Given Imaging Announces First Quarter Results

Sales Increase 65% Compared to First Quarter 2002

Yoqneam, Israel, April 30, 2003 -- Given Imaging Ltd. (NASDAQ:GIVN), today announced first quarter results for the period ended March 31, 2003.

[To see the Financial Tables in detail, please refer to our web site: http://www.givenimaging.com/usa/press_release_detail.asp?id=94]

The Company announced revenues of $8.6 million for the first quarter of 2003, a 65% increase over the first quarter of 2002, but less than guidance of 100% growth over the first quarter of 2002. Gross margin increased to 67.2% of revenues, as compared to a gross margin of 52% in the first quarter of 2002 and 66.3% in the fourth quarter of 2002. Operating expenses were $9.7 million, $0.4 million lower than the $10.1 million recorded for the fourth quarter of 2002. Net loss for the first quarter was $3.6 million or ($0.14) per share, compared to $5.7M or ($0.23) per share in the first quarter of 2002, and slightly less than the loss of $3.7 million or ($0.15) per share in the fourth quarter of 2002.

While capsule sales grew by more than 110% compared to the first quarter of 2002 and were 25% higher than capsule sales in the fourth quarter of 2002, systems sales remained similar to the first quarter of 2002, and 31% less than systems sales in the fourth quarter of 2002. We believe that this lag in systems sales reflects the tendency of our prospective customers to carefully evaluate the system and the related reimbursement before committing to capital spending, which was exacerbated by the worldwide economic downturn and the unexpected impact of the war in Iraq on sales that were planned for the end of the quarter.

The Company’s liquidity remains strong and at the end of the quarter we had cash reserves amounting to $29.3 million.

First Quarter 2003 Revenue Analysis
On a geographic basis, sales of the Given System in the United States accounted for 58% of the quarterly revenues. A geographic breakdown of first quarter 2003 sales is as follows:
(Millions of U.S. dollars)

• United States $5.0
• Europe $1.4
• ROW $2.2
• Total $8.6

During the quarter, worldwide M2A capsule sales grew to more than 10,200, representing 52% of revenues. M2A reorders in the first quarter increased to more than 8,600, or 84% of total M2A sales.

Sales of workstations totaled 161 for the first quarter of 2003 with 86, or 53%, sold in the United States. Sales of recorders totaled 297 during the quarter with 170 recorders or 57% sold in the United States. Worldwide deliveries of Given Systems reached more than 1,170 by the end of the first quarter of 2003.

"During the first quarter of 2003 we saw a steady increase in M2A usage by existing customers particularly in the U.S. which reflects growing familiarity with the system and a more favorable reimbursement climate," said Gavriel Meron, President and CEO of Given Imaging, Ltd. "We anticipate that this trend will continue as we gain additional reimbursement coverage in the U.S. and abroad, and as reimbursement policies expand to include indications beyond bleeding such as Crohn’s disease."

"As we enter the second quarter, we expect to see a growing number of product demonstrations that have been performed by our sales team convert into sales, spurred by first hand experience with Capsule Endoscopy as well as additional validation through peer-review publications and scientific discussion at this year’s Digestive Disease Week in May."

Highlights
In the first quarter, Given Imaging accomplished the following milestones:

• Launched the Rapid 2 System in the United States with Suspected Bleeding Indicator following FDA clearance.
• Installed a back-up line in Ireland that is now operational, and completed installation of a second semi-automated line in Yoqneam, Israel.
• Commenced clinical trials for clearance of Capsule Endoscopy in Japan, the second largest healthcare market in the world in terms of spending. We expect clinical trials to be completed by the end of 2003.
• Hosted the Second International Conference on Capsule Endoscopy (ICCE) in Berlin. More than 160 gastroenterologists from around the world attended the conference and exchanged clinical experience using the M2A capsule. A presentation of the consensus of the conferences is provided on the Company’s website, www.givenimaging.com.

Reimbursement update

• More than 100 million individuals worldwide now have reimbursable access to capsule endoscopy, of which 20 million are covered for a wide range of indications, including Crohn’s disease and other small bowel pathology, and 80 million beneficiaries are currently covered only for obscure bleeding, which is a far smaller indication in the population.
• The total number of United States residents with reimbursable access to capsule endoscopy is now 86 million, representing 35% of the insured population. This reflects an increase in the number of individuals eligible for capsule endoscopy by more than 48 million. The majority of these coverage statements relate to bleeding indications and require that a previous procedure be performed prior to using the Given System. The breakdown of coverage between private payers and Medicare in the United States is as follows:
  • The number of individuals with access to capsule endoscopy through private insurance increased by 42 million to 63 million. Private payers that issued capsule endoscopy coverage policies during the quarter including Blue Shield of California, Wellpoint, Excellus, Univera, Healthnet, and the Blue Cross and Blue Shields of Alabama, Arkansas and Minnesota. In addition, the Company recently announced that Aetna has issued a national coverage policy for capsule endoscopy.
  • The number of individuals covered by Medicare reached 23 million - an increase of 5.7 million.
• Received capsule endoscopy reimbursement in Portugal and Austria covering a total of 18 million individuals. In both countries, coverage is for a broad range of gastrointestinal disorders.

Revised Annual Guidance
Based on in-depth evaluation of the factors that impacted system sales in the first quarter, which was conducted following the quarter revenue pre-announcement earlier this month, Given Imaging anticipates that in light of the longer sales cycle of new systems, and anticipated continued overall slowdown in capital expenditure by our potential customers, total revenues for the full year 2003 will increase by 40% to 50% over 2002 sales, compared to previously stated guidance of 100% year to year growth. Accordingly, our target to reach breakeven is delayed to early 2004.

First Quarter Webcast Information
Given Imaging’s first quarter earnings conference call will take place tomorrow, May 1, 2003 at 10:00 am ET, 5:00 pm Israel time. To access the call dial 800-360-9865. International callers dial 973-694-6836. A live webcast of this call will be available on the Given Imaging corporate website, www.givenimaging.com. A replay of the call will also be available for one week by dialing 800-428-6051 and entering passcode 290734. International callers dial 973-709-2089 and enter the same passcode.

This press release contains forward-looking statements about Given Imaging, including projections about our business, our future revenues, and our future profitability, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. For example, statements in the future tense, words such as "anticipates," "estimates," "expects," "intends," "plans," "believes," and words and terms of similar substance used in connection with any discussion of future operating or financial performance identify such forward-looking statements. Those forward-looking statements are not guarantees of future performance and actual results could differ materially from our current expectations as a result of numerous factors, including but not limited to the following: changes in regulatory environment, our success in implementing our sales, marketing and manufacturing plan, protection and validity of patents and other intellectual property rights, the impact of currency exchange rates, the effect of competition by other companies, the outcome of future litigation, the reimbursement policies for our product from healthcare payors, quarterly variations in operating results, the possibility of armed conflict or civil or military unrest in Israel and other risks disclosed in our filings with the U.S. Securities Exchange Commission.

19.Sept.'03