Angiotech Announces Financial Results for the Fourth Quarter Ended December 31, 2012

 Angiotech Announces Financial Results for the Fourth Quarter Ended December
                                   31, 2012

PR Newswire

VANCOUVER, March 28, 2013

VANCOUVER, March 28, 2013 /PRNewswire/ - Angiotech Pharmaceuticals,Inc.
("Angiotech") announced that it released its financial results for the fourth
quarter ended December31, 2012.

"We are pleased to have concluded 2012 by recording yet another quarter of
significantly improved business results as compared to the past several prior
years," said Thomas Bailey, President and CEO of Angiotech. "2012 was a year
of exceptional renewal for Angiotech, with our teams turning our back to
basics, balanced turnaround approach into improved revenue growth, a doubling
of the operating profitability of our Medical Device Products Business and a
significantly improved cash flow and liquidity position."

Selected recent developments and highlights include:

  *Sale of Interventional Products Business to Argon Medical Devices,Inc.
    On March25, 2013, we announced that we entered into a definitive
    agreement to sell certain of our subsidiaries, comprising Angiotech's
    Interventional Products Business to Argon Medical Devices,Inc., a
    Delaware corporation ("Argon"), which is a portfolio company of
    RoundTable, for $362.5 million in cash consideration. Subject to various
    conditions, the transaction is expected to close prior to the end of April
    2013. For more detailed information on the significant terms and
    conditions contemplated by this transaction, refer to our Form8-K filed
    with the U.S. Securities and Exchange Commission ("SEC") on March26,
    2013.

  *Redemption of $16.0 million of Senior Floating Rate Notes ("FRN's"). On
    March18, 2013, pursuant to a Notice of Partial Redemption Option,
    Angiotech exercised its option to call for the partial redemption of $16.0
    million in aggregate principal amount of its $60 million of outstanding
    FRN's. These notes will be redeemed on or prior to April17, 2013 at 100%
    of their principal amount, together with any accrued and unpaid interest.
    We expect that the cash consideration from the sale of the Interventional
    Products Business (as discussed above) will be used to repay our remaining
    $273.4 million of outstanding debt obligations under our FRN's and 9%
    Senior Notes.

  *Revenue. During the year ended December31, 2012, revenue from our medical
    device products increased by 6.1% to $221.3 million, as compared to $208.5
    million for the same period in 2011. Excluding the impact of foreign
    currency fluctuations, sales growth would have been 7.1%. During the
    quarter ended December31, 2012, revenue from our medical device products
    increased by 11.7% to $57.5 million from $51.5 million for the same period
    in 2011. Excluding the impact of foreign currency fluctuations, sales
    growth would have been 12.0%. Improved sales growth from our medical
    device products is primarily attributable to the following factors:
    (i)improved sales growth observed in our biopsy, wound closure and
    medical device component product lines; (ii)increased commercial and
    operational focus on our most competitive product lines; and
    (iii)stabilization of our medical device component manufacturing
    business, with growth observed in existing and new medical device
    component customers.

  *Adjusted EBITDA. For the year ended December31, 2012, our consolidated
    Adjusted EBITDA increased by 48.8% to $74.1 million, as compared to $49.8
    million observed for the same period in 2011. Adjusted EBITDA attributable
    to our Medical Device Products business (which excludes Adjusted EBITDA
    derived from royalties received from our Licensed Technologies segment)
    increased by 101.4% to $59.4 million during the year ended December31,
    2012, as compared to $29.5 million observed for the same period in 2011.
    For the quarter ended December31, 2012, our consolidated Adjusted EBITDA
    increased by 31.8% to $19.5 million, as compared to $14.8 million observed
    for the same period in 2011. Adjusted EBITDA attributable to our Medical
    Device Products increased by 92.0% to $16.9 million during the quarter
    ended December31, 2012, as compared to $8.8 million observed for the same
    period in 2011.

  *Operating Cash Flow and Liquidity. During the quarter and year ended
    December31, 2012, we reported positive operating cash flows of $30.8
    million and $69.7 million, respectively. In addition, as at December31,
    2012, our total liquidity was $69.0 million, which consists of $46.4
    million in cash and cash equivalents and short term investments and $22.6
    million of borrowing capacity available under our Revolving Credit
    Facility. We expect further improvements in our liquidity and capital
    resources in future quarters, as we expect our businesses to continue to
    generate positive cash flows from operations in future periods. In
    addition, we may be eligible to receive an additional $15.0 million of
    contingent consideration in 2013 from Ethicon,Inc. ("Ethicon") if we
    successfully conclude certain product development activities which are
    contemplated under the terms of our collaboration agreement with Ethicon
    relating to our proprietary Quill™ product line. Any improvements in our
    total liquidity may be offset should we elect to pursue further repayment
    in advance of maturity of any of our remaining outstanding debt
    obligations, or termination of our revolving credit facility (see Sale of
    the Interventional Products Business to Argon Medical Devices, Inc.
    section above).

  *Net Debt Reduction and Credit Statistics. As at December31, 2012, we had
    no borrowings outstanding under our Revolving Credit Facility. Our ratio
    of Net Debt to last 12 months Adjusted EBITDA decreased to 3.3 as at
    December31, 2012 from 6.1 as at December31, 2011. The improvement in our
    Net Debt to last 12 months Adjusted EBITDA is primarily due to our
    improved profitability and operating cash flows, cash received during 2012
    relating to our transaction with Ethicon, and our partial redemption of
    $40.0 million of our Senior Floating Rate Notes in October2012.

