8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

May 10, 2005

Date of Report

(Date of earliest event reported)

RITA Medical Systems, Inc.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation)

000-30959	94-3199149
(Commission File Number)	(I.R.S. Employer Identification No.)

46421 Landing Parkway

Fremont, CA 94538

(Address of principal executive offices, with zip code)

(510) 771-0400

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition

On May 10, 2005, RITA Medical Systems, Inc., a Delaware corporation (“RITA”), will announce its financial results for the first quarter and three months ended March 31, 2005. A copy of RITA’s press release announcing these financial results is attached as Exhibit 99.1 hereto and incorporated by reference herein.

On May 10, 2005, RITA will hold a conference call to discuss its financial results for the first quarter and three months ended March 31, 2005. A copy of the slides to be presented by RITA during this conference call is attached as Exhibit 99.2 hereto and incorporated by reference herein.

RITA uses, and the press release and the conference call refer to, non-GAAP measures of first quarter gross margin, net loss and net loss per common share that are adjusted from GAAP results to exclude certain merger related items. RITA uses a non-GAAP measure of gross margin, excluding merger related expenses, because it believes that these expenses reflect unusual costs driven by integration of its operations and, as such, does not help RITA predict future margins. Similarly, RITA uses non-GAAP measures of net loss excluding merger related expenses, including severance, because it believes the merger related expenses in RITA’s current results are unlikely to affect future periods, at least to the same extent, and are therefore not helpful to RITA in predicting its future results of operations. Reconciliations of these measures to the most directly comparable GAAP measures are included in the press release.

Additionally, RITA uses, and the conference call will refer to, a non-GAAP measure of sales figures for the third quarter of 2004, which include the July 2004 results of Horizon Medical Products, with which RITA merged in July 2004. The reconciliation of third quarter 2004 GAAP sales to non-GAAP sales is as follows (in thousands):

	Three Months Ended September 30, 2004
	Domestic		International		Total
GAAP sales, Q3 2004	$	6,828	$	1,123	$	7,951
Add: July 2004 sales of specialty access catheter products by Horizon		1,218		102		1,320
Non-GAAP sales, Q3 2004	$	8,046	$	1,225	$	9,271

Furthermore, RITA uses, and the conference call will refer to, as a metric earnings before interest, taxes, depreciation and amortization (“EBITDA”). The calculation of EBITDA has no basis in GAAP. The reconciliation of EBITDA from GAAP net loss is as follows:

	Three Months Ended March 31,
	2005			2004
GAAP net loss	$	(1,689	)	$	(2,170	)
Add: Depreciation and amortization		970			431
Add: Interest expense		287			—
Add: Integration expenses		682			—
Deduct: (Interest income) and other expense, net		(65	)		(10	)
EBITDA, net of integration expenses	$	185		$	(1,749	)

RITA believes that each of these non-GAAP metrics and EBITDA provides useful information to investors, permitting a better evaluation of RITA’s ongoing business performance, including evaluation of RITA’s performance against its competitors in the healthcare industry. The presentation of these non-GAAP metrics and EBITDA is not meant to be considered in isolation or as a substitute for RITA’s financial results prepared in accordance with GAAP.

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits:

99.1 Press Release of RITA Medical Systems, Inc. dated May 10, 2005.

99.2 Power Point Presentation of RITA Medical Systems, Inc. Q1 2005 Conference Call.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	RITA Medical Systems, Inc.
Date: May 10, 2005	By:	/s/ Donald Stewart
		Donald Stewart
		Chief Financial Officer and
		Vice President, Finance and Administration

RITA MEDICAL SYSTEMS, INC.

INDEX TO EXHIBITS

Exhibit Number	Description
99.1	Press Release of RITA Medical Systems, Inc. dated May 10, 2005
99.2	Power Point Presentation of RITA Medical Systems, Inc. Q1 2005 Conference Call.

