Patient Safety Technologies Reports Third Quarter Results
November 17, 2009

TEMECULA, Calif., Nov. 17 /PRNewswire-FirstCall/ -- Patient Safety Technologies, Inc. (OTC Bulletin Board: PSTX - News) today announced third quarter 2009 results. "We are continuing to see strong year over year growth and healthy increases in our gross margins," stated Steven H. Kane, Chief Executive Officer of Patient Safety Technologies. "While third quarter revenues from sales of safety sponges were comparable with revenues in the second quarter, we expect that significantly increased marketing activity, coupled with the upcoming implementation of recently signed accounts, should have a significant impact on future revenues. During the last quarter, PSTX reached the major milestone of having had a cumulative total of 20 million sponges used in over 700,000 surgical procedures." "Additionally," said Kane, "our recently launched indemnification program, whereby hospitals using the Safety-Sponge(TM) System in conjunction with PSTX's proprietary data manager, 'Citadel(TM)' are insured for up to $1 million per retained foreign object ('RFO') event, has increased interest in and accelerated adoption of PSTX system." Kane added: "As hospitals continue to embrace the PSTX solution to RFOs, we are actively expanding our sales and clinical presence in the marketplace to keep pace with our growing customer base." Third Quarter Results Revenues for the third quarter 2009 were $978 thousand, an increase of 11% from the $880 thousand reported for third quarter 2008. Third quarter 2009 gross margin was 44%, an improvement over third quarter 2008 gross margin of 29%. The improvement in gross margin was due primarily to the change in our business model, which shifted our sales mix to primarily sales of safety sponges (which have higher margins), and permitted us to depreciate most of the expense associated with our SurgiCounter(TM) scanners over the life of the scanner, thereby significantly reducing our cost of revenues. Operating loss for the third quarter 2009 was $1.5 million compared $1.4 million for the third quarter of 2008. Increased operating loss was the result of increased general and administrative expenses, which were only partially offset by higher gross profits on increased sales and lower costs of revenues. Net loss applicable to common shareholders for the third quarter was $3.4 million compared to net income of $0.2 million in the third quarter of 2008. The increase in our net loss was primarily driven by a significant increase in the fair value of our warrant derivative liability as measured by the increase in the publicly quoted price of our stock, which resulted in a non-cash expense of $1.8 million in the three months ended September 30, 2009, compared to income of $1.7 million in the same period in 2008. Revenues for the nine months ended September 30, 2009 were $2.9 million, an increase of 52% from the $1.9 million reported for the nine months ended September 30, 2008. Gross margin for the nine months ended September 30, 2009 was 42% compared to 31% for the nine months ended September 30, 2008. The improvement in gross margin was due primarily to the change in our business model, which shifted our sales mix to primarily sales of safety sponges (which have higher margins), and permitted us to depreciate most of the expense associated with our SurgiCounter(TM) scanners over the life of the scanner, thereby significantly reducing our cost of revenues. Net loss for the nine months ended September 30, 2009 was $10.9 million compared to a loss of $3.8 million for the nine months ended September 30, 2008. The increase in our net loss was primarily driven by a significant increase in the fair value of our warrant derivative liability as measured by the increase in the publicly quoted price of our stock, which resulted in a non-cash expense of $4.3 million in the nine months ended September 30, 2009, compared to income of $1.5 million in the same period in 2008. About Patient Safety Technologies, Inc. and SurgiCount Medical, Inc. Patient Safety Technologies, Inc., through its wholly owned operating subsidiary SurgiCount Medical, Inc., provides the Safety-Sponge(TM) System, a system designed to improve the standard of patient care and reduce healthcare costs by preventing the occurrence of surgical sponges and other foreign objects from being left inside patients after surgery. RFOs are among one of the most common surgical errors. For more information, contact SurgiCount at (951) 587-6201, or visit www.surgicountmedical.com.