Advanced Neuromodulation Systems to Acquire Its Largest Distributor's Pain Management Business

Business Wire, March 13, 2003

Business Editors

DALLAS--(BUSINESS WIRE)--March 13, 2003

Sun Medical Acquisition Will Expand ANS' Direct Sales Force

in Key Southwest and Upper Midwest Territories

Advanced Neuromodulation Systems, Inc. (ANS) (Nasdaq:ANSI) today announced that it has agreed to acquire the pain management business of its largest distributor, Sun Medical, Inc. Sun Medical is a specialty medical device distributor based in Arlington, Texas.

"Sun Medical has earned the distinction of being ANS' largest distributor and customer for many years and has served as a major contributor to our company's growth. As our exclusive distributor in key territories throughout the Southwest and Upper Midwest, Sun has played a key long-term role in expanding the market for spinal cord stimulation (SCS). We are excited about transitioning Sun's pain products sales team from their current role as distributor sales representatives to direct ANS sales employees," commented Chris Chavez, ANS' President and Chief Executive Officer.

Scott Drees, ANS' Executive Vice President - Sales and Marketing, added: "By acquiring Sun's pain business, ANS will be better able to focus sales priorities on ANS products, expand sales coverage as needed and invest more heavily in key customer and market development. In the overall domestic market, ANS will continue to utilize a hybrid and highly entrepreneurial sales force, which includes: specialty pain distributors, independent sales agents, and direct sales people." ANS typically has contracts with its distributors and sales agents that provide for exclusive territories and established sales quotas. In 2002, Sun purchased $6.3 million of ANS products, or approximately 14% of net revenue derived from neuromodulation products.

Doug Archer, President of Sun Medical, commented: "We have been very proud to represent ANS' SCS products and contribute to the significant growth of the neuromodulation market. We appreciate the way in which ANS has approached us with this proposal and in how they have ensured a smooth transition that will result in a win-win result for both parties." Mr. Archer said he is confident that most, if not all, of Sun's pain management sales reps and clinical representatives will accept positions with ANS. Mr. Archer will become the Regional Sales Director of ANS' South Central Region upon completion of the transaction.

ANS said that the transaction is structured as an asset purchase. The transaction is subject to Sun's shareholders' approval and other customary terms and conditions. Other deal terms were not announced.

About Advanced Neuromodulation Systems

Advanced Neuromodulation Systems designs, develops, manufactures and markets implantable systems used to manage chronic intractable pain and other disorders of the central nervous system. Forbes magazine recently recognized ANS as one of America's 200 Best Small Companies. ANS recently reported that for the twelve months ended December 31, 2002, revenue increased 51% to $57.4 million from $37.9 million, as neuromodulation sales increased 70% to $46.7 million from $27.5 million for 2001. Net income for 2002 more than quadrupled to $6.7 million, or $0.56 per diluted share, from $1.5 million, or $0.15 per diluted share, for 2001. Additional information about ANS is available at www.ANS-medical.com.

"Safe harbor" statement under the Private Securities Litigation Reform Act of 1995:

Statements contained in this press release that are not based on historical facts are "forward-looking statements." Terms such as "plan," "should," "would," "anticipate," "believe," "intend," "estimate," "expect," "predict," and similar expressions are intended to identify forward-looking statements. Such statements are by nature subject to uncertainties and risks, including but not limited to: effectively integrating and transitioning Sun's pain management business; minimizing disruption to customer relationships; Sun's sales people accepting offered positions at ANS; receipt of Sun's shareholders' approval; and satisfaction of other closing conditions. Consequently, if such management assumptions prove to be incorrect or such risks or uncertainties materialize, anticipated results could differ materially from those forecast in forward-looking statements.