EX-99.1

Exhibit 99.1

Contact:	Allen & Caron Inc	RITA Medical Systems, Inc.
	Jill Bertotti (investors)	Don Stewart, Chief Financial Officer
	Len Hall (media)	Stephen Pedroff, VP Marketing Communications
	949-474-4300	(510) 771-0400
	jill@allencaron.com	dstewart@ritamed.com
	len@allencaron.com	spedroff@ritamed.com

RITA MEDICAL SYSTEMS ANNOUNCES FIRST QUARTER 2005 RESULTS

Fremont, Calif., May 10, 2005 . . . RITA Medical Systems, Inc. (Nasdaq: RITA), a leading medical oncology device company, today announced that growth in utilization and reorder rates in its core radiofrequency ablation (RFA) and specialty access catheter (SAC) businesses as well as continued strength in international channels, resulted in total sales for the first quarter ended March 31, 2005 of $11.2 million, The Company received an additional $200,000 in orders which were backordered as of March 31, 2005 and will be shipped and recognized as revenue in the second quarter. Gross margins improved in the quarter to 57%, up sequentially from 54% in the 2004 fourth quarter. Gross margins reflect among other items $622,000 in merger related expenses included in cost of goods sold in the 2005 first quarter and $967,000 in merger related expenses included in cost of goods sold in the 2004 fourth quarter. Non-GAAP gross margins for these periods, excluding merger related expenses, were 63% for the 2005 first quarter and 62% for the 2004 fourth quarter.

The net loss for the 2005 first quarter was $1.7 million, or $0.04 loss per share, a 22 percent improvement from the net loss of $2.2 million, or $0.12 loss per share, in the 2004 first quarter. The loss for the 2005 first quarter reflects a total of $682,000 in merger related expenses. The loss for the 2005 first quarter also includes approximately $600,000 in expenses related to the Company’s annual audit and efforts to comply with the Sarbanes-Oxley Act of 2002, an increase of $500,000 over the prior year. Net loss for the 2005 first quarter, determined on a non-GAAP basis excluding merger related costs and expenses, was $1.0 million or $0.02 loss per share. Merger-related and Sarbanes-Oxley compliance expenses are expected to decrease substantially in coming periods.

The merger related expenses included in the 2005 first quarter results are associated with the Company’s merger with Horizon Medical Products, completed in July 2004. A reconciliation of GAAP and non-GAAP results is provided below.

Sequentially, total sales in the 2005 first quarter improved from total sales of $11.0 million in the 2004 fourth quarter, including sequential increases of 16.0% in domestic radiofrequency electrode utilization and 19.3% in domestic specialty access port sales.

MORE – MORE – MORE

RITA MEDICAL SYSTEMS REPORTS 1^ST QUARTER 2005 RESULTS

2-2-2

The company noted that positive sales momentum continued in the period as both RFA and SAC order rates continued to grow. In addition, growth in cross-selling indicated that the sales force integration and training are returning positive revenue results among the Company’s combined installed customer base.

Joseph DeVivo, President and CEO of RITA Medical Systems commented, “New orders from existing customers in the quarter showed strong growth and we expect that the new products we launched at the end of the first quarter will help keep sales momentum strong going forward.” Mr. DeVivo continued, “Another positive indicator of growth in the quarter came from international sales of our specialty access catheter products which were at record levels for the quarter.”

Operating expenses for the 2005 first quarter were $7.8 million, compared to $5.2 million in the 2004 period. This increase is primarily due to the additional headcount and operating expenses associated with the Horizon merger, as none of Horizon’s expenses are included in the Company’s first quarter 2004 results. Also, the 2005 period includes audit and Sarbanes-Oxley compliance costs of approximately $600,000, approximately $500,000 higher than in the first quarter of 2004, as well as $400,000 in additional amortization charges relating to intangible assets created with the Horizon merger. The Company has also accelerated its investigation of the application of RF technology in the fields of kidney and breast cancer, resulting in a modest increase in research and development expenses.

Mr. DeVivo noted, “While we budgeted what we believed was a sufficient amount to perform our audit and Sarbanes-Oxley compliance work, we learned that it was difficult to accurately predict the total costs associated with our compliance with this complex legislation. We remain committed to Sarbanes-Oxley compliance in 2005 but expect associated costs to decrease substantially in the coming quarters.” Mr. DeVivo continued, “The transfer of manufacturing from California to our facility in Georgia is proceeding; however in the first quarter we maintained limited manufacturing capability in Mountain View which negatively impacted our gross margins. We expect our California manufacturing operations to remain open through the second quarter. The overall manufacturing output of both facilities, given the challenges of cross-training and implementing quality controls, also resulted in lower than expected manufacturing output which contributed to the backorder.”

