COMPUMED AND MERRY X-RAY ANNOUNCE DISTRIBUTION AGREEMENT
AGREEMENT WILL ENHANCE DISTRIBUTION OF DICOM OSTEOGRAM TO GROWING NUMBER OF FACILITIES USING DIGITAL IMAGING SYSTEMS

LOS ANGELES and SAN DIEGO, July 26 -- CompuMed, Inc., (BB:CMPD), a leading developer of computer-aided telemedicine and diagnostics technology, today announced a nationwide distribution agreement with Merry X-Ray Corporation, the largest independent dealer of medical imaging products, systems and service in the U.S.

Under the terms of the agreement, Merry X-Ray will market and distribute CompuMed's innovative DICOM OsteoGramŽ system for low-cost osteoporosis testing. The software-based system can be added to new and previously installed computed radiography (CR) and digital radiography (DR) equipment. It adds significant value to such equipment by making it capable of performing bone mineral density (BMD) screening for early detection and treatment of osteoporosis -- a silent disease that affects more than 44 million Americans and costs the nation's healthcare system more than $18 billion annually.

"We are excited to partner with such a broad-reaching and well respected organization," said Jerry McLaughlin, CompuMed's president and CEO. "The OsteoGram is ideally suited for Merry X-Ray's large customer base, which includes hospitals, imaging centers and orthopedic offices nationwide."

DICOM-based systems, such as filmless x-ray platforms and PACS network servers, have become a high growth segment of the medical imaging market. CompuMed's breakthrough second-generation DICOM-based technology will give Merry X-Ray's customers the ability to use a simple hand x-ray to accurately determine bone mineral density as a screening or diagnostic indicator of osteoporosis and future fracture risk. The hand x-ray image is analyzed by the automated OsteoGram software program, which instantly produces a BMD report comparable to tests performed on far more costly BMD testing equipment, which requires dedicated rooms and specially trained staff.

"Combining OsteoGram software with new digital x-ray platforms will enable imaging professionals to consolidate their workflow and expand the services they can provide with already available equipment," added McLaughlin.

"The DICOM OsteoGramŽ is an innovative add-on solution that provides a rapid ROI," said Jeff Root, Merry X-Ray's corporate director of digital imaging. "It is a perfect fit for our customers because it can transform existing CR or DR equipment into bone density measurement systems."

About Merry X-Ray

For almost half a century, Merry X-Ray (MXR) Corporation has met the challenges of keeping pace with the rapidly changing technology within the medical imaging profession. Most dramatic of these changes has been the migration from analog imaging to today's trend of digital medical imaging. In 1998, MXR created its Digital Imaging Division to respond to these current needs. MXR's electronic product portfolio is rich with vendor partners and solutions to meet any digital imaging need -- from basic teleradiology to enterprise-wide PACS. MXR represents over 8,000 products and has thirty-four branches nationwide. MXR is the largest independent dealer in the U.S. and major distributor member of National Healthcare Distributors (NHD). For more information about Merry X-ray Corporation, please visit www.merryxray.com.

About CompuMed:

Founded in 1973, CompuMed, Inc. (BB:CMPD) is a leading provider of computer-aided telemedicine and diagnostics technology. The company's core products are the OsteoGram and CardioGram systems. The OsteoGram, which is cleared by the FDA for commercial use, is an accurate and precise technology for low-cost osteoporosis testing. The CardioGram system remotely interprets electrocardiograms and is used by private practice, government and corporate healthcare providers nationwide. CompuMed is headquartered in Los Angeles. Visit CompuMed at www.compumed.net or call (310) 258-5000.

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, ability to raise capital, the availability of appropriate acquisition candidates and/or business partnerships, economic conditions, the impact of competition and pricing, capacity and supply constraints or difficulties, government regulation and other risks defined in this document. All such forward-looking statements are expressly qualified by these cautionary statements. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof, except as required by law.

CONTACT: Erik Deutsch - Tellem Worldwide, +1 (310) 479-6111 x.15, edeutsch@tellem.com