers. Thisgrowing footprint of AngioJet System drive units provides thenecessary installed base to ensure continued penetration in our coremarkets, and also positions the Company to take advantage of newmarket opportunities, such as deep vein thrombosis (DVT) and pulmonaryembolism (PE)."

Possis Medical's gross profit margin was 73 percent in the firstquarter, compared to 75 percent a year ago and 74 percent in thefourth quarter of fiscal 2005. The average catheter utilization rateper installed drive unit, a measure of recurring usage, was 7.5 in thefirst quarter, compared to 9.3 in the prior-year period and 8.2 in thefourth quarter of fiscal 2005.

Selling, general and administrative expenses (SG&A) increased by$837,000 to $8.4 million in the first quarter of fiscal 2006 from thefirst quarter of fiscal 2005, due primarily to reflecting FAS 123(R)stock-based compensation charges in the current period. The increasein SG&A over the fourth quarter of fiscal 2005 was also primarilystock-based compensation related.

First quarter research and development (R&D) spending increased by$72,000 to $2.5 million from the prior-year period due to stock-basedcompensation expenses partially offset by timing-related spendingreductions for completed projects.

"We continue to invest heavily in R&D, as a percentage of revenue,because we believe it is a key driver of our future growth," continuedDutcher. "The first quarter of 2006 was the first full quarter ofsales for two new catheter models, the DVX(TM), our most powerfulcatheter, and the XMI(R) RX Plus, our second generation rapid-exchangecatheter. We expect sales of these products to continue to ramp upduring 2006 and help drive our growth. We now have several keysubmissions currently waiting for FDA approval, including our newAngioJet Ultra Console and combined thrombectomy sets, and expandedindications for two new catheters to include coronary indications foruse. We expect to hear from the FDA on these submissions in early2006," concluded Dutcher.

The Company's cash and cash equivalents and marketable securitiesposition increased slightly to $44.8 million at the end of the firstquarter compared to $44.4 million at the end of the fiscal 2005 fourthquarter. This increase is attributable to positive operating cash flowpartially offset by $1.1 million in common stock share repurchasesmade during the quarter.

Product Development Update

As illustrated by the recent product launches and regulatorysubmissions, Possis expects to continue to benefit from its ongoinginvestment in new and enhanced product designs. For example, in thefirst quarter of fiscal 2006 the Company introduced the Spiroflex(TM)catheter, another improvement to the 4 Fr rapid-exchange catheterline. This product features a spiral laser cut along the full lengthof the proximal stainless steel outer lumen, which is then jacketedwith a soft plastic coating. Possis began an initial market evaluationduring the quarter and the product was showcased at the OctoberTranscatheter Cardiovascular Therapies (TCT) 2005 conference inWashington, D.C. "Spiroflex has received rave reviews from customerswho have used it. We expect that when approved by the FDA for coronaryuse, the Spiroflex will rapidly become our flagship coronarycatheter," said Dutcher.

The Company also reported that, during the first quarter, it tooksignificant steps in advancing its goal to bring its GuardDOG distalocclusion guidewire to market. GuardDOG is a specially designed lineof guidewires, featuring a soft, compliant balloon at the distal tip.By inflating the balloon, the operator can temporarily and selectivelyocclude blood flow during interventional treatment. Dutcher said, "Weare excited by the potential for this product. Physicians tell us thatit will help optimize AngioJet thrombectomy, especially in cases oftough peripheral thrombus, and will also minimize the risk ofprocedure-related embolization. Based on the feedback we are gettingfrom physicians, we are currently developing both .014 and .035 inchdiameter GuardDOG occlusion guide wires, and balloons in a range ofsizes. We anticipate that the new designs will be filed with the FDAin the first half of our 2006 fiscal year, with a market launch by theend of the year."

New Clinical Science

On another important and complementary front, Possis Medical iscontinuing to expand its commitment to sponsor meaningful new clinicalscience to highlight the value of AngioJet treatment for thrombus.