As of March 31, 2005, cash, cash equivalents, and marketable securities totaled $6.2 million, current assets were $20.7 million, the current ratio was 2.8:1, total assets were $144.1 million, debt was $10.2 million and stockholders’ equity was $127.2 million. In February 2005 the Company pre-paid $6.5 million to certain holders of the Company’s debt.

MORE – MORE – MORE

RITA MEDICAL SYSTEMS REPORTS 1^ST QUARTER 2005 RESULTS

3-3-3

Significant milestones and developments regarding RITA Medical Systems and radiofrequency ablation during the first quarter of 2005 included:

• RITA hired Dr. Jelle Kylstra, Vice President, Medical Director to promote the Company’s efforts to increase acceptance of RFA in the medical oncology community.

• Physician’s Weekly Magazine, Surgery Edition, published a feature article highlighting Radiofrequency Ablation Assisted Lumpectomy breast cancer treatment developed at the Arkansas Cancer Research Center by Dr. Suzanne Klimberg.

• The Radiological Society of North America issued a press release highlighting publication of clinical study showing positive 5-year survival rates for primary liver cancer patients treated with RFA.

• RITA sponsored the “Innovations in Breast Conservation Surgery” symposium prior to the Society of Surgical Oncology annual meeting.

• The Journal of Clinical Oncology March 1, 2005 published a clinical study from the Cleveland Clinic suggesting survival benefit for metastatic colorectal liver cancer patients treated with RFA.

• RITA introduced the Starburst^™ TALON radiofrequency electrode for sale in the U.S. and Europe.

• The Society of Interventional Radiology issued two press releases highlighting the use of RFA to treat bone cancer and lung cancer.

Use Of Non-GAAP Financial Measures

The Company uses, and this press release contains, non-GAAP measures of first quarter gross margin, net loss and net loss per common share that are adjusted from GAAP results to exclude certain merger related items. The Company uses a non-GAAP measure of gross margin, excluding merger related expenses, because it believes that these expenses reflect unusual costs driven by integration of its operations and, as such, does not help the Company predict future margins. Similarly, the Company uses a non-GAAP measure of net loss excluding merger related expenses, including severance, because these merger-related expenses are unlikely to affect future periods, at least to the same extent, and are therefore not helpful to the Company in predicting its future results of operations. The Company believes that each of these non-GAAP measures provide useful information to investors, permitting a better evaluation of the Company’s ongoing business performance, including evaluation of the Company’s performance against its competitors in the healthcare industry. The presentation of these non-GAAP measures is not meant to be considered in isolation or as a substitute for the Company’s financial results prepared in accordance with GAAP. Reconciliations of these measures to the most directly comparable GAAP measures follow below.

MORE – MORE – MORE

RITA MEDICAL SYSTEMS REPORTS 1^ST QUARTER 2005 RESULTS

4-4-4

Reconciliation of GAAP to non-GAAP gross margin (in thousands):

	Three Months Ended March 31,						Three Months Ended December 31,
	2005			2004			2004
GAAP sales	$	11,205		$	4,644		$	10,961
GAAP cost of goods sold		4,805			1,615			5,094
Adjustment to remove manufacturing and inventory costs associated with integration of operations		(622	)		—			(967	)
Non-GAAP cost of goods sold		4,183			1,615			4,127
Non-GAAP gross profit	$	7,022		$	3,029		$	6,834
Non-GAAP gross margin		63	%		65	%		62	%

Reconciliation of GAAP to non-GAAP net loss and net loss per common share, basic and diluted (in thousands):

	Three Months Ended March 31,
	2005			2004
GAAP net loss	$	(1,689	)	$	(2,170	)
Adjustment to remove manufacturing and inventory costs associated with integration of operations		622			—
Adjustment to remove other integration expenses		60			—
Non-GAAP net loss	$	(1,007	)	$	(2,170	)
Non-GAAP net loss per common share, basic and diluted	$	(0.02	)	$	(0.12	)
Shares used in computing non-GAAP net loss per common share, basic and diluted		41,457			17,998

MORE – MORE – MORE

RITA MEDICAL SYSTEMS REPORTS 1^ST QUARTER 2005 RESULTS

5-5-5

Conference Call Information

Management will host a conference call to be broadcast live on the Internet today at 11:30 a.m. EST (Eastern). Slides will be used to accompany this conference call. To access the webcast and slides, please go to the webcast link provided on the home page of RITA’s website at http://www.ritamedical.com and click on the “Conference Call/Audio Webcast” link. After you register your name and company, you will be given access to the webcast and slides. Web participants are encouraged to go to the webcast site at least 15 minutes prior to the start of the call to register, download and install any necessary software. An archive of the call can also be accessed at this site. Any financial and other statistical information discussed during the call can be accessed from the home page of RITA’s website at http://www.ritamedical.com.

