I-Flow Reports Regional Anesthesia Sales Increase 35 Percent in the Second Quarter

LAKE FOREST, Calif. -- I-Flow Corporation announces that second quarter revenue in its regional anesthesia business increased 35 percent to $23 million, and that total revenue from continuing operations for the second quarter of 2007 increased 30 percent to $29.1 million vs. $22.4 million for the same period of the prior year. For the first half of 2007, regional anesthesia revenue increased 35 percent to a first-half record $42.1 million compared to $31.3 million for the first six months of 2006, and total revenue from continuing operations for the first half of 2007 increased 26 percent to $53.4 million vs. $42.3 million for the same period last year.

"Our regional anesthesia business is continuing to benefit from the successful implementation of our strategic initiatives to drive usage of our proprietary ON-Q® products for relieving post-surgical pain without narcotics, and ultimately to replace narcotics as the standard of care in this multi-billion-dollar market,” said Donald M. Earhart, chairman, president and CEO. “Our business generated cash during the second quarter and our cash position increased, even as we invested in the planned expansion of our marketing programs and ON-Q sales organization, which now numbers almost 200 quota-carrying sales professionals on our planned 300-person sales team."

Earhart added, "I am particularly pleased by the 20 percent sequential growth in regional anesthesia from the first quarter of 2007 to the second quarter of 2007. Given the size of the market opportunity, we intend to make every effort to make ON-Q a standard of care as rapidly as possible."

Earhart noted that clinical studies demonstrating the efficacy of ON-Q products in relieving post-surgical pain without narcotics have played a significant role in helping I-Flow establish its position of market leadership. Last quarter the company reported on the results of an infection meta-analysis which revealed a lower rate of surgical site infections with ON-Q than standard pain relief treatments. The company also reported on the first pediatric study highlighting the positive outcomes seen when ON-Q is used to treat pain after surgery in young heart patients. In addition, an independent pain relief meta-analysis published in a surgical journal in December 2006 confirmed the efficacy of continuous wound catheters that deliver local anesthetic, including ON-Q, for post-surgical pain relief.

"By encouraging more and more hospitals, ambulatory surgery centers, surgeons, anesthesiologists and their patients to use our products, we believe the accumulation of consistently positive clinical study results such as these contributes significantly to our sustained rapid growth in ON-Q sales," Earhart said, adding, "During the second quarter we expanded our ongoing study of the effects of ON-Q PainBuster® with ON-Q SilverSoakerTM Antimicrobial Catheter in reducing surgical site infections in colorectal surgery to more than 167 patients, and submitted data to the FDA in support of our request for an expanded efficacy claim in this application. We also announced an innovative strategic alliance with GE Healthcare to conduct clinical trials and explore joint opportunities in the anesthesiology market. In the initial phase of this alliance, I-Flow has initiated a multi-center, prospective, randomized clinical study designed to measure the effectiveness of using GE's compact ultrasound devices for making nerves easier to find when I-Flow's ON-Q® C-bloc® Continuous Nerve Block System is used. We expect to place into service at least 40 of GE's compact ultrasound systems for this study during the remainder of 2007, with additional units planned for next year.”

Source: I-Flow Corporation

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