TUCSON, Ariz., April 22 /PRNewswire/ -- Ventana Medical Systems, Inc.
(Nasdaq: VMSI), the global leader in providing automated instrument-reagent
systems to histology labs, today reported record revenue for the first quarter
ended March 31, 1999.  Management also reported that the Company had made
significant progress in reducing its receivables during the same period.
    "Our first quarter results, which include a 51% increase in sales, reflect
both the strength of our core histology market and competitive position,"
stated Jack Schuler, Chairman.  "We experienced strong placements of our core
IHC, Special Stain and Tissue Processing systems during the first quarter and
strong reagent growth which was up 56% compared to the year-ago quarter.
    "Switching the histology market from manual to automated testing will
continue to fuel our growth for many years to come," added Schuler.  "Less
than one-third of the $150 million plus global IHC market has switched from
manual to automated testing and the $150 million Special Stains market remains
almost entirely manual."
    Net sales for the three months ended March 31, 1999 increased to a record
$15.6 million from $10.4 million for the same period in 1998.  Net income in
the first quarter was $1.2 million, up 54% from the $0.8 million recorded in
the prior year comparable quarter.  Earnings per diluted share of $0.09
increased 50% from the $0.06 per share reported in the first quarter of 1998.
Operating income for the first quarter of 1999 was $1.4 million, an increase
of 127% from the year-ago period.
    "This is our second consecutive quarter in which sales exceeded the prior
year by more than 50%," commented Schuler.  "We are very pleased with the
sales momentum we are building.  Consumable revenues were extremely strong,
primarily driven by the rate of new instrument placement which we have enjoyed
in the last six months," added Schuler.
    Schuler further commented:  "Our overall gross margin was down slightly
from the fourth quarter of 1998, as planned, due largely to special
introductory pricing on our Special Stains module, which ended on March 31.
Net income of $1.2 million included a tax provision for the first time in the
company's history, acknowledging the fact that the company will exhaust its
U.S. tax loss carry forward utilization during 1999."
    According to Schuler, the Company made strong progress in the quarter at
bringing its accounts receivable to a more controlled level.  "We reduced
receivable-days outstanding by 13 days to 91 days in the first quarter,
compared to 104 days on Dec. 31, 1998.  In fact, the dollar value of our
accounts receivable declined by $0.8 million despite a 7% increase in revenues
between the fourth quarter of 1998 and the first quarter of 1999.
Shareholders can expect that we will  continue to be focused on improved asset
management throughout the current year."
    Ventana also reported a decline in inventory levels during the quarter of
$77,000 and a reduction of its inventory on hand to 197 days as of March 31,
1999, compared to 235 days on Dec. 31, 1998.
    Safe Harbor Statement:  Statements in this press release which are not
strictly historical are "forward-looking" statements that are made pursuant to
the Safe Harbor provisions of the Private Securities Litigation Reform Act of
1995.  Forward-looking statements involve known and unknown risks, which may
cause the company's actual results in the future to differ materially from the
expected results.  The risks and uncertainties that may affect the results of
the company's business are described in the company's specific filings with
the Securities and Exchange Commission.
    Ventana develops, manufactures and markets instrument/reagent systems that
automate tissue preparation and slide staining in histology laboratories
worldwide.  Ventana's systems are important tools used in the diagnosis and
treatment of cancer and infectious diseases.

                          VENTANA MEDICAL SYSTEMS, INC.
                            CONSOLIDATED BALANCE SHEET
                       (in thousands except per share data)


                                                   March 31,       Dec. 31,
    ASSETS                                            1999           1998
                                                  (Unaudited)        (Note)
    Current assets:
      Cash and cash equivalents                       $2,113         $2,424
      Accounts receivable                             15,767         16,531
      Inventories                                     10,932         11,009
      Prepaid expenses                                 1,342            645
      Other current assets                             1,305          1,142
    Total current assets                              31,459         31,751
    Property and equipment, net                       12,184          9,937
    Intangible, net                                   14,498         14,592
    Total assets                                     $58,141        $56,280
    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities
      Accounts payable                                $3,211         $3,536
      Other current liabilities                        5,575          5,053
    Total current liabilities                          8,786          8,589
    Long term debt                                     1,843          1,907
    Stockholders' equity:
      Common stock - $.001 par value;
       50,000,000 shares authorized;
       13,465,206 and 13,421,819 shares issued
       and outstanding at March 31,1999 and
       December 31, 1998, respectively                    13             13
      Additional Paid-In Capital                      79,196         78,716
      Accumulated deficit                            (30,904)       (32,152)
      Cumulative foreign currency translation
       adjustment                                       (193)          (193)
      Treasury stock - 40,000 shares, at cost           (600)          (600)
    Total stockholders' equity                        47,512         45,784
    Total liabilities and stockholders' equity       $58,141        $56,280

    Note:  The consolidated balance sheet at December 31, 1998 has been
           derived from the audited financial statements at that date but
           does not include all of the information and footnotes required by
           generally accepted accounting principles for complete financial
           statements.

                          VENTANA MEDICAL SYSTEMS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                       (in thousands except per share data)
                                   (Unaudited)

                                                       Three Months Ended:
                                                            March 31,
                                                        1999           1998
    Sales:
      Instruments                                     $5,120         $3,595
      Reagents and other                              10,512          6,760
        Total net sales                               15,632         10,355
    Cost of goods sold                                 4,988          3,453

    Gross profit                                      10,644          6,902
    Operating expenses:
      Research and development                         1,629          1,200
      Selling, general and administrative              7,399          4,974
    Amortization of intangibles                          253            127
    Income from operations                             1,363            601
    Other income                                          24            210
    Pretax income                                     $1,387           $811
    Provision for income tax                             138             --
    Net income                                        $1,249           $811

    Basic earnings per share                           $0.09          $0.06
    Diluted earnings per share                         $0.09          $0.06


                          VENTANA MEDICAL SYSTEMS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (in thousands)
                                   (Unaudited)

                                                        Three Months Ended
                                                             March 31,
                                                        1999           1998
    Operating activities:
    Net income                                        $1,249           $811
    Adjustments to reconcile net income to
      cash provided by operating activities:
      Depreciation and amortization                      893            545
      Changes in operating assets and liabilities, net    61           (488)
    Net cash provided by operating activities          2,203            868

    Investing activities:
    Purchase of property and equipment, net           (2,885)          (342)
    Purchase of intangible assets, net                   (45)            (1)
    Net cash used in investing activities             (2,930)          (343)

    Financing activities:
    Repayment of debt                                    (64)            --
    Issuance of stock                                    480            902
    Net cash provided by financing activities            416            902

    Effect of exchange rate change on cash                --             21

    Net increase (decrease) in cash and cash equivalents (311)        1,448

    Cash and cash equivalents, beginning of period     2,424         18,902
    Cash and cash equivalents, end of period          $2,113        $20,350

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