In support of its coronary market, the Company sponsored anevening satellite symposium at the recent TCT2005 conference, thelargest annual meeting of interventional cardiologists. The symposiumwas titled "Developments and New Approaches in the Treatment ofIntracoronary Thrombosis with Rheolytic Thrombectomy," and addressedsome of the concerns raised by the AiMI results. Dr. Charles Simontonof the Sanger Clinic in Charlotte, North Carolina, presented updatedcoronary AngioJet registry data. Dr. Fadi Matar of Cardioquest inTampa, Florida, presented his positive experience in employing acombination therapy of AngioJet and an embolic protection filter wireto treat high-risk coronary patients. Dr. Ray Matthews of GoodSamaritan Hospital in Los Angeles presented his patient registry offavorable results with AngioJet use in rescue percutaneous coronaryintervention. Separately at TCT, Dr. Samin Sharma of the Mt. SinaiMedical Center in New York City presented on the positive benefits ofAngioJet therapy with direct stenting in a sub-group of coronarypatients with large thrombus.

In addition, the Company is sponsoring the JETSTENT study ofAngioJet treatment in heart attack patients with visible thrombus. InJETSTENT, up to 10 sites, primarily in Europe, will randomize 500heart attack patients to be treated with a combination of AngioJet andstenting, or just stenting alone. The key difference between JETSTENTand AiMI is that all JETSTENT patients must have visible thrombus atbaseline, or a total occlusion; and all AngioJet patients will betreated with the specific technique developed by Dr. David Antoniucciof Careggi Hospital, Florence, Italy. The Company expects thatapproximately 100 patients will be enrolled in JETSTENT by the end offiscal 2006.

Looking out through fiscal 2006, the Company is planningadditional presentations of real-world AngioJet coronary treatmentexperiences. The list includes a round-table discussion ofinterventional cardiologists at the upcoming ACC meeting in Atlanta inMarch and the PCR meeting in Paris in May. "Undoubtedly, this is a lotof attention and activity focused on our coronary market," saidDutcher. "Regardless of the results of the AiMI study that wereannounced about a year ago, this work is critical to our futuresuccess and in achieving our growth targets," Dutcher continued.

The Company also announced progress on initiatives to addressrapidly growing peripheral vascular markets. In fiscal 2006, PossisMedical will deepen its investment in clinical science to developAngioJet therapy for treating venous thromboembolic (VTE) disease.This includes both deep vein thrombosis (DVT) and pulmonary embolism(PE). "Since the underlying cause of both these diseases is thrombus,many physicians are interested in treating their patients withAngioJet thrombectomy. We are excited by the potential for this areaand estimate the initial market opportunity from treatment of thesediseases exceeds $240 million and will grow significantly over thenext decade," commented Dutcher. The Company expects to initiate a newIDE clinical trial of AngioJet in treating DVT by the end of fiscal2006.

New Reimbursement Update

Possis also announced that the American Medical Association (AMA)has established five new peripheral Current Procedural Terminology(CPT) codes for treatments involving the removal of thrombus usingmechanical thrombectomy devices. These new codes identify specifictypes of therapy used in the peripheral vasculature; three codesrelate to arterial interventions and two are for venous interventions.Based on the new peripheral CPT codes, physicians using AngioJetthrombectomy to treat peripheral arteries can expect to be reimbursedin the range of $227 - $393 per procedure, depending on geographiclocation and the specifics of the overall peripheral vasculartreatment. "We expect that these new CPT codes will spur use of theAngioJet System in the treatment of peripheral thrombus. Thesespecific CPT codes will make it far easier for physicians to correctlyidentify and be reimbursed for the procedures that they have beenperforming for several years," said Dutcher. These new CPT codes willgo into effect on January 1, 2006.

Outlook

Looking ahead, coronary product sales are projected to berelatively flat sequentially for the balance of fiscal 2006, whileperipheral product sales are projected to be up between 10 and 25percent sequentially per quarter throughout the balance of fiscal2006. Due to the revised coronary projections, the Company has reducedfiscal 2006 revenue projections from the previously stated guidance of$69 to $74 million to $66 to $70 million.