About RITA Medical Systems, Inc.

RITA Medical Systems develops manufactures and markets innovative products for cancer patients including radiofrequency ablation (RFA) systems for treating cancerous tumors as well as percutaneous vascular and spinal access systems. The Company’s oncology product lines include implantable ports, some of which feature its proprietary VTX® technology; tunneled central venous catheters; and stem-cell transplant catheters used primarily in cancer treatment protocols. The proprietary RITA system uses radiofrequency energy to heat tissue to a high enough temperature to ablate it or cause cell death.

The statements in this news release related to the use of the Company’s technology and the Company’s future financial and operating performance, including without limitation the costs and success of the Company’s integration with Horizon, the Company’s ability to achieve its sales revenue goals, the Company’s ability to comply with the Sarbanes-Oxley Act of 2002, the Company’s transfer of its manufacturing activities, the Company’s ability to achieve and sustain profitability and the rate of growth of the Company’s international sales and sales of specific product lines, are forward-looking statements involving risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. Information regarding these risks is included in the Company’s filings with the Securities and Exchange Commission.

TABLES FOLLOW

MORE – MORE – MORE

RITA MEDICAL SYSTEMS REPORTS 1^ST QUARTER 2005 RESULTS

6-6-6

RITA MEDICAL SYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, unaudited)

	March 31, 2005		December 31, 2004
Assets
Current assets:
Cash and cash equivalents	$	5,906	$	12,978
Marketable securities		251		880
Accounts and note receivable, net		6,480		6,410
Inventories		6,881		7,126
Prepaid assets and other current assets		1,219		792
Total current assets		20,737		28,186
Long term note receivable, net		140		177
Property and equipment, net		1,865		1,966
Goodwill		91,339		91,339
Intangible assets		29,885		30,600
Other assets		139		41
Total assets	$	144,105	$	152,309
Liabilities and stockholders’ equity
Accounts payable and accrued liabilities	$	6,629	$	6,731
Current portion of long term debt		708		7,200
Total current liabilities		7,337		13,931
Long term liabilities		9,534		9,722
Stockholders’ equity		127,234		128,656
Total liabilities and stockholders’ equity	$	144,105	$	152,309

MORE – MORE – MORE

RITA MEDICAL SYSTEMS REPORTS 1^ST QUARTER 2005 RESULTS

7-7-7

RITA MEDICAL SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data, unaudited)

	Three Months Ended March 31,
	2005			2004
Sales	$	11,205		$	4,644
Cost of goods sold		4,805			1,615
Gross profit		6,400			3,029
Operating expenses:
Research and development		1,039			843
Selling, general and administrative		6,768			4,366
Restructuring charges		60			—
Total operating expenses		7,867			5,209
Loss from operations		(1,467	)		(2,180	)
Interest expense		(287	)		—
Interest income and other (expense), net		65			10
Net loss	$	(1,689	)	$	(2,170	)
Net loss per common share, basic and diluted	$	(0.04	)	$	(0.12	)
Shares used in computing net loss per common share, basic and diluted		41,457			17,998

#####

EX-99.2

Exhibit 99.2

RITA Medical Systems, Inc.

(Nasdaq: RITA)

Q1 2005 Conference Call

Safe Harbor Statement

This conference call includes forward-looking statements involving risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. Forward looking statements are based on current expectations as of today. We undertake no obligation to provide updates to these expectations during the year. For those specific factors that can cause actual results to differ from our statements, we refer you to the “Risk Factors” and other disclosures included in the company’s periodic filings with the Securities and Exchange Commission.

