1145460--2/29/2008--INVERNESS_MEDICAL_INNOVATIONS

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repay and service our debt or otherwise create liquidity problems, limit our flexibility to adjust to market conditions, place us at a competitive disadvantage and expose us to interest rate fluctuations. We have entered into agreements governing our indebtedness that subject us to various restrictions that may limit our ability to pursue business opportunities. Our secured credit facilities contain certain financial covenants that we may not satisfy which, if not satisfied, could result in the acceleration of the amounts due under these facilities and the limitation of our ability to borrow additional funds in the future. A default under any of the agreements governing our indebtedness could result in a default and acceleration of indebtedness under other agreements. We may not be able to satisfy our debt obligations upon a fundamental change or change of control, which could limit our opportunity to enter into a fundamental change or change of control transaction. Our acquisitions may not be profitable, and the integration of these businesses may be costly and difficult and may cause disruption to our business. If we choose to acquire or invest in new and complementary businesses, products or technologies rather than developing them internally, such acquisitions or investments could disrupt our business and, depending on how we finance these acquisitions or investments, could result in the use of significant amounts of cash. Our joint venture transaction with P G may not realize all of its intended benefits. If goodwill and/or other intangible assets that we have recorded in connection with our acquisitions of other businesses become impaired, we could have to take significant charges against earnings. We may experience manufacturing problems or delays, which could result in decreased revenue or increased costs. We may experience difficulties that may delay or prevent our development, introduction or marketing of new or enhanced products. If the results of clinical studies required to gain regulatory approval to sell our products are not available when expected or do not demonstrate the anticipated utility of those potential products, we may not be able to sell future products and our sales could be adversely affected. If we are unable to obtain required clearances or approvals for the commercialization of our products in the United States, we may not be able to sell future products and our sales could be adversely affected. We are also subject to applicable regulatory approval requirements of the foreign countries in which we sell products, which are costly and may prevent or delay us from marketing our products in those countries. Failure to comply with ongoing regulation applicable to our businesses may result in significant costs or, in certain circumstances, the suspension or withdrawal of previously obtained clearances or approvals. If we deliver products with defects, our credibility may be harmed, market acceptance of our products may decrease and we may be exposed to liability in excess of our product liability insurance coverage. The effect of market saturation may negatively affect the sales of our products, including our Biosite Triage BNP tests. The health management business is a relatively new component of the overall healthcare industry. Our health management business may be adversely affected by cost reduction pressures among health care providers. A portion of our health management fees are contingent upon performance. If our costs of providing health management services increase, we may not be able to pass these cost increases on to our customers. Our data management and information technology systems are critical to maintaining and growing our business. Our sales of branded nutritional supplements have been trending downward since 1998 due to the maturity of the market segments they serve and the age of that product line, and we may experience further declines in sales of those products. Our sales of specific vitamins and nutritional supplements could be negatively affected by media attention or other news developments that challenge the safety and effectiveness of those specific vitamins and nutritional supplements. Because sales of our private label nutritional supplements are generally made at low margins, the profitability of these products may suffer significantly as a result of relatively small increases in raw material or other manufacturing costs. Our financial condition or results of operations may be adversely affected by international business risks. Because our business relies heavily on foreign operations and revenues, changes in foreign currency exchange rates and our need to convert currencies may negatively affect our financial condition and results of operations. Intense competition could reduce our market share or limit our ability to increase market share, which could impair the sales of our products and harm our financial performance. We could suffer monetary damages, incur substantial costs or be prevented from using technologies important to our products as a result of a number of pending legal proceedings. The rights we rely upon to protect the intellectual property underlying our products may not be adequate, which could enable third parties to use our technology and would reduce our ability to compete in the market. Claims by others that our products infringe on their proprietary rights could adversely affect our ability to sell our products and services and could increase our costs. We have initiated, and may need to further initiate, lawsuits to protect or enforce our patents and other intellectual property rights, which could be expensive and, if we lose, could cause us to lose some of our intellectual property rights, which would reduce our ability to compete in the market. In December 2005, we learned that the SEC had issued a formal order of investigation in connection with the previously disclosed revenue recognition matter at one of our diagnostic divisions. We cannot predict what the outcome of this investigation will be. In March 2006, the FTC opened a preliminary, non-public investigation into our acquisition of the Innovacon business to determine whether this acquisition may be anticompetitive. We cannot predict what the outcome of this investigation will be. Non-competition obligations and other restrictions will limit our ability to take full advantage of our management team, the technology we own or license and our research and development capabilities. Our operating results may fluctuate due to various factors and as a result period-to-period comparisons of our results of operations will not necessarily be meaningful. Period-to-period comparisons of our operating results may not be meaningful due to our acquisitions. Future sales of our common stock issuable upon conversion of our senior subordinated convertible notes may adversely affect the market price of our common stock. The conversion rate of our senior subordinated convertible notes may be adjusted based upon the daily volume weighted average price per share of our common stock for the thirty consecutive trading days ending on May 9, 2008, and any such adjustment will be dilutive to the holders of our common stock and could have an adverse effect on the price of our common stock. The holders of the Series B Convertible Perpetual Preferred Stock that we may issue in connection with the Matria acquisition shall be entitled to receive liquidation payments in preference to the holders of our common stock. The terms of the Series B Preferred Stock, if issued, may limit our ability to raise additional capital through subsequent issuances of preferred stock. Future sales of our common stock issuable upon conversion the proposed Series B Preferred Stock may adversely affect the market price of our common stock.

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1145460--2/29/2008--INVERNESS_MEDICAL_INNOVATIONS_INC