The Company expects gross margins in the low to mid-seventies as apercent of sales and non-GAAP (pro forma) net income of between $0.34and $0.42 per diluted share for fiscal 2006 versus $0.34 per share forfiscal 2005. Including the impact of FAS 123 (R) stock-basedcompensation expense, the Company expects net income per diluted shareto be in the range of $0.16 to $0.24 for the full fiscal year comparedto $0.16 per share for fiscal 2005. Possis anticipates second-quarterrevenue to be approximately $15.7 to $16.1 million and net income inthe range of $0.01 to $0.03 per diluted share. The impact of expensingstock-based compensation per FAS 123(R) is anticipated to beapproximately $0.05 per diluted share for the second quarter andapproximately $0.18 per diluted share for fiscal year 2006.

The Company will host a conference call on Wednesday, November 23,2005 at 9:30 am Central Time. Bob Dutcher, Chairman & CEO, and JulesFisher, CFO, will discuss the first-quarter operating results and theremainder of fiscal 2006.

To join the conference call, dial 888-889-7567 (international -1-517-645-6377) by 9:25 am (CT), and give the password "Conference"and leader "Mr. Bob Dutcher."

A webcast of the conference call can be accessed at www.possis.comunder the Investors tab. The webcast can also be accessed atwww.fulldisclosure.com for individual investors. Institutionalinvestors can access the webcast through a password-protected site atwww.streetevents.com. An archived webcast will be available for thirtydays.

A replay of the conference call will be available from NoonCentral Time on Wednesday, November 23rd through Friday, November 25that 11:59 pm Central Time. Dial toll-free 1-866-509-6763 (toll -1-203-369-1928).

Possis Medical, Inc. develops manufactures and markets pioneeringmedical devices for the large and growing cardiovascular and vasculartreatment markets. The AngioJet(R) Rheolytic(TM) Thrombectomy Systemis marketed in the United States for blood clot removal from nativecoronary arteries, leg arteries, coronary bypass grafts and AVdialysis access grafts.

Certain statements in this press release constitute"forward-looking statements" within the meaning of Section 27A of theSecurities Act of 1933, as amended, and Section 21E of the SecuritiesExchange Act of 1934, as amended. Some of these statements relate toestimated future revenue, gross margins, expenses and earnings pershare, regulatory approvals, product introductions, clinicalinitiatives, and the continuing impact from the results of the AiMItrial. These statements are based on our current expectations andassumptions, and entail various risks and uncertainties that couldcause actual results to differ materially from those expressed in suchforward-looking statements such as the effectiveness of our sales andmarketing efforts in re-establishing coronary product usage, ourability to effectively manage new product development timelines, andour ability to generate suitable clinical registry data to supportgrowing use of the AngioJet in coronary applications. A discussion ofthese and other factors that could impact the Company's future resultsare set forth in the cautionary statements included in Exhibit 99 tothe Company's Form 10-K for the year ended July 31, 2005, filed withthe Securities and Exchange Commission.

This release includes non-GAAP (pro forma) net income, non-GAAP(pro forma) net income per share data, and non-GAAP (pro forma) keybusiness indicators, and other non-GAAP line items from theConsolidated Statements of Income and Comprehensive Income, includingcost of medical products, operating expenses (including selling,general and administrative, and research and development), andprovision for income taxes. These measures are not in accordance with,or an alternative for, generally accepted accounting principles andmay be different from non-GAAP (pro forma) measures used by othercompanies. Possis believes that the presentation of non-GAAP (proforma) net income, non-GAAP (pro forma) net income per share data,non-GAAP (pro-forma) key business indicators and other non-GAAP lineitems from the Consolidated Statements of Income and ComprehensiveIncome, when shown in conjunction with the corresponding GAAPmeasures, provides useful information to management and investorsregarding financial and business trends relating to its financialcondition and results of operations. Possis further believes thatwhere the adjustments used in calculating non-GAAP (pro forma) netincome and non-GAAP (pro forma) net income per share are based onspecific identified charges that impact different line items in thestatements of income (including cost of medical products, selling,general and administrative and research and development expense), thatit is useful to investors to know how these specific line items in thestatements of income are affected by these adjustments. In particular,as Possis begins to apply FAS 123(R), it believes that it is useful toinvestors to understand how the expenses associated with theapplication of FAS 123(R) are reflected on its Consolidated Statementsof Income and Comprehensive Income.