  *Business Strategy and Cost Realignment. During 2011 and 2012, we executed
    various restructuring and operational initiatives to better align our
    resources with our business model and capital structure. Through these
    changes, we achieved cost savings of $5.4 million (81.2% decrease) and
    $12.7 million (64.3% decrease) in our research and development expenses
    during the quarter ended and year ended December31, 2012, respectively,
    as compared to the same periods in 2011. Similarly, we achieved cost
    savings of $5.5 million (21.9% decrease) and $14.3 million (16.8%
    decrease) in our selling, general and administrative expenses during the
    quarter ended and year ended December31, 2012, respectively, as compared
    to the same periods in 2011.

Financial Information

This press release contains financial data derived from the audited
consolidated financial statements for the year ended December31, 2012 and the
eight months ended December31, 2011. This press release should, therefore, be
read in conjunction with our audited consolidated financial statements and
Management's Discussion and Analysis for the year ended December31, 2012,
which were filed on Form10-K on March28, 2013 with the United States (U.S.)
Securities and Exchange Commission ("SEC") and posted on the Investor section
of our website at www.angiotech.com.

Amounts, unless specified otherwise, are expressed in U.S. dollars. Financial
results are reported in accordance with U.S. GAAP unless otherwise noted.

Non-GAAP Financial Information

Certain financial measures in this press release are prepared in accordance
with U.S. Generally Accepted Accounting Principles ("GAAP"). In addition, we
have presented adjusted earnings before interest, taxes, depreciation and
amortization ("Adjusted EBITDA"), which is a non-GAAP financial metric that
excludes certain non-cash and non-recurring items. Management uses Adjusted
EBITDA to establish operational goals, and believes that this metric may
assist investors in evaluating the results of our business and analyzing the
underlying trends over time. In addition, our creditors may monitor this
metric to measure compliance with certain financial covenants in our lending
agreements, or assess the operating and cash flow performance of our business.
Investors should consider our non-GAAP Adjusted EBITDA in addition to, and not
as a substitute for, or as superior to, financial metrics prepared in
accordance with GAAP. A reconciliation of our non-GAAP Adjusted EBITDA to our
GAAP-based net income or loss has been included in the appendix to this press
release. We have also included explanations about our use of Adjusted EBITDA
and a detailed description of the adjustments made.

Fresh Start Accounting

On May12, 2011 we implemented a recapitalization transaction which, among
other things, eliminated our $250 million 7.75% Senior Subordinated Notes due
in 2014 and $16 million of related interest obligations in exchange for new
common shares in Angiotech (the "Recapitalization Transaction"). In connection
with this Recapitalization Transaction, we were required to adopt fresh start
accounting in accordance with ASC #852—Reorganization on April30, 2011 (the
"Convenience Date"). The adoption of fresh start accounting resulted in a new
entity for financial reporting purposes. Angiotech is therefore referred to as
the "Predecessor Company" for all periods preceding the Convenience Date and
the "Successor Company" for all periods subsequent to the Convenience Date.
However, we believe that the comparison of results from the years ended
December31, 2012 and 2011 still provides the best comparison and analysis of
our operating results.

Upon implementation of fresh start accounting, the estimated reorganization
value was allocated to our assets based on their estimated fair values; the
deficit, additional paid-in-capital and other comprehensive income balances
were eliminated; and debt and equity balances were revalued at their estimated
fair values. Our estimated reorganization value was determined in
collaboration with an independent financial advisor specifically for the
purposes of fresh start accounting. As our estimated reorganization value is
inherently subject to significant uncertainties, there is no assurance that
the estimates and assumptions used in these valuations will be realized and
actual results may differ materially. After the estimated reorganization value
was assigned to tangible assets and identifiable intangible assets, the excess
of the estimated reorganization value over and above the identifiable net
asset values was recorded as goodwill.

For further discussion of fresh start accounting and its impact on historical
operating results, please refer to our audited consolidated financial
statements and Management, Discussion and Analysis for the eight months ended
December31, 2011 filed on Form10-K with the SEC on March29, 2012.

                        ANGIOTECH PHARMACEUTICALS INC.
                    CONSOLIDATED STATEMENTS OF OPERATIONS
  (All amounts expressed in thousands of U.S. dollars, except share and per
                                 share data)
                                 (Unaudited)
                                                             
                                           ThreemonthsendedDecember31,
                                               2012             2011
REVENUE                                                               
Product sales, net                          $      57,518    $      51,506
Royalty revenue                                    3,816           7,106
License fees                                       3,966               —
                                                 65,300          58,612
                                                                     
EXPENSES                                                              
Cost of products sold                             26,628          24,619
License and royalty fees                             346             164
Research and development                           1,249           6,632
Selling, general and administration               19,544          25,031
Depreciation and amortization                      8,608           9,037
Write-down of assets held for sale                   277               —
Write-down of property, plant and                     12           4,359
equipment
Write-down of intangible assets                        —          10,850
                                                 56,664          80,692
Operating income (loss)                            8,636        (22,080)
                                                                     
