PACIFIC PULMONARY SERVICES AND O₂ SCIENCE
ANNOUNCE INTENT TO MERGE

NOVATO, Calif. and TEMPE, Ariz. …  July 30, 2005  …  Pacific Pulmonary Services and O₂ Science, both leading providers of respiratory therapy services and home healthcare products, announced today their intent to merge.  The transaction is expected to close in August 2005.

Pacific Pulmonary Services, with operations in 13 states, and O₂ Science, with locations across seven states, have very little geographic overlap.  As a result, the new organization will serve much of the western United States, and most of the company’s combined employees will remain in their respective positions. 

Peter B. Kelly, president and CEO at Pacific Pulmonary Services will assume the role of president and CEO of the merged company.  Mark S. Hanley, O2 Science’s president and CEO, will pursue the previously established healthcare business interests he has recently garnered.  . 

The corporate offices of the combined company will be the Pacific Pulmonary Services’ headquarters in Novato, Calif., located just north of San Francisco.

“We are very excited about this opportunity because the cultures of each company are quite similar.  Over the years, both companies have emphasized a growth-oriented entrepreneurial spirit and have fostered autonomy among their employees. Most importantly, both have made the delivery of quality patient care the top priority of their individual organizations.  Because of these similarities, we believe the combined organization, with its enhanced geographic reach, stronger market penetration and additional employee base, will prove beneficial to the patients, payers, physicians and referral sources we serve.  Additionally, we believe the O ₂ Science employees will be afforded the right environment to thrive within this expanded organization,” stated Kelly.

Hanley added:  “For some time, we had been looking to merge with a company that would be the right fit based on corporate culture, business philosophy and commitment to patient care.  We found all those commonalities in Pacific Pulmonary Services.  We believe this merger will bring value to our shareholders, enhance the quality of patient care we deliver and offer our employees the best workplace environment as they transition to the new corporation.”

Tempe, Ariz.-based O₂ Science is a regional provider of a wide range of home healthcare services including respiratory therapy and medications.  The company operates in seven states.  For more information, please visit www.02science.com.