EXHIBIT 99.2

Pro Forma Financial Information

Introduction

The following unaudited pro forma condensed consolidated financial information gives pro forma effect to an agreement and plan of merger by and among ArthroCare Corporation, Medical Device Alliance Inc. (MDA), and Alpha Merger Sub Corporation, pursuant to which Alpha Merger Sub Corporation was merged with and into MDA, with the separate existence of Alpha Merger Sub Corporation ceasing and MDA continuing as a wholly-owned subsidiary of ArthroCare. This financial information was prepared from, and should be read in conjunction with, the historical consolidated financial statements found in the companies’ annual and quarterly filings, with the Securities and Exchange Commission. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2003 gives effect to the transaction as if it had occurred on that date. The unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2003 and twelve months ended December 31, 2002, give effect to the transaction as if it had occurred on January 1, 2002.

The unaudited pro forma condensed consolidated financial information was prepared for illustrative purposes only. This information does not purport to represent what the actual results of operations or financial position of ArthroCare would have been if the merger had actually occurred on the dates assumed and does not necessarily indicate what ArthroCare’s future operating results or consolidated financial position will be.

The pro forma adjustments presented in the unaudited pro forma condensed consolidated financial information give effect to estimates made by ArthroCare’s management and assumptions that it believes to be reasonable. The unaudited pro forma condensed consolidated financial information does not take into account any synergies or cost savings which may have occurred as a result of the merger.

Condensed Consolidated Pro Forma Balance Sheet as of September 30, 2003 (in thousands)


	ArthroCare		MDA		Adjustments			Pro Forma
Current Assets:
Cash & Cash Equivalents	$	33,692	$	5,496	$	(14,997	)	$	24,191
Accounts Receivable, net		19,539		955					20,494
Inventories		32,614		1,277		329			34,220
Prepaid Expenses & Other Current		3,563		18					3,581


Total Current Assets		89,408		7,746		(14,668	)		82,486

PP&E, net		21,101		556					21,657
Related Party Receivables		1,205		—					1,205
Intangible assets		6,236		—		9,160			15,396
Goodwill		10,383		3,899		14,866			25,249
						(3,899	)
Other assets		4,464		15		3,600			8,079


Total Assets	$	132,797	$	12,216	$	9,059		$	154,072


Liabilities
Current Liabilities:
Accounts Payable	$	8,474	$	542				$	9,016
Accrued Liabilities and other current liabilities		10,431		1,937		132			12,500


Total Current Liabilities		18,905		2,479		132			21,516

Long-term debt and other long-term liabilities		159		—		18,664			18,823


Total Liabilities		19,064		2,479		18,796			40,339


Series B redeemable preferred stock		—		4,347		(4,347	)		—
Stockholders’ Equity		113,733		5,390		(5,390	)		113,733


Total Liabilities and Equity	$	132,797	$	12,216	$	9,059		$	154,072

See notes to pro forma condensed consolidated financial information.

Condensed Consolidated Pro Forma Statement of Operations for the year ended December 31, 2002 (in thousands)


	ArthroCare			MDA			Adjustments			Pro Forma
Total Revenues	$	88,787		$	3,627		$	—		$	92,414
Cost of Product Sales		33,409			1,257			—			34,666


Gross Profit		55,378			2,370			—			57,748


Operating expenses:
Research and development		8,826			614			—			9,440
Selling, general and administrative		47,399			5,540			1,260			54,199


Total operating expenses		56,225			6,154			1,260			63,639


Income (loss) from operations		(847	)		(3,784	)		(1,260	)		(5,891	)
Other income, net		2,545			28,190			(432	)		30,303


Income before income tax provision		1,698			24,406			(1,692	)		24,412
Income tax provision		566			10,077			(491	)		10,152


Net income	$	1,132		$	14,329		$	(1,201	)	$	14,260


Basic net income per share	$	0.05								$	0.66


Shares used in computed basic net income per share		21,467									21,467


Diluted net income per share	$	0.05								$	0.64


Shares used in computed diluted net income per share		22,330									22,330

Condensed Consolidated Pro Forma Statement of Operations for the nine months ended

September 30, 2003

(in thousands)


	ArthroCare		MDA			Adjustments			Pro Forma
Total Revenues	$	86,342	$	6,264		$	—		$	92,606
Cost of Product Sales		26,325		1,272			—			27,597


Gross Profit		60,017		4,992			—			65,009


Operating expenses:
Research and development		8,321		494			—			8,815
Selling, general and administrative		46,593		6,062			945			53,600


Total operating expenses		54,914		6,556			945			62,415


Income (loss) from operations		5,103		(1,564	)		(945	)		2,594
Other income, net		1,636		(488	)		(324	)		824


Income (loss) before income tax provision		6,739		(2,052	)		(1,269	)		3,418
Income tax provision		2,089		404			(368	)		2,125


Net income (loss)	$	4,650	$	(2,456	)	$	(901	)	$	1,293


Basic net income per share	$	0.22							$	0.06


Shares used in computed basic net income per share		20,908								20,908


Diluted net income per share	$	0.21							$	0.06


Shares used in computed diluted net income per share		21,740								21,740

See notes to pro forma condensed consolidated financial information.

Notes to pro forma condensed consolidated financial information.

Adjustments to Pro Forma Balance Sheet:

For the purpose of this pro forma disclosure, a pro forma allocation of the purchase price to the estimated fair value of the net assets on September 30, 2003 was performed. The actual allocation of the purchase price will be performed based on the estimated fair value at the date of the acquisition. A summary of the pro forma allocation is presented below:


	(000’s)
Purchase consideration:
Cash consideration	$	28,356
Acquisition costs		1,641	(1)


		29,997


Estimated fair value of assets acquired:
Book value of assets acquired		9,737
Fair value adjustment for acquired inventory		329
Deferred tax liability		(3,796	)
Write off of MDA goodwill		(3,899	)
Intangible assets acquired		9,160	(2)


		11,531


Excess of purchase consideration over estimated fair value of assets acquired:	$	18,466

(1)

Estimated costs associated with the merger are expected to amount to $1,641,000. Such costs include estimated legal fees of $901,000, estimated accounting fees of $400,000, loan fees of $85,000 and appraisal, printing and other costs of $255,000.

(2)

Estimated intangible assets acquired were based on a third party evaluation and consist of existing technology of $5,500,000, patents and core technology of $1,800,000, customer and supplier relationships of $860,000, trademarks and trade names of $600,000, non-compete agreements of $200,000 and FDA approvals of $200,000. These intangible assets will be amortized over their useful lives, ranging from three years to ten years.

Adjustments to Pro Forma Statements of Operations:

As described above, estimated intangible assets have been added to the pro forma balance sheet. Pro forma amortization of those intangibles, adjusted for income tax effect, has been added to the pro forma statements of operations for the periods shown. In addition, an adjustment has been made for interest expense for the debt used to finance the acquisition.

MEDICAL DEVICE ALLIANCE INC 8-K/A