Other income (expenses)                                               
Foreign exchange loss                                257           (166)
Other income (expense)                                25             212
Interest expense                                 (6,284)         (4,329)
Write-downs of investments                         (132)         (2,035)
Total other expenses                             (6,134)         (6,318)
Loss before income taxes                           2,502        (28,398)
Income tax expense (recovery)                    (2,827)           (884)
                                                                     
Net income (loss)                           $       5,329    $    (27,514)
                                                                     
Basic net income (loss) per common share    $        0.42    $      (2.20)
Diluted net income (loss) per common        $        0.42    $      (2.20)
share
                                                                     
Basic weighted average number of common           12,710          12,528
shares outstanding (in thousands)
Diluted weighted average number of                12,795          12,528
common shares outstanding (in thousands)
_______________________________                               

(1) There was no dilutive effect on basic weighted average common shares
     outstanding for the three months ended December31,
     2011 given that Angiotech was in a net loss position.
    

                                          ANGIOTECH PHARMACEUTICALS INC.
                                      CONSOLIDATED STATEMENTS OF OPERATIONS
              (All amounts expressed in thousands of U.S. dollars, except share and per share data)
                                                    (Audited)
                                                                                                     
                                             SuccessorCompany             PredecessorCompany      Combined
                                     Yearended     Eightmonthsended     Fourmonthsended     Yearended
                                                       December31,                             
                                      December31,                                April30,          December31,
                                        2012               2011                  2011                2011
REVENUE                                                                                               
Product sales, net                    $   221,326        $      139,307         $      69,198     $   208,505
Royalty revenue                           18,449               13,670                10,941         24,611
License fees                               4,050                    —                   127            127
                                        243,825              152,977                80,266        233,243
                                                                                                     
EXPENSES                                                                                              
Cost of products sold                    102,706               90,348                32,219        122,567
License and royalty fees                     618                  264                    68            332
Research and development                   7,056               14,076                 5,686         19,762
Selling, general and administration       70,985               60,424                24,846         85,270
Depreciation and amortization             34,503               23,973                14,329         38,302
Write-down of assets held for sale           277                    —                   570            570
Write-down of property, plant and                                                                
equipment                                     877                  4,502                     215            4,717
Write-down of intangible assets                —               10,850                     —         10,850
                                        217,022              204,437                77,933        282,370
Operating income (loss)                   26,803             (51,460)                 2,333       (49,127)
                                                                                                     
Other income (expenses)                                                                               
Foreign exchange gain (loss)               (751)                1,461                 (646)            815
Other income (expense)                     1,320                  547                    34            581
Interest expense                        (20,390)             (11,945)              (10,327)       (22,272)
Write-downs and net gains (losses)                                                               
on investments                              (561)                (2,035)                       —          (2,035)
Debt extinguishment loss                 (4,437)                    —                     —              —
Total other expenses                    (24,819)             (11,972)              (10,939)       (22,911)
Income (loss) before reorganization                                                              
items, gain on
extinguishment of debt and
settlement of other other
liabilities and income taxes              1,984               (63,432)                 (8,606)         (72,038)
Reorganization items                           —                    —               321,084        321,084
Gain on extinguishment of debt and                                                               
settlement of other liabilities                 —                      —                  67,307           67,307
Income (loss) before taxes                 1,984             (63,432)               379,785        316,353
Income tax (recovery) expense              8,210              (2,986)                   267        (2,719)
                                                                                                     
Net (loss) income                     $   (6,226)        $     (60,446)         $     379,518     $   319,072
                                                                                                     
Basic and diluted net (loss) income               (2)     $              (2)      $             (1)  
per common share                       $    (0.49)                 (4.82)                    4.46                
                                                                                                     
Basic and diluted weighted average                                                               
number of common
shares outstanding (in thousands)        12,791                 12,528                  85,185                
___________________________________             

(1) There was no dilutive effect on basic weighted average common shares
     outstanding for the year ended December31, 2012 and the eight
     months ended December31, 2011 given that Angiotech was in a net loss
     position during both periods.
(2) There was no dilutive effect on the basic weighted average common shares
     outstanding for the four months ended April30, 2011 given
     that the impact of stock options was anti-dilutive.
    

                        ANGIOTECH PHARMACEUTICALS INC.
                         CONSOLIDATED BALANCE SHEETS
   (All amounts expressed in thousands of U.S. dollars, except share data)
                                  (Audited)
                                                          
                                                 SuccessorCompany
                                           December31,   December31,
                                               2012           2011
ASSETS                                                             
Current assets                                                     
Cash and cash equivalents                   $     45,945   $     22,173
Short-term investments                              424         3,259
Accounts receivable                              28,786        28,238
Income tax receivable                             4,769         1,462
Inventories                                      46,414        34,304
Deferred income taxes, current portion            5,885         3,995
Deferred financing costs, current                   833             —
portion
Prepaid expenses and other current                3,355         6,624
assets
Total current assets                            136,411       100,055
                                                                  
Assets held for sale                              1,866             —
Property, plant and equipment                    31,437        39,189
Intangible assets                               311,443       343,066
Goodwill                                        124,051       123,228
Deferred income taxes, non-current                1,005         2,165
portion
Deferred financing costs, non-current             1,915             —
portion
Other assets                                        274           403
Total assets                                    608,402       608,106
                                                                  