POSSIS MEDICAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)

For Three Months Ended

October 31, October 31,
2005 2004
------------ ------------

Product sales................................$15,475,674 $17,501,988
Cost of sales and other expenses:
Cost of medical products.................. 4,230,155 4,304,339
Selling, general and administrative....... 8,393,727 7,556,583
Research and development.................. 2,509,293 2,437,704
------------ ------------
Total cost of sales and other expenses....... 15,133,175 14,298,626
------------ ------------
Operating income............................. 342,499 3,203,362
Interest income.............................. 403,449 286,432
(Loss) Gain on sale of securities............ (6,346) 18,081
------------ ------------
Income before income taxes................... 739,602 3,507,875
Provision for income taxes................... 474,000 1,315,000
------------ ------------
Net income................................... 265,602 2,192,875

Other comprehensive income, net of tax
Unrealized (loss) gain on securities........ (99,000) 125,000
------------ ------------
Comprehensive income......................... $166,602 $2,317,875
============ ============

Net income per common share:
Basic...................................... $0.02 $0.12
============ ============
Diluted.................................... $0.01 $0.11
============ ============
Weighted average number of common shares
assumed outstanding:
Basic...................................... 17,315,847 18,080,940
Diluted.................................... 17,951,037 19,159,308

Note:

Net income for the first quarter of fiscal 2006 includes stock-based
compensation expense of $702,000, net of tax, due to the
implementation of FAS 123(R).

Net income for the first quarter of fiscal 2005 did not include
stock-based compensation expense under FAS 123. The table below
reflects net income and diluted net income per share for the first
quarter of fiscal 2006 compared with first quarter of fiscal 2005
including the pro forma stock-based compensation expense as follows:


Three Months Ended
----------------------------------------------------------------------
October 31, October 31,
2005 2004
----------------------------------------------------------------------
Net income -as reported for the first
quarter of fiscal 2005. $2,192,875
----------------------------------------------------------------------
Stock-based compensation expense, net of tax
- as reported for the first quarter of
fiscal 2005. ($584,000)
----------------------------------------------------------------------
Net income, including the effect of stock-
based compensation expense $265,602 $1,608,875
----------------------------------------------------------------------
Diluted net income per share - as reported
for the first quarter of fiscal 2005. $0.11
----------------------------------------------------------------------
Stock-based compensation expense, net of
tax, per share - as reported for the first
quarter of fiscal 2005. (0.03)
----------------------------------------------------------------------
Diluted net income per share, including the
effect of stock-based compensation expense. $0.01 $0.08
----------------------------------------------------------------------



POSSIS MEDICAL, INC. AND SUBSIDIARIES
NON-GAAP (PRO-FORMA) CONSOLIDATED STATEMENTS OF
INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)

For Three Months Ended

October 31, October 31,
2005 2004
------------ ------------

Product sales................................$15,475,674 $17,501,988
Cost of sales and other expenses:
Cost of medical products.................. 4,128,155 4,304,339
Selling, general and administrative....... 7,862,727 7,556,583
Research and development.................. 2,320,293 2,437,704
------------ ------------
Total cost of sales and other expenses....... 14,311,175 14,298,626
------------ ------------
Operating income............................. 1,164,499 3,203,362
Interest income.............................. 403,449 286,432
(Loss) Gain on sale of securities............ (6,346) 18,081
------------ ------------
Income before income taxes................... 1,561,602 3,507,875
Provision for income taxes................... 594,000 1,315,000
------------ ------------
Net income................................... 967,602 2,192,875

Other comprehensive income, net of tax:
Unrealized (loss) gain on securities........ (99,000) 125,000
------------ ------------
Comprehensive income......................... $868,602 $2,317,875
============ ============

Net income per common share:
Basic...................................... $0.06 $0.12
============ ============
Diluted.................................... $0.05 $0.11
============ ============
Weighted average number of common shares
assumed outstanding:
Basic...................................... 17,315,847 18,080,940
Diluted.................................... 17,951,037 19,159,308

Note: The impact of FAS 123(R) is excluded from the period ending
October 31, 2005; the period ending October 31, 2004, is shown as
reported.