Use of Non-GAAP Financial Measure

The Company uses, and this presentation refers to, non-GAAP measures of first quarter gross margin, net loss and net loss per common share that are adjusted from GAAP results to exclude certain merger related items. The Company uses a non-GAAP measure of gross margin, excluding merger related expenses, because it believes that these expenses reflect unusual costs driven by integration of its operations and, as such, does not help the Company predict future margins. Similarly, the Company uses non-GAAP measures of net loss excluding merger related expenses, including severance, because it believes the merger related expenses in the Company’s current results are unlikely to affect future periods, at least to the same extent, and are therefore not helpful to the Company in predicting its future results of operations. Additionally, the Company uses, and this presentation refers to, as a metric earnings before interest, taxes, depreciation and amortization (“EBITDA”). The calculation of EBITDA has no basis in GAAP. The Company believes that each of these non-GAAP metrics and EBITDA provides useful information to investors, permitting a better evaluation of RITA’s ongoing business performance, including evaluation of RITA’s performance against its competitors in the healthcare industry. Reconciliations of these measures to the most directly comparable GAAP measures follow below.

The presentation by the Company of the non-GAAP metrics and EBITDA is not meant to be considered in isolation or as a substitute for the Company’s financial results prepared in accordance with GAAP. In accordance with Regulation G, a presentation of the most directly comparable GAAP measures and a discussion of the Company’s use of the non-GAAP measures are presented in the Company’s May 10, 2005 press release, which was filed with the SEC on a Current Report on Form 8-K filing on or about May 10, 2005. Furthermore, in accordance with Regulation G, a presentation of the most directly comparable GAAP measures and a discussion of the Company’s use of the EBITDA financial measures is presented in the Company’s Current Report on Form 8-K, which was filed on or about May 10, 2005. A copy of this May 10, 2005 press release and this Current Report on Form 8-K can be found on the “Investor Relations—Press Releases” section of the Company’s website at http://www.ritamedical.com.”

Conference Call Schedule

Joseph DeVivo, President and CEO

Don Stewart, CFO – Q1 Financial Results

Trent Reutiman, VP Sales & Marketing – Q1 Results

Darrin Uecker, CTO – Q1 Highlights

Dr. Jelle Kylstra, VP, Medical Director –Clinical Update

Questions and Answers

Joseph M. DeVivo

President & Chief Executive Officer

Introduction

Q1 2005 Update

Key Clinical Data

Sales Momentum

Sarbanes-Oxley

Manufacturing Integration

Donald J. Stewart

Chief Financial Officer

Q1 2005 Results

Q1 2005 GAAP Statement of Operations

Three Months Ended

March 31, 2004 June 30, 2004 Sept. 30, 2004 Dec. 31, 2004 March 31, 2005

Sales $4,644 $4,659 $7,951 $10,961 $11,205

Segment Information:

United States $3,671 $3,723 $6,662 $9,077 $9,523

International $973 $936 $1,129 $1,540 $1,573

Other Revenue $160 $344 $109

United States Sources of Revenue

New Customer Revenue $350 $428 $446 $815 $285

Utilization Revenue $3,321 $3,295 $2,215 $2,780 $3,226

Ports $2,534 $3,434 $4,098

Other Specialty Access Catheters $1,467 $2,048 $1,914

Cost of goods sold 1,615 1,670 2,821 5,094 4,805

Gross profit 3,029 2,989 5,130 5,867 6,400

Gross Profit Margin 65% 64% 65% 54% 57%

Operating expenses:

Research and development 843 981 928 1,035 1,039

Selling, general and administrative 4,366 4,018 6,139 6,114 6,768

Restructuring charges—- 1,089 220 60

Total operating expenses 5,209 4,999 8,156 7,369 7,867

Loss from operations (2,180) (2,010) (3,026) (1,502) (1,467)

Interest income and other expense, net 10 7 (232) (370) (222)

Net loss $(2,170) $(2,003) $(3,258) $(1,872) $(1,689)

Net loss per share, basic and diluted $(0.12) $(0.11) $(0.10) $(0.05) $(0.04)

Shares used in computing net loss per share, basic and diluted 17,998 18,025 31,079 38,574 41,457

Q1 2005 Pro Forma Gross Margin

Three Months Ended March 31,

2005 2004

GAAP sales $11,205 $4,644

GAAP cost of goods sold 4,805 1,615

Adjustment to remove manufacturing and inventory costs associated with integration of operations (622) -