LIABILITIES AND SHAREHOLDERS' EQUITY                               
                                                                  
Current liabilities                                                
Accounts payable and accrued                     26,789        30,537
liabilities
Deferred income taxes, current portion                —             —
Income taxes payable                              3,663         2,023
Interest payable                                  1,872         1,450
Deferred revenue, current portion                22,007           496
Debt, current portion                            60,024             —
Revolving credit facility                             —            40
Total current liabilities                       114,355        34,546
                                                                  
Deferred revenue, non-current portion            24,901         3,771
Deferred income taxes, non-current               88,539        92,634
portion
Other tax liabilities                             9,618         5,729
Debt, non-current portion                       229,413       325,000
Other liabilities                                   908            19
Total non-current liabilities                   353,379       427,153
                                                                  
Shareholders' equity                                               
Sucessor share capital                          203,613       203,719
  Authorized:                                                     
  Unlimited number of common shares,                              
   without par value
  Common shares issued and                                        
   outstanding:
  December31, 2011 - 12,556,673                                  
  December31, 2012 - 12,547,702                                  
Additional paid-in capital                        7,356         8,552
Accumulated deficit                            (66,672)      (60,446)
Accumulated other comprehensive loss            (3,629)       (5,418)
Total shareholders' equity                      140,668       146,407
                                                                  
Total liabilities and shareholders'         $    608,402   $    608,106
equity
                                                       

Forward Looking Statements

Statements contained in this press release that are not based on historical
fact, including without limitation statements containing the words "believes,"
"may," "plans," "will," "estimates," "continues," "anticipates," "intends,"
"expects" and similar expressions, constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 and
constitute "forward-looking information" within the meaning of applicable
Canadian securities laws. All such statements are made pursuant to the "safe
harbor" provisions of applicable securities legislation. Forward-looking
statements may involve, but are not limited to, comments with respect to our
objectives and priorities in 2013 and beyond, our strategies or future
actions, our targets, expectations for our financial condition and the results
of, or outlook for, our operations, research and development and product
development. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, events or
developments to be materially different from any future results, events or
developments expressed or implied by such forward-looking statements. Many
such known risks, uncertainties and other factors are taken into account as
part of our assumptions underlying these forward-looking statements and
include, among others, the following: general economic and business conditions
in the United States, Canada and the other regions in which we operate; market
demand; competition; technological changes that could impact our existing
products or our ability to develop and commercialize future products;
governmental legislation and regulations and changes in, or the failure to
comply with, governmental legislation and regulations; availability of
financial reimbursement coverage from governmental and third-party payers for
products and related treatments; adverse results or unexpected delays in
pre-clinical and clinical product development processes; adverse findings
related to the safety and/or efficacy of our products or products sold by our
partners; decisions, and the timing of decisions, made by health regulatory
agencies regarding approval of our technology and products; the requirement
for funding to conduct research and development, to expand manufacturing and
commercialization activities; and any other factors that may affect our
performance. In addition, our business is subject to certain operating risks
that may cause any results expressed or implied by the forward-looking
statements in this press release to differ materially from our actual results.
These operating risks include: our ability to successfully manufacture, market
and sell our products; changes in our business strategy or development plans;
our ability to attract and retain qualified personnel; our ability to
successfully complete pre-clinical and clinical development of our products;
our failure to obtain patent protection for discoveries; loss of patent
protection resulting from third-party challenges to our patents;
commercialization limitations imposed by patents owned or controlled by third
parties; our ability to obtain rights to technology from licensors; liability
for patent claims and other claims asserted against us; our ability to obtain
and enforce timely patent and other intellectual property protection for our
technology and products; the ability to enter into, and to maintain, corporate
alliances relating to the development and commercialization of our technology
and products; market acceptance of our technology and products; the
availability of capital to finance our activities; our ability to service our
debt obligations; and any other factors referenced in our other filings with
the SEC. For a more thorough discussion of the risks associated with our
business, see the "Risk Factors" section in our annual report for the year
ended December31, 2012 filed with the SEC on Form10K on March28, 2013.

Given these uncertainties, assumptions and risk factors, investors are
cautioned not to place undue reliance on such forward-looking statements.
Except as required by law, we disclaim any obligation to update any such
factors or to publicly announce the result of any revisions to any of the
forward-looking statements contained in this press release to reflect future
results, events or developments.

^©2013 Angiotech Pharmaceuticals,Inc. All Rights Reserved.

About Angiotech

Angiotech develops, manufactures and markets medical device products and
technologies, primarily within the areas of interventional oncology, wound
closure and ophthalmology.  Our strategy is to utilize our precision
manufacturing capabilities and our highly targeted sales and marketing
capabilities to offer novel or differentiated medical device products to
patients, physicians and other medical device manufacturers or distributors.
For additional information about Angiotech, please visit our website at
www.angiotech.com.

Appendix A: Presentation of Non-GAAP Financial Information

The financial results presented in this press release include Adjusted EBITDA,
which is a non-GAAP financial measure.

Economic Substance of Non-GAAP Financial Measures

Our non-GAAP Adjusted EBITDA excludes certain non-cash, non-recurring and
non-operating items, which may be unpredictable, volatile and not directly
correlated to our operating performance. We believe exclusion of these items
from our GAAP-based net loss may provide the following advantages:
(i)improved understanding of trends underlying our business and performance;
(ii)improved consistency across periods when measuring and assessing our
operating performance; (iii)improved understanding of the cash flow and cash
earnings generated by our business in a given period and as compared to prior
periods; and (iv)improved comparability of our operating results to those of
similar companies in our industry.

