Results Include First U.S. Commercial Sales

    MINNEAPOLIS, Feb. 5 /PRNewswire/ -- Urologix, Inc. (Nasdaq: ULGX),  a
rapidly emerging developer and marketer of minimally invasive medical products
for the treatment of urological disorders, said today that the combination of
the U.S. launch of the Targis(TM) System for the treatment of Benign Prostatic
Hyperplasia (BPH) and sales to international distribution partners allowed the
company to report a substantial increase in revenues for the second quarter of
fiscal 1998.
    Results for the quarter ended December 31, 1997 included sales of
$3.2 million versus $1.3 million in the same quarter a year ago and
$2.6 million in the quarter ending September 30, 1997.  Sales in the quarter
ended included the company's first U.S. commercial sales, which represented
25% of total sales.  The company incurred a net loss of $2.1 million or
21 cents per share in the quarter ended December 31, 1997 compared to a net
loss of $1.6 million or 17 cents per share in the same quarter a year ago.
    Sales for the six months ended December 31, 1997 were $5.8 million versus
$1.9 million in the same period a year ago.  Net loss for the six months ended
December 31, 1997 was $4.2 million or 43 cents per share versus $3.4 million
or 37 cents per share for the same period a year ago.  Shares used to
calculate per share amounts for the three and six months ended December 31,
1997 reflect the weighted average impact of the company's 1.725 million share
offering in November 1997.  The offering generated $31.5 million in net
proceeds, enabling the company to continue to expand its operations and
develop markets worldwide for the Targis System.
    "The second quarter of fiscal 1998 was an exciting transition period for
Urologix," said Jack Meyer, president and chief executive officer.  "We
formally launched the Targis System in the U.S., the world's largest BPH
market and we are pleased with the early response from the U.S. urological
community.  Because adoption by the medical community of new therapy
modalities is challenging, a key element of our strategy has been to focus our
efforts on leading urological centers in the United States.  We believe that
the successful long-term adoption and utilization of the Targis System is
enhanced by demonstrating treatment success through key opinion leaders.  The
Targis System has been acquired by some of the most prestigious urology
centers in the U.S.  This is a strategy we initiated with our clinical studies
and are continuing in our early commercial effort.  We are proud of our
association with these prestigious centers."
    "As previously stated, Urologix' marketing efforts in the U.S. will be
conducted principally through a direct sales force.  To date, eight sales
representatives have been hired and trained and we continue to recruit.  We
are extremely pleased with the caliber of sales personnel we have been able to
attract.  We believe they have the rare combination of skills necessary not
only to successfully articulate the clinical advantages of the Targis System
but also possess the business acumen to demonstrate how the system fits into a
changing reimbursement environment.  Additionally, they have the expertise to
be successful with the complex market development process we are embarking
upon," stated Meyer.
    "Our market development efforts in the U.S. have been enhanced by
significant reimbursement progress.  The 1998 CPT Code Book was published
during the quarter and included the previously assigned CPT code and value for
microwave thermotherapy.  This allows physicians to file for reimbursement for
their professional fee in performing a Targis procedure.  In addition,
Medicare carriers representing over 45 states have now indicated they will
cover microwave thermotherapy for BPH.  This reimbursement not only covers the
physician's professional fee but also the cost associated with providing a
Targis treatment when done in a Medicare licensed hospital outpatient
facility.  These developments, along with our recent agreement with GE Capital
to provide lease financing directly to our customers, will enhance our
potential customers' ability to economically justify the acquisition of a
Targis System," added Meyer.
    Internationally, Urologix is following a similar strategy of focusing on
leading urological centers with distribution partners, Boston Scientific and
Nihon Kohden.  Our partners are now focused not only on expanding the number
of customers who are using the Targis System but also on working closely with
existing customers to increase the utilization of their systems and obtain
reimbursement for Targis procedures.  The process includes demonstrating to
the urologist and payers the clinical value of the Targis treatment modality
and assisting urologists in changing their traditional treatment patterns.
    Certain statements in this press release that relate to future performance
of the company are "forward-looking" and are subject to risks and
uncertainties inherent in the company's business.  These risks and
uncertainties include: competition from other BPH treatments; the ability of
the company's distributors and representatives to successfully market and sell
the Targis System; the company's ability to manufacture the Targis Systems in
sufficient quantities; the company's ability to maintain intellectual property
protection for its proprietary products and to defend its existing
intellectual property rights from challenges by third parties; and the extent
to which the physicians performing the Targis System procedures are able to
obtain third-party reimbursement.  In addition, a detailed discussion of risks
and uncertainties may be found in the Risk Factors section of the company's
Prospectus dated November 12, 1997.
    Urologix, Inc., based in Minneapolis, develops, manufactures and markets
minimally invasive medical devices for the treatment of urological diseases.
The company has developed the Targis System, a non-surgical, anesthesia-free,
catheter-based therapy that uses a proprietary microwave technology for the
treatment of benign prostatic hyperplasia (BPH), a disease that affects over
23 million men worldwide.  The Targis System has been approved for marketing
in the United States, the European Union, Japan and Canada.

                                UROLOGIX, INC.
                      CONDENSED STATEMENTS OF OPERATIONS
                                 (Unaudited)

                             Three Months Ended         Six Months Ended
                                  December 31              December 31
                              1997          1996       1997           1996

    Sales                  $3,203,845    $1,285,675   $5,802,980   $1,871,800
    Cost of goods sold      2,140,126     1,154,468    3,878,427    1,876,021
      Gross profit (loss)   1,063,719       131,207    1,924,553       (4,221)
    Costs and expenses:
      Research and
        development         1,444,241     1,079,132    2,818,406    2,318,356
      Sales and marketing   1,520,866       541,774    2,853,832    1,026,818
        General and
        administrative        631,200       572,415    1,132,005    1,023,158
        Total costs and
          expenses          3,596,307     2,193,321    6,804,243    4,368,332

        Operating loss     (2,532,588)   (2,062,114)  (4,879,690)  (4,372,553)
    Interest income, net      392,281       464,666      723,723      985,420
    Net loss              $(2,140,307)  $(1,597,448) $(4,155,967) $(3,387,133)

    Basic and diluted net
      loss per common share    $(0.21)       $(0.17)      $(0.43)      $(0.37)
    Weighted average number
      of common shares
      outstanding          10,140,194     9,148,655    9,725,045    9,139,732

                             SELECTED BALANCE SHEET DATA
                                   (Unaudited)

                                December 31        June 30
                                   1997              1997
    Cash and marketable
      securities               $50,380,691       $26,100,809
    Current assets              58,428,970        30,160,769
    Total assets                63,729,166        35,582,087
    Current liabilities          3,567,648         3,147,319
    Long-term obligations           27,890            37,725
    Shareholders' equity        60,133,628        32,397,043

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