Medsphere Raises Appoints Larry Augustin as Company CEO

Medsphere Systems Corporation, provider of Medsphere OpenVista, a fully integrated Electronic Health Record (EHR) that enhances the quality, safety, and efficacy of health
care delivery, today announced the completion of a $7.5M Series B round of
venture financing led by Azure Capital Partners. Also participating were
existing investors Thomas Weisel Venture Partners and Wasatch Venture Fund.
In conjunction with the close of the financing, Medsphere announced the
appointment of Larry Augustin as CEO of the company. The new infusion of
capital and the recruitment of Mr. Augustin will position the company for
rapid growth as it introduces Medsphere OpenVista as a significant Healthcare
Information Technology (HIT) innovation.

Medsphere OpenVista provides a single source of information to patient
care and administrative departments across the healthcare enterprise --
capturing and organizing all clinical, financial, and administrative patient
data into an always-current, comprehensive Electronic Health Record.
Medsphere enhanced the Department of Veteran Affairs' (VA's) highly acclaimed,
open source VistA EHR to develop Medsphere OpenVista for the commercial
market. Over 15,000 physicians and 56,000 nurses in more than
1,300 healthcare organizations, including 160 medical centers and 850 clinics,
are currently using VistA.

According to the Institute of Medicine, preventable medical errors result
in the deaths of approximately 98,000 annually and cost hospitals up to
$29 billion annually. Lack of automation was identified as a critical factor
in these errors. One of the recommended solutions to this crisis in
healthcare quality is the implementation of advanced EHR systems. The highly
acclaimed VistA EHR was singled out as a model system by the Institute of
Medicine in their 2002 Leadership by Example report, which states "The VA's
integrated health information system, including its framework for using
performance measures to improve quality, is considered one of the best in the
nation." As noted in the August 2003 Modern Physician article Wired and
Ready, while less than 5% of private sector hospitals utilize Computerized
Physician Order Entry (CPOE), the VA has exceeded 90% usage with VistA CPOE,
and has virtually eliminated all medical errors at the point of
administration.

"Medsphere OpenVista is an exciting development in the healthcare
IT market," stated General Partner Michael Kwatinetz of Azure Capital
Partners. "We see significant opportunity for Medsphere to successfully enter
the provider market with an open technology solution that has a proven track
record of physician adoption, improved patient safety and enhanced delivery of
quality care." Mr. Kwatinetz will join the Medsphere board in conjunction
with the round.

Prior to joining Medsphere, Mr. Augustin was a Venture Partner at Azure
Capital Partners specializing in software, systems, and related IT
infrastructure technologies. Prior to Azure, Mr. Augustin founded VA Linux
(now VA Software), where he served as CEO and led VA Linux to an initial
public offering (IPO) that set the record for the largest first day gain ever
in an IPO. In 2000, Worth Magazine named him one of the Top 50 CEOs in
America. Known as one of the early innovators in bringing Open Source
technologies to the commercial market, Mr. Augustin helped coin the term "Open
Source." Mr. Augustin serves on the boards of directors of VA Software, the
Open Source Development Lab (OSDL), Linux International, and Linux Mark
Institute. Mr. Augustin holds Ph.D. and M.S. degrees in electrical
engineering from Stanford University, and a B.S. in electrical engineering
from the University of Notre Dame.

"I am pleased to be joining Medsphere as the company transitions to its
go-to-market growth phase," stated Mr. Augustin. "I see many parallels
between the opportunities in front of Medsphere and other paradigm-shifting,
open source companies such as Red Hat. I look forward to contributing to the
successful market entry of Medsphere and OpenVista as a cost-effective,
comprehensive and proven solution initially targeting the largely underserved
market of small to medium sized hospitals."

"The recently completed financing and our ability to attract someone of
Larry's caliber demonstrates our commitment to the success of Medsphere and
OpenVista," stated Medsphere's former CEO and co-founder Steve Shreeve.
"Larry's demonstrated success in leveraging open source technology to create
significant value for customers will greatly accelerate Medsphere's market
entry." Mr. Augustin is succeeding Steve Shreeve, who will transition to the
role of Chief Technical Officer for the company.

Media Contacts:
Scott Shreeve, MD
Chief Medical Officer
Medsphere Systems Corporation
(949) 297-4050
Scott.shreeve@medsphere.com

Josh Wisham
Vice President, Sales and Marketing
Medsphere Systems Corporation
(949) 297-4050
Josh.wisham@medsphere.com

General Inquiries:
info@medsphere.com