Examples of these non-cash, non-recurring and non-operating items may include:
integration and restructuring expenses, reorganization adjustments,
retrospective adjustments driven by accounting policy changes, financing
charges, asset write-downs, impairment charges, foreign exchange fluctuations,
stock-based compensation expense, acquisition related amortization charges and
certain extraordinary litigation expenses. A detailed discussion of the
excluded items is provided below (see "Description of Adjustments").

Investors are cautioned that Adjusted EBITDA does not have any standardized
meaning prescribed by GAAP and may not be comparable to similar measures
presented by other issuers. Our non-GAAP Adjusted EBITDA is a supplemental
metric and should not be viewed as a substitute for, or superior to, financial
results and measures prepared in accordance with GAAP. We have prepared a
reconciliation of our non-GAAP Adjusted EBITDA to our GAAP-based net income
(loss) included in this Appendix. Management compensates for certain material
limitations that may be applicable to our use of Adjusted EBITDA by reviewing
our operating results that have been prepared in accordance with GAAP.

Use of Non-GAAP Financial Measures

Management uses Adjusted EBITDA when setting corporate and operational goals,
and evaluating operating performance in connection with:

  *Presenting, comparing and assessing the financial results and forecasts
    reported to our Board of Directors.

  *Evaluating, managing and benchmarking our operating performance.

  *Analyzing underlying trends in our business.

  *Evaluating market position and performance relative to our competitors,
    many of which use the same or similar performance metrics.

  *Establishing internal operating budgets and goals.

  *Determining compensation under bonus or other incentive programs.

  *Enhancing comparability from period to period.

  *Assessing compliance with credit facility covenants.

  *Providing vital information in assessing cash flows to service our
    significant debt obligations.

  *Comparing performance with internal forecasts and targeted business
    models.

  *Evaluating and valuing potential acquisition candidates.

The adjustments used to compute our non-GAAP Adjusted EBITDA are consistent
with those excluded from operating results that may be used by our chief
operating decision maker to make operating decisions and assess performance.
We have provided this information to enable investors to analyze our operating
results in the same way that management may use this information to assess our
business relative to other periods, our business objectives and similar
companies in our industry.

                          ANGIOTECH PHARMACEUTICALS, INC.
                          CALCULATION OF ADJUSTED EBITDA
                                    (Unaudited)
                                                     
                      Three months ended                 Year ended
                             December 31,                     December 31,
(in thousands        2012           2011           2012           2011
U.S.$)
                                                             
Net income        $    5,329   $  (27,514)   $   (6,226)   $   319,072
(loss)
Interest              6,284        4,329       20,390       22,272
expense on
long-term debt
Income tax          (2,827)        (884)        8,210      (2,719)
expense
(recovery)
Depreciation          9,650        9,458       38,647       41,630
and
amortization
EBITDA               18,436     (14,611)       61,021      380,255
Adjustments:                                                  
Non-recurring       (3,966)            —      (4,050)        (127)
revenue, net
of license
fees (a)
Non-recurring         1,912        5,947        6,082        8,256
restructuring
related
charges (b)
Reorganization        1,800            —        3,582    (321,084)
items and
other
non-recurring
transaction
fees (c)
Stock-based             807        6,216        2,820       10,312
compensation
expense (d)
Litigation              367            —          514          100
expenses (e)
Non-recurring             —            —      (1,425)       22,616
production
charges (f)
Foreign               (257)          166          751        (815)
exchange
(gain) loss
(g)
Impairments of          583       17,244        1,715       18,172
long-lived
assets and
(gains) losses
on investments
(h)
Loss (gain) on           24            —        4,437     (67,307)
extinguishment
of debt (i)
Other (income)        (211)        (212)      (1,320)        (581)
expense (i)
Adjusted          $   19,495   $    14,750   $    74,127   $    49,797
EBITDA
                                                     

For an explanation of the adjustments used to derive our Adjusted EBITDA,
please refer to the corresponding discussion in the "Description of
Adjustments" section below.

Description of Adjustments

The following provides an explanation of each of the items that management has
adjusted to derive its non-GAAP Adjusted EBITDA for the three months and year
ended December 31, 2012.

(a)Non-Recurring Revenue and Other Revenue Adjustments

Our Adjusted EBITDA for the three months and year ended December 31, 2012 and
2011 exclude certain non-recurring and non-operating license revenue that is
reported as part of our GAAP-based revenue.

Our Adjusted EBITDA for the three months and year ended December 31, 2012
excludes $4.0 million of deferred revenue that was recognized as revenue in
connection with our completion of certain product development milestones under
the terms of our collaboration arrangement with Ethicon, LLC and Ethicon, Inc.
(collectively "Ethicon") related to our proprietary Quill Technology.

(b)Non-Recurring Restructuring-Related Charges

Our Adjusted EBITDA excludes certain expenses or recoveries related to
corporate reorganization or plant restructuring activities that we have
pursued or are pursuing. These amounts, which are added back or deducted from
our GAAP-based net income (loss) as appropriate, primarily represent severance
costs; asset write-offs; contract renegotiation or termination fees; and other
expenses associated with plant closures, transfers of production lines from
one facility to another and plant headcount optimization initiatives that are
not reasonably expected to recur in the future.