Non-GAAP cost of goods sold 4,183 1,615

Non-GAAP gross profit $7,022 $3,029

Non-GAAP gross margin 63% 65%

Q1 2005 GAAP to Pro Forma Loss

Three Months Ended March 31,

2005 2004

GAAP net loss $(1,689) $(2,170)

Adjustment to remove manufacturing and inventory costs associated with integration of operations 622 -

Adjustment to remove other integration expenses 60 -

Non-GAAP net loss $(1,007) $(2,170)

Non-GAAP net loss per common share, basic and diluted $(0.02) $(0.12)

Shares used in computing non-GAAP net loss per common share, basic and diluted 41,457 17,998

Q1 GAAP to EBITDA

Three Months Ended March 31,

2005 2004

GAAP net loss $(1,689) $(2,170)

Add: Depreciation and amortization 971 431

Add: Interest expense 287 -

Add: Integration expenses 682 -

Deduct: (Interest income) and other expense, net (65) (10)

EBITDA, net of integration expenses $186 $(1,749)

GAAP to non-GAAP Sales

3rd Quarter 2004 4th Quarter 2004 1st Quarter 2005

GAAP Non-GAAP GAAP GAAP

Domestic RFA $2.8 $2.8 $3.7 $3.6

SAC $4.0 $5.2 $5.7 $6.0

Total $6.8 $8.0 $9.4 $9.6

International RFA $0.8 $0.8 $1.0 $0.9

SAC $0.4 $0.5 $0.6 $0.7

Total $1.2 $1.3 $1.6 $1.6

Total $8.0 $9.3 $11.0 $11.2

Balance Sheet

RITA MEDICAL SYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, unaudited)

March 31, 2005 December 31, 2004

Assets

Current assets:

Cash and cash equivalents $5,906 $12,978

Marketable securities 251 880

Accounts and note receivable, net 6,480 6,410

Inventories 6,881 7,126

Prepaid assets and other current assets 1,219 792

Total current assets 20,737 28,186

Long term note receivable, net 140 177

Property and equipment, net 1,865 1,966

Goodwill 91,339 91,339

Intangible assets 29,885 30,600

Other assets 139 41

Total assets $144,105 $152,309

Liabilities and stockholders’ equity

Accounts payable and accrued liabilities $6,629 $6,731

Current portion of long term debt 708 7,200

Total current liabilities 7,337 13,931

Long term liabilities 9,534 9,722

Stockholders’ equity 127,234 128,656

Total liabilities and stockholders’ equity $144,105 $152,309

Trent C. Reutiman

V.P. U.S. Sales & Marketing

Q1 2005 Sales Results

Domestic RFA

New Business

$1,000,000 $800,000 $600,000 $400,000 $200,000 $0

Q3 2004 Q4 2004 Q1 2005

New Direct $440,000 $332,000 $483,000

Initial Investment by Distributors

$285,000

Utilization

$3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000

Q3 2004 Q4 2004 Q1 2005

$2,215,000 $2,780,000 $3,226,000

International RFA

International RFA Sales

$1,100,000 $1,000,000 $900,000 $800,000 $700,000 $600,000 $500,000 $400,000

Q3 2004 Q4 2004 Q1 2005 $760,376 $992,996 $926,843

International Specialty Access Catheters

Ports

$400,000 $300,000 $200,000 $100,000 $0

Q3 2004 Q4 2004 Q1 2005

$259,100 Aug / Sep Sales

$54,000 Pro forma + July Sales

$357,000 $425,100

Other SAC

$200,000 $100,000 $0

Q3 2004 Q4 2004 Q1 2005

$108,000 Aug / Sep Sales

$49,000 Pro forma + July Sales

$191,000 $225,400

Domestic Specialty Access Catheters

Ports

$4,000,000 $3,000,000 $2,000,000 $1,000,000 $0

Q3 2004 Q4 2004 Q1 2005

$2,501,000 Aug / Sep Sales

$836,000 Pro forma + July Sales

$3,434,000 $4,098,000

Other SAC

$4,000,000 $3,000,000 $2,000,000 $1,000,000 $0

Q3 2004 Q4 2004 Q1 2005

$1,502,000 Aug / Sep Sales

$416,000 Pro forma + July Sales

$2,048,000 $1,914,000

Talon RFA Device

Side-Deployment designed so as to enable improved penetration of mobile tumors

Easier positioning designed for both surface and difficult to reach dome lesions

Integrated main cable & tubing designed set for easy set-up

Solid tip designed for improved penetrations of hard tumors

Used for percutaneous, laparoscopic & open cases

Proprietary real-time temperature feedback designed to ensure controlled ablations