POSSIS MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

October 31, July 31,
ASSETS 2005 2005
------------ ------------

CURRENT ASSETS:
Cash and cash equivalents................. $4,404,321 $5,257,244
Marketable securities..................... 40,365,735 39,169,811
Trade receivables (less allowance for
doubtful accounts and returns of
$677,000 and $669,000, respectively)..... 8,191,161 8,274,839
Inventories............................... 5,962,800 5,830,204
Prepaid expenses and other assets......... 938,420 1,158,214
Deferred tax asset........................ 1,042,000 1,042,000
------------ ------------
Total current assets......................... 60,904,437 60,732,312

PROPERTY AND EQUIPMENT, net.................. 5,102,407 4,879,221
DEFERRED TAX ASSET........................... 11,820,958 12,113,949
OTHER ASSET.................................. 440,425 425,914
------------ ------------

TOTAL ASSETS.................................$78,268,227 $78,151,396
============ ============

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Trade accounts payable.................... $2,140,551 $1,355,402
Accrued salaries, wages, and commissions.. 2,225,055 3,212,525
Other liabilities......................... 2,440,210 2,468,669
------------ ------------
Total current liabilities............... 6,805,816 7,036,596

OTHER LIABILITIES............................ 609,525 526,914

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
Common stock-authorized, 100,000,000
shares of $0.40 par value each; issued
and outstanding, 17,259,137 and
17,326,487 shares, respectively......... 6,903,655 6,930,595
Additional paid-in capital................ 75,841,526 75,725,188
Unearned compensation..................... (6,000) (15,000)
Accumulated other comprehensive loss...... (339,000) (240,000)
Retained deficit..........................(11,547,295) (11,812,897)
------------ ------------
Total shareholders' equity.............. 70,852,886 70,587,886
------------ ------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY...$78,268,227 $78,151,396
============ ============



POSSIS MEDICAL, INC. AND SUBSIDIARIES


AngioJet Key Business Indicators

Q1-05 Q2-05 Q3-05 Q4-05 Q1-06
----------------------------------------------------------------------
U.S. AngioJet Revenue - $17,199 $15,585 $14,690 $15,609 $15,029
$(000)
----------------------------------------------------------------------
U.S. Drive Units Sold 49 49 44 40 42
----------------------------------------------------------------------
U.S. Drive Units in the Field 1,371 1,422 1,461 1,509 1,560
----------------------------------------------------------------------
U.S. Catheter Utilization 9.3 8.3 7.8 8.2 7.5
----------------------------------------------------------------------
Gross Margin % 75% 74% 72% 74% 73%
----------------------------------------------------------------------

Net Income Per Diluted Share Q1-05 Q2-05 Q3-05 Q4-05 Q1-06
Net income per diluted share -
as reported for prior periods
(1) $0.11 $0.09 $0.06 $0.07 N/A
Stock-based compensation
expense, not of tax, per
share (2) $(0.03) $(0.04) $(0.04) $(0.07) $(0.04)
Net income per share including
the effect of stock-based
compensation expense (3) $0.08 $0.05 $0.02 $0.00 $0.01

Notes:
1. Net income and net income per share prior to fiscal 2006 did not
include stock-based compensation expense under FAS 123.
2. Stock-based compensation expense and stock-based compensation
expense per share prior to fiscal 2006 is calculated based on FAS
123 as previously disclosed in Possis' financial statement
footnotes.
3. Net income and net income per share prior to fiscal 2006
represents pro forma information based on FAS 123 as previously
disclosed in Possis' financial statement footnotes.