Our Adjusted EBITDA for the three months ended December 31, 2012 excludes a
$1.1 million obligation recorded for continuing lease payments on a property
that was vacated in late 2012; $0.4 million of restructuring costs associated
with the closure of our Denmark manufacturing facility and concurrent transfer
of production activities to certain of our U.S. locations; and $0.4 million of
residual severance and reorganization costs related to various restructuring
initiatives that were executed in 2011.

Our Adjusted EBITDA for the three months ended December 31, 2011 excludes:
$3.1 million of severance obligations related to the termination of certain
executives in 2011; $2.1 million of severance costs related to personnel
reductions in our research and development and sales and marketing departments
in December 2011; and $0.6 million of costs associated with the transfer of
certain production activities from our Reading, Pennsylvania facility to our
Puerto Rico facility.

Our Adjusted EBITDA for the year ended December 31, 2012 excludes a $1.1
million obligation recorded for continuing lease payments on a property that
was vacated in late 2012; a $1.0 million fee paid to Biopsy Sciences, LLC to
eliminate all future financial obligations owing under the original January
22, 2007 Asset Purchase and Assignment Agreement and Amended and Restated
License Agreement; $1.3 million of costs associated with the restructuring of
our Denmark manufacturing facility as described above; $0.9 million of charges
related to the restructuring of our Vancouver head-office; $0.9 million of
non-recurring compensation and severance costs related to certain retention
initiatives and reductions in our research and development, sales and
marketing and finance departments; and $0.8 million of residual reorganization
costs related to various restructuring initiatives that were executed in 2011.

Our Adjusted EBITDA for the year ended December 31, 2011 excludes: $4.5
million of severance obligations related to the termination of certain
executives in 2011; $3.0 million of severance costs related to personnel
reductions in our research and development and sales and marketing
departments; $1.7 million of costs associated with the transfer of certain
production activities from our Reading, Pennsylvania facility to our Puerto
Rico facility as described above; $0.4 million of severance costs related to
headcount reductions and residual reorganization costs from the 2008 closure
of our Syracuse, New York manufacturing facility; and $0.6 million of exit
costs related to the downsizing and termination of certain rentable space at
two of our facilities. These adjustments were partially offset by a $1.0
million non-cash recovery on our rent expense resulting from the acceleration
of amortization of certain leasehold inducements received in prior years
associated with the reduction of leased space at one of our facilities; and a
$0.6 million recovery on a lease obligation previously recorded for a property
lease that was subsequently terminated.

(c) Reorganization Items and Other Non-Recurring Transaction Fees

Our Adjusted EBITDA excludes certain extraordinary and non-recurring costs
related to significant corporate transactions. These amounts are adjusted from
our GAAP-based net (loss) income because they are highly variable and specific
to the extent and nature of the transaction being undertaken. As these
expenses are not directly correlated to our day-to-day operating performance
and are due to transaction or related financing decisions made by us that are
infrequent or volatile in nature and specific to the situation at that time,
inclusion of these charges in our financial results makes it more difficult to
compare our performance to that of prior periods or similar companies in our
industry, or to assess the cash flow generation of our operations.

Our Adjusted EBITDA for the three months ended December 31, 2012 excludes $1.8
million of non-recurring professional fees related to the exploration of
certain strategic and financial alternatives.

For the three months ended December 31, 2011, we did not incur any
reorganization items or other non-recurring transaction fees for the purposes
of calculating our Adjusted EBITDA.

Our Adjusted EBITDA for the year ended December 31, 2012 excludes $1.6 million
of non-recurring transaction fees and expenses incurred in connection with the
completion of the transaction with Ethicon as described above and $0.2 million
of other non-recurring professional fees associated with the exploration of
certain strategic and financial alternatives.

Our Adjusted EBITDA for the year ended December 31, 2011 excludes net
reorganization gains, fees and expenses of $321.1 million related to our
Recapitalization Transaction. The $321.1 million of reorganization gains, fees
and expenses consists of: (i) $341.2 million of non-cash gains realized due to
fair value adjustments recorded under fresh start accounting; (ii) $17.9
million of professional fees paid to advisors for legal, accounting and other
financial consulting services, primarily relating to the Recapitalization
Transaction; (iii) $1.6 million of additional insurance costs required to
indemnify directors and officers for a period of six years after the
completion of the Recapitalization Transaction; (iv) a $0.8 million incentive
fee paid under the terms of a Key Incentive Employment Plan ("KEIP") that was
implemented in connection with the Recapitalization Transaction, which is net
of a $0.2 million tax recovery; (v) a $1.5 million recovery of prior year
royalty fees that resulted from a Settlement and License Termination Agreement
negotiated with our partner Rex Medical, LLP as part of the Recapitalization
Transaction; and a $1.4 million charge to stock based compensation expense
related to the cancellation of the Predecessor Company's existing options and
awards in accordance with the terms of the Recapitalization Transaction.