Tip Placed to Distal Margin of Tumor

Side-Deployed Tines Penetrate Tumor to 1cm Margin

4cm Spherical Ablation Created Using RITA Temperature Control

Peripherally Located Lesion

Darrin Uecker

Chief Technology Officer

Q1 2005 Highlights

Manufacturing Transfer

Produced approximately 45% of all RF electrodes in Manchester Facility in Q1

Quarter started slow, however March production was above the demand run rate, producing nearly 60% of all electrodes for the quarter in the month of March.

April production was well over 100% of current demand run rate for the product families transferred.

RFA Q1 Production in Manchester

% of Quarterly Output

70% 60% 50% 40% 30% 20% 10% 0%

Jan Feb March

In March production was in excess of demand run rate

R&D Product Launches

Talon RF Electrode

Designed for easier and faster electrode positioning

Designed for improved tumor anchoring

Leverages current infusion platform

Vortex EZ and Vortex EZ Max

Designed with novel “suture anywhere” feature

Plastic and silicon port designed for MRI compatibility

Max catheter designed for improved imagining visibility

LifeGuard Vision

Designed for enhanced ease of use

Lowest profile Huber safety needle on the market

Regulatory Update

Received a response from FDA late February

Follow-on conference call with FDA

Ongoing discussion to determine next steps

No target date for FDA clearance at this time

Jelle Kylstra, MD

VP, Medical Director

Q1 2005 Clinical Update

Population Cleveland Clinic Study

(n=135, non-resectable)

Characteristic Mean +/- SEM

Median age, years: 62 +/-1

Sex, male (%): 63%

# of tumors treated with RFA: 3.2 +/- .2

# of metastases: 1-3 65 %

> 3 35 %

Extrahepatic disease present: 30 %

Largest size of met: < 3 cm 28 %

3-5 cm 45 %

> 5 cm 27 %

Pre-RFA chemotherapy: 80 %

Study Results—Overall Survival:

28.9 months post RFA,

44.6 months from diagnosis of metastases (Kaplan-Meier)

Percent Survival

100 90 80 70 60 50 40 30 20 10 0

0 1 2 3 4 5

Median Survival 2.4 Years

Years

Median Survival in Recent Comparative Studies

1st line chemotherapy alone: (months)

Irinotecan + infusional 5FU (Douillard) 17.4

Irinotecan, bolus 5FU + bevacizumab (Hurwitz) 20.3

FOLFOX4 (Sargeant) 19.5

FOLFOX6 +FOLFIRI (Gercor) 21.6

Floxuridine Hepatic Artery Infusion (CALGB, Kemeny) 24.4

2nd line chemotherapy alone:

FOLFOX4+bevacizumab (ECOG3200) 12.5

Irinotecan + cetuximab (“Bond” study) 8.6

2nd line RFA + chemotherapy:

Percutaneous RFA + 2nd line chemotherapy (DeBaère) 27

Laparoscopic RFA + 2nd line chemotherapy (Cleveland study) 28.9

Conclusions

Cleveland Study: RFA + modern chemotherapy as 2nd line treatment confers a median survival of 28.9 months, over a year better than reported with any chemotherapy regimen in a 2nd line setting;

Limited extra-hepatic disease pre-RFA does not affect outcome;

RFA can be performed with similar outcome either by laparoscopy (Cleveland study) or percutaneously (French study by DeBaère et al);

RFA is an adjuvant to modern chemotherapy:

RFA may be given concurrent with FOLFOX, IFL, or IFL+Erbitux;

Avastin may be added to FOLFOX or IFL 1 month after RFA

Joseph M. DeVivo

President and Chief Executive Officer

Summary

Q2 2005

Q2 2005

Revenues $11.5M to $12.2M

Gross Margin 63% to 66%

Integration $0.4M to $0.6M

Net Income/Net Integration ($0.4M) to $0.1M

EPS/Net Integration

2005 Full Year

Revenues $50M to $56M

Gross Margin 63% to 66%

Integration $1.2M to $1.8M

Net Income/Net Integration $1.0M to $2.7M

EPS/Net Integration

Questions and Answers