TSON Baxano Surgical, Inc. (MM)

- Fourth quarter revenues were $4.1 million -

- Net loss per share was $0.44 for the quarter –

- Excluding special items, net loss per share was $0.20 for the quarter* -

TranS1 Inc. (Nasdaq:TSON), a medical device company focused on designing, developing and marketing products to treat degenerative conditions of the spine affecting the lumbar region, today announced its financial results for the fourth quarter ended December 31, 2012.

Revenues were $4.1 million in the fourth quarter of 2012, representing a 3.5% increase from revenues of $4.0 million in the fourth quarter of 2011. Domestic revenues were $3.0 million in the fourth quarter of 2012, compared to $3.7 million in the fourth quarter of 2011 and international revenues were $1.1 million in the fourth quarter of 2012, compared to $0.3 million in the fourth quarter of 2011. The increase in international revenues was due to the initial stocking order for our new distributor in China. Gross margin was 62.2% in the fourth quarter of 2012 as compared to 73.9% in the fourth quarter of 2011. The decrease in gross margin was due primarily to a higher percentage of international sales which carry a lower gross margin than domestic sales, inventory charges related to excess inventories, and increased depreciation expense on reusable kits.

Net loss was $12.0 million in the fourth quarter of 2012, compared to a net loss of $4.9 million in the fourth quarter of 2011. Net loss per common share was $0.44 in the fourth quarter of 2012 compared to a net loss per share of $0.18 in the fourth quarter of 2011.

Excluding special items, net loss in the fourth quarter of 2012 was $5.3 million, or $0.20 per common share, compared to net loss excluding special items of $4.7 million, or $0.17 per common share in the fourth quarter of 2011. Special items in the fourth quarter of 2012 consisted of expenses of $6.6 million, including $0.6 million of legal fees, related to our tentative agreement in principle with the U.S. Department of Justice to settle its federal investigation related to the subpoena issued in October 2011. Special items in the fourth quarter of 2011 consisted of expenses of $0.2 million for legal fees related to the U.S. Department of Justice investigation.

Cash and cash-equivalents were $21.5 million as of December 31, 2012.

"In the fourth quarter we made significant progress on our key operational goals, including further reimbursement progress, expanding clinical publications and driving adoption of the VEO direct lateral system. In addition, we re-launched AxiaLIF in November at a large per-to-peer training event in anticipation of the activation of our Category I code on January 1," said Ken Reali, President and Chief Executive Officer of TranS1. "We believe that the stabilization of our domestic business and the initial stocking order in China have created positive momentum for TranS1 as we enter 2013."

TranS1 Outlook

For the first quarter ending March 31, 2013, the Company expects total revenues in the range of $3.0 - $3.4 million.

Conference Call

TranS1 will host a conference call today at 8:30 am Eastern time to discuss its fourth quarter financial results. This conference call replaces the call originally scheduled for today at 4:30PM. The conference call numbers did not change. To listen to the conference call on your telephone, please dial (877) 881-2183 for domestic callers and (970) 315-0453 for international callers approximately ten minutes prior to the start time. The call will be concurrently webcast. To access the live audio broadcast or the archived recording, as well as the Company's presentation used during the conference call, use the following link at http://ir.trans1.com/events.cfm.

Reconciliation of GAAP Financial Information to Non-GAAP Financial Information

To supplement the Company's consolidated financial statements presented in accordance with GAAP, the Company uses non-GAAP measures of certain components of financial performance, including net loss and net loss per common share, which are adjusted from results based on GAAP.  Although "as adjusted" financial measures are non-GAAP financial measures, the Company believes that the presentation of "as adjusted" financial measures calculated to exclude "special items" are useful adjuncts to the GAAP "as reported" financial measures.  "Special items" consist of charges related to a tentative settlement with the U.S. Department of Justice, including related legal fees, and legal fees related to a stockholder class action lawsuit. These non-GAAP measures are provided to enhance investors' overall understanding of the Company's current financial performance and the Company's prospects for the future. We believe that providing a non-GAAP measure that adjusts for significant non-recurring expenses allows comparison of our core operations from period to period. These non-GAAP measures may be considered in addition to results prepared in accordance with generally accepted accounting principles, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP measures included in this press release have been reconciled to the most directly comparable GAAP measure.

About TranS1 Inc.

TranS1 is a medical device company focused on designing, developing and marketing products to treat degenerative conditions of the spine affecting the lumbar region. TranS1 currently markets the AxiaLIF® family of products for single and two level lumbar fusion, the VEOTM lateral access and interbody fusion system and the VectreTM posterior fixation system for lumbar fixation supplemental to AxiaLIF fusion.  TranS1 was founded in May 2000 and is headquartered in Raleigh, North Carolina. For more information, visit www.trans1.com.

Forward Looking Statements

This press release includes statements that are based on our current beliefs and assumptions. These statements constitute "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and are intended to qualify for the safe harbor from liability established by  the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that are often difficult to predict, are beyond our control, and which may cause results to differ materially from expectations.  Factors that could cause our results to differ materially from those described include, but are not limited to, the pace of adoption of our  product technology by spine surgeons, the outcome of coverage and reimbursement decisions by the government and third party payors, the success of our continuing product development efforts, the effect on our business of existing and new regulatory requirements, uncertainty surrounding the outcome of the matters relating to the subpoena issued to the Company by the Department of Health and Human Services, Office of Inspector General, stockholder class action lawsuits, and other economic and competitive factors. For a discussion of the most significant risks and uncertainties associated with TranS1's business, please review the Company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2011 and subsequent reports.   You are cautioned not to place undue reliance on these forward looking statements, which are based on TranS1's expectations as of the date of this press release and speak only as of the date of this press release. We undertake no obligation to publicly update or revise any forward looking statement, whether as a result of new information, future events or otherwise.

CONTACT: Investors:
         TranS1 Inc.
         Joseph P. Slattery, 919-825-0868
         Executive Vice-President and Chief Financial Officer
         or
         Westwicke Partners
         Mark Klausner, 443-213-0501
         trans1@westwicke.com

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