(d) Stock-Based Compensation Expense

Our Adjusted EBITDA excludes amounts recorded for stock-based compensation
expense. Stock-based compensation expense is added back to our GAAP-based net
income (loss) because it is a non-cash charge required by GAAP, which
represents an estimated additional cost associated with the issuance of
restricted stock, restricted stock units and stock options to management and
employees as part of their compensation. Such compensation expense is a
non-cash expense calculated using the Black-Scholes or other similar
methodology to derive the expected fair value of awards issued to employees
under the Company's stock based compensation plans. Fair value calculations
may be highly subjective, because they are dictated by the specific
assumptions and inputs used in the model. Key assumptions and inputs may
include our estimated stock price on the day the calculation is completed, the
historical volatility of the Predecessor Company's stock price, historical
volatilities of our industry peer groups, the estimated risk-free rate of
return offered by the market and other factors, which are not directly
correlated to our day-to-day operating performance and are difficult to
determine, predict or forecast. In these respects and others (including the
methodology that may be used to calculate such expense), methods and data that
may be used to complete the calculation of stock-based compensation expense
may vary widely from period to period or from company to company. Inclusion of
stock based compensation in our results makes it difficult to assess our
operational cash flows as well as measure and compare our performance to that
of similar companies in our industry, our operating goals or our performance
in prior periods.

Our Adjusted EBITDA for the three months and year ended December 31, 2012
excludes $0.8 million and $2.8 million of stock-based compensation expense,
respectively.

Our Adjusted EBITDA for the three months ended December 31, 2011 excludes
stock-based compensation expense of $6.2 million. The $6.2 million adjustment
includes $5.5 million of stock based compensation expense associated with the
accelerated vesting of certain Restricted Stock ("RS"), Restricted Stock Units
("RSU's") and Stock Options ("Options") that were provided for under the
provisions of employment agreements for certain executives terminated in 2011,
and $0.6 million of stock based compensation expense related to certain RS,
RSU's and Options that were issued to certain employees and directors at the
conclusion of the Recapitalization Transaction.

Our Adjusted EBITDA for the year ended December 31, 2011 excludes stock-based
compensation expense of $10.3 million. The $10.3 million adjustment includes
$7.5 million of stock based compensation expense associated with the
accelerated vesting of certain RS, RSU's and Options that was provided for
under the provisions of employment agreements for certain executives
terminated in 2011; $2.4 million of stock based compensation expense related
to certain RS, RSU's and Options that were issued to certain employees and
directors at the conclusion of the Recapitalization Transaction; and $0.4
million of stock based compensation expense related to Options and awards
issued under the Predecessor Company's 2006 Stock Incentive Plan.

(e) Litigation-Related Charges

Our Adjusted EBITDA excludes certain litigation-related charges, which are
incurred in connection with extraordinary litigation matters that are
inherently unpredictable, highly variable from period to period, are not
reasonably expected to recur in future periods or are not related to the day
to day operational activities of our business.

Our Adjusted EBITDA for the three months and year ended December 31, 2012
excludes $0.4 million and $0.5 million of litigation related expenses,
respectively.

Our Adjusted EBITDA for the three months and year ended December 31, 2011
excludes litigation-related charges of nil and $0.1 million, respectively.

(f) Non-Recurring Production Charges

Our Adjusted EBITDA excludes amounts recorded for certain extraordinary and
non-recurring production costs. These amounts are adjusted from our Adjusted
EBITDA because they are unplanned, difficult to predict and related to
one-time events not expected to recur from period to period.

During the three months ended December 31, 2012 and 2011, we did not record
any significant unusual or non-recurring production charges for the purposes
of calculating our Adjusted EBIDTA.

Our Adjusted EBITDA for year ended December 31, 2012 excludes a $1.4 million
non-recurring, non-cash inventory adjustment related to the reversal of an
intercompany profit elimination entry from a prior period. This non-cash
adjustment resulted in lower cost of products sold reported on a GAAP basis,
represents the realization of profit attributable to a prior period, and is
not expected to recur in future periods.

Net income for the year ended December 31, 2011 includes $22.6 million of
additional costs of products sold expense related to the revaluation of our
inventory from $37.5 million to $60.1 million in connection with our
implementation of fresh start accounting on April 30, 2011. Given that this is
a non-cash, non-recurring charge, we removed the impact of this fresh start
accounting adjustment for the purposes of calculating our Adjusted EBITDA for
the year ended December 31, 2011.

(g) Foreign Exchange Gains and Losses

Our Adjusted EBITDA excludes amounts recorded for certain foreign exchange
gains and losses. These amounts, which are added back to our GAAP-based net
income (loss), primarily represent expenses related to differences arising
from translating assets held by us in foreign territories and denominated in
foreign currencies, into our reporting currency. These foreign currency assets
fund our research and development activities in Canada, and are unique to our
current operational structure. As they have no bearing on our day-to-day
operations, operating decisions or our ability to fund or manage our
operations or research and development programs, we exclude them from our
non-GAAP Adjusted EBITDA.

Our Adjusted EBIDTA for the three months and year ended December 31, 2012
excludes net foreign exchange gains of $0.3 million and net foreign exchange
losses of $0.8 million, respectively.

Our Adjusted EBITDA for the three months and year ended December 31, 2011
excludes net foreign exchange losses of $0.2 million and net foreign exchange
gains of $0.8 million, respectively.

