TSON Baxano Surgical, Inc. (MM)

- First quarter revenues were $3.1 million -

- Net loss per share was $0.26 for the quarter -

- Excluding special items, net loss per share was $0.21 for the quarter* -

- Acquisition of Baxano, Inc. and financing transaction expected to close May 31 -

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 first quarter ended March 31, 2013.

Revenues were $3.1 million in the first quarter of 2013, representing an 18.1% decrease from revenues of $3.8 million in the first quarter of 2012. Domestic revenues were $2.6 million in the first quarter of 2013, compared to $3.5 million in the first quarter of 2012 and international revenues were $0.5 million in the first quarter of 2013, compared to $0.3 million in the first quarter of 2012. Gross margin was 66.7% in the first quarter of 2013 as compared to 73.6% in the first quarter of 2012. The decrease in gross margin was due primarily to a higher percentage of international sales which carry a lower gross margin than domestic sales, increased depreciation expense on reusable kits and the new medical device tax.

Net loss was $7.1 million in the first quarter of 2013, compared to a net loss of $5.8 million in the first quarter of 2012.   Net loss per common share was $0.26 in the first quarter of 2013 compared to a net loss per share of $0.21 in the first quarter of 2012.

Excluding special items, net loss in the first quarter of 2013 was $5.7 million, or $0.21 per common share, compared to net loss excluding special items of $5.2 million, or $0.19 per common share in the first quarter of 2012. Special items in the first quarter of 2013 consisted of merger and integration expenses of $1.3 million related to our pending merger with Baxano, Inc., legal fees of $0.1 million related to the U.S. Department of Justice investigation related to the subpoena issued in October 2011 and legal fees related to a stockholder class action lawsuit.  Special items in the first quarter of 2012 consisted of expenses of $0.5 million for legal fees related to the U.S. Department of Justice investigation and legal fees related to a stockholder class action lawsuit.

Cash and cash-equivalents were $14.7 million as of March 31, 2013.

"In the first quarter of 2013 we made good progress on the key value drivers in our business that position the company for long term growth," said Ken Reali, President and Chief Executive Officer of TranS1. "The re-launch of AxiaLIF, our VEO market penetration, the imminent closing of our Baxano acquisition and concurrent financing have positioned the company for sustained revenue growth in the quarters to come."

Baxano Merger and Financing Update

On March 4, 2103 TranS1 announced that it had agreed to acquire Baxano, Inc. and to raise $17.2 million in equity. The vote of TranS1's stockholders to approve the issuance of common stock in connection with these transactions is scheduled to be held on May 31, 2013. If approved, TranS1 would expect to close the transactions on May 31, 2013. After closing the combined company will be called Baxano Surgical, Inc. and trade on NASDAQ under the ticker symbol "BAXS."

For the quarter ended March 31, 2013 Baxano, Inc. recorded approximately $3.0 million in revenues.

TranS1 Outlook

For the second quarter ending June 30, 2013, the Company expects total revenues in the range of $4.0 - $4.5 million, which assumes closing of the Baxano merger on May 31, 2013. On a pro forma basis, including Baxano's revenue through May 31, 2013, the Company expects total revenues in the range of $5.6 - $6.3 million. For the full fiscal year 2013, on a pro forma basis for the combined companies, the Company now expects total revenues in the range of $25 - $29 million versus prior guidance of $28 - $32 million.

Conference Call

TranS1 will host a conference call today at 4:30 pm Eastern time to discuss its first quarter financial results. 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 merger and integration expenses related to the previously announced merger with Baxano, Inc., 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 direct 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.

TranS1 has entered into an Agreement and Plan of Merger, dated March 3, 2013, by and among TranS1, RacerX Acquisition Corp. ("Merger Sub"), Baxano, and Sumeet Jain and David Schulte, as Securityholder Representatives, as amended by the First Amendment to Agreement and Plan of Merger, dated April 10, 2013, by and among the parties (the "Merger Agreement"), pursuant to which, at the effective time, Merger Sub will merge with and into Baxano with Baxano surviving as a wholly-owned subsidiary of TranS1 (the "Merger"). Baxano, based in San Jose, California, is focused on developing minimally invasive tools to restore spine function and preserve healthy tissue. Its commercially available product is the iO-Flex® System for both decompression and fusion applications. The Merger is expected to close on May 31, 2013.

AxiaLIF® is a registered trademark of TranS1 and iO-Flex® is a registered trademark of Baxano.

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 ability to consummate the Merger on the proposed timeline, or at all, failure to receive the approval of our stockholders, the risk that the Merger Agreement could be terminated under circumstances that would require us to pay a termination fee, 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, 2012 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.

Cautionary Statement

The Merger and private placement transaction discussed above involve the sale of securities in a private transaction that will not be registered under the Securities Act of 1933, as amended (the "Securities Act"), and will be subject to the resale restrictions under that act. Such securities may not be offered or sold absent registration or an applicable exemption from registration requirements. This communication does not constitute an offer to sell or a solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state or jurisdiction in which such an offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

Additional Information and Where to Find It

This communication may be deemed to be solicitation material in respect of the Merger and private placement transaction described in the definitive proxy statement on Schedule 14A filed by TranS1 on May 9, 2013. TranS1 may file other documents regarding the Merger and private placement transaction described in this communication with the SEC. STOCKHOLDERS OF TRANS1 ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE DEFINITIVE PROXY STATEMENT ON SCHEDULE 14A FILED BY TRANS1 ON MAY 9, 2013, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER AND PRIVATE PLACEMENT TRANSACTION. The definitive proxy statement will be mailed to stockholders on or about May 14, 2013. Stockholders may obtain, without charge, a copy of the definitive proxy statement and other documents TranS1 files with the SEC from the SEC's website at www.sec.gov. The definitive proxy statement and other relevant documents are also available, without charge, by directing a request by mail or telephone to TranS1, Attn: Corporate Secretary, 110 Horizon Drive, Suite 230, Raleigh, NC 27615, by calling TranS1 at (866) 256-1206, by emailing TranS1 at merger@trans1.com, or TranS1's website, www.trans1.com.

TranS1 and its directors, executive officers, certain members of management, and employees may have interests in the Merger or private placement transaction or be deemed to be participants in the solicitation of proxies of TranS1's stockholders to approve the issuance of TranS1's stock in connection with the Merger and private placement transaction. Stockholders may obtain additional information regarding the participants and their interests in the solicitation by reading the definitive proxy statement on Schedule 14A filed by TranS1 on May 9, 2013.

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

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