(h) Impairment Charges of Long-Lived Assets and Gains (Losses) on Investments
and Other Long-Lived Assets

Our Adjusted EBITDA excludes certain write-downs of investments or other
long-lived assets, for which the carrying values are impaired and unlikely to
recover. These amounts are added back to our GAAP-based net income (loss)
because they are typically non-recurring, non-operating and non-cash
write-downs or expense items, thus making it difficult to compare our
operating performance in the period the impairment expense is incurred to our
operating performance in other periods, or to the operating performance of
similar companies in our industry. Management typically excludes these charges
from our operating goals, forecasts, budgets and other non-GAAP financial
measures.

Our Adjusted EBITDA for the three months ended December 31, 2012 excludes $0.3
million of unrealized other-than-temporary impairment losses on the remaining
shares of Athersys, Inc. that we hold and a $0.3 million impairment charge on
a property that is currently being marketed for sale in connection with the
closure of our Denmark manufacturing facility.

Our Adjusted EBITDA for the year ended December 31, 2012 excludes a $0.7
million write-down of leasehold improvements at our Vancouver facility; a $0.3
million impairment charge on the Demark based property discussed above; a $0.2
million write-down of certain manufacturing equipment in connection with the
termination of one of our product development projects; and $0.6 million of
net losses on our investment in Athersys, Inc. resulting from the sale of a
portion of our shares during the year as well as certain other-than-temporary
impairment losses recorded in connection with the remaining shares held.

Our Adjusted EBITDA for the three months ended December 31, 2011 excludes
$10.9 million of non-cash intangible asset impairment write-downs and $4.4
million of fixed asset impairment write-downs related to our termination of
our anti-infective product, research and development programs and personnel
reductions in our research and development department; and a $2.0 million
other-than-temporary impairment write-down of our short term investments. In
addition to the items noted above, our Adjusted EBITDA for the year ended
December 31, 2011 also excludes a $0.6 million write-down of a property based
in Vancouver, Canada that was sold in May 2011 and $0.3 million of write-downs
of certain leasehold improvements and furniture and fixtures in connection
with our downsizing of our Rochester manufacturing facility and our Seattle
office.

(i) Non-Recurring Gains, Losses and Other Income

Our Adjusted EBITDA excludes certain extraordinary and non-recurring gains and
losses. These amounts are adjusted from our GAAP-based metrics because they
are unplanned, difficult to predict and related to one-time events not
expected to recur from period to period.

Our Adjusted EBITDA for the three months ended December 31, 2012 was not
adjusted for any significant non-recurring gains, losses or other
income/expense items. However, our Adjusted EBITDA for the year ended December
31, 2012 excludes a $4.4 million debt extinguishment loss related to our
refinancing of $225.0 million of our existing Floating Rate Notes in exchange
for the $229.5 million of new 9% Senior Notes which mature on December 1,
2016; $0.6 million of gains related to the sale of certain lab equipment
associated the shutdown of our research and development facility at our
Vancouver headquarters; $0.2 million of gains related to the sale of certain
manufacturing equipment associated with the Quill related transaction
discussed above; and (iv) $0.2 of gains related to the disposition of certain
property, plant and equipment at our manufacturing facilities.

Our Adjusted EBITDA for the three months ended December 31, 2011 was not
adjusted for any significant non-recurring gains, losses or other
income/expense items. However, our Adjusted EBITDA for the year ended December
31, 2011 excludes a $67.3 million gain related to the settlement and
extinguishment of our $250 million Subordinated Notes, $16 million of related
interest obligations and $4.1 million of certain other liabilities that were
subject to compromise as part of the Recapitalization Transaction.

Material Limitations

While we believe our measure of Adjusted EBITDA is a useful financial metric
for the reasons stated above, there may be certain inherent limitations in
this non-GAAP metric, including but not limited to:

  *Exclusion of amortization and depreciation expense from our Adjusted
    EBITDA does not take into account the need for future capital spending,
    whether this is to support growth or to replace assets which are subject
    to wear and tear.

  *Exclusion of write-downs, amortization and depreciation from our Adjusted
    EBITDA does not take into consideration the potential tax impacts or
    obligations which can materialize into actual future cash flows.

  *As we use our own approach for calculating our Adjusted EBITDA, other
    companies may not make the same adjustments or disclose their financial
    data in a manner that would allow comparison of their results to our
    adjusted results, thus decreasing comparability of our adjusted financial
    measures as comparative analytical tools.

  *Non-GAAP based adjustments may not take into account the full economic
    cost of running our business. For example, financing costs are required to
    raise capital, which is used to fund operations. Adjusted financial
    measures do not necessarily reflect these considerations.

As noted above, our Adjusted EBITDA is not a substitute for our GAAP-derived
financial measures and statements. Adjusted EBITDA is used by management to
supplement our GAAP disclosures and help investors and lenders gain a better
understanding of our operating performance. It also provides investors,
lenders, and our Board of Directors with access to the same data used by
management to assess our operating performance. Management compensates for the
foregoing limitations by ensuring that our GAAP disclosures are transparent
and sufficient to provide readers with the information required to reconcile
financial results and form unbiased conclusions.





SOURCE Angiotech Pharmaceuticals, Inc.

Contact:

Investor Relations and Corporate Communications
Angiotech Pharmaceuticals,Inc.
(604) 221-6933
ir@angio.com