Allied's
life-saving
products
are utilized
to restore
health to
individuals
from generation
to generation.

Allied
Healthcare
Products, Inc.
1997 Annual
Report to
Shareholders

Allied [Logo]

Around the globe,
our products help
bring people back
to health.

Corporate Profile

Allied Healthcare Products is a leading manufacturer of
medical gas construction equipment, respiratory therapy
and emergency medical equipment and home health care
products. The company's products are utilized in a wide
range of medical settings, including pre-hospital
emergency medical situations, hospital and sub-acute
treatment and home health care.

Allied's medical gas construction systems include
in-wall components for delivering medical gases
throughout the hospital; central pumps and compressors
for supplying vacuum and medical air; and headwalls,
which are pre-fabricated with piping and electrical
components to speed renovations and provide a
decorative look for patient rooms and intensive care
units.

Allied also offers a broad range of products used in
respiratory care, including large volume compressors;
adult, pediatric, infant and transport ventilators and
calibrators; humidifiers; monitoring systems; oxygen
concentrators; and nebulizers.

The company's emergency medical products include
respiratory and resuscitation products, trauma and
patient handling equipment and related items for
ambulance companies, fire departments and emergency
medical system volunteer organizations.

Allied's well respected brand names include
Chemetron(R), Gomco(R), Timeter(R), Oxequip(R), Life
Support Products(R), Bear Medical Systems(R), BiCore
Monitoring Systems(R), B&F/Schuco(R), Hospital
Systems(R) and Omni-Tech Medical(R).

Financial Highlights

Five Year
(Dollars in thousands, Compound
except per share data) % Change Annual Rate
For years ended June 30, 1997 1996 (1997-1996) 1992 (1997-1992)
- --------------------------------------------------------------------------------------------------------------

OPERATING RESULTS
Net sales $118,118 $120,123 (1.7)% $58,603 19.2%
Income (loss) before income taxes (5,949) 3,300 (280.3) 10,645 --
Net income (loss) (4,521) 1,827 (347.5) 5,451 --
Net income (loss) as a % of sales (3.8) 1.5% -- 9.3% --

FINANCIAL POSITION
Working capital $ 18,743 $ 38,030 -- $16,605 --
Total assets 126,343 136,760 -- 38,167 --
Total debt 46,932 52,882 -- 2,297 --
Shareholders' equity 59,365 63,886 -- 27,921 --
Current ratio 1.57:1 2.69:1 -- 3.11:1 --

PER SHARE DATA
Net income (loss) $ (0.58) $ 0.25 (332.0) $ 0.76 --
Book value $ 7.61 $ 8.19 (7.1) $ 3.57 --

1997 Annual Report 1

Letter to Shareholders

Management is
focused on bringing
our company back
to financial health.

Dear Shareholders:

Fiscal 1997 represented a period of great disappointment for Allied
Healthcare Products. Results were adversely impacted by cost and margin
pressures, a significant increase in interest expense, as well as disruptions
caused by a computer conversion and a 19-day work stoppage at the company's
St. Louis facility. However, the worst appears to be over and Allied looks
forward to a very different fiscal 1998.

Subsequent to year end, the company refinanced its debt through a new $46.0
million credit facility with Foothill Capital Corporation, a division of
Norwest Bank, and completed the placement of $5.0 million in subordinated
debt for a total financing of $51.0 million. The proceeds from the new
financing were used to repay the company's outstanding debt with its
previous

[PHOTO]

2 1997 Annual Report Letter to Shareholders (continued from page one)

bank group, as well as related fees and expenses, and provide additional
liquidity.

Allied's pace of business has improved, with new orders for fiscal 1997 up
4.3 percent over a year ago. The company's backlog reflects a strong mix of
higher margin products and strength in medical gas construction, medical gas
equipment and ventilation products.

The company received FDA clearance for its Bear Cub(R) 750 ventilator,
which is now available in the U.S. market. Allied's international business
remains strong, and now accounts for 29 percent of total revenues.
Additionally, Allied's new office in Beijing will enable the company to
serve a growing customer base in an important region of the world.

[PHOTO]

The BEAR CUB(R) 750 infant ventilator offers integrated synchrony and volume
monitoring, dual flow capability, an internal battery and a graphics package.

- --------------------------------------------------------------------------------

1. Improving
Costs and Margins

The health care environment is quite different today due to a variety of
factors, including limits on Medicare reimbursements, consolidation of
hospitals and changes in product mix. Within these constraints, management is
continuing to review each of its major product lines and taking
appropriate action to help improve margins. These actions include analyzing
discount schedules and overall product pricing, capital expenditure projects
to improve efficiency, and changes in plant design and layout. Management
expects to realize premium pricing as a result of its ongoing efforts to
improve products, customer service and the ability to offer same-day
shipping of key products.

Allied's outside sales force has been consolidated, with a reduction in
fiscal 1997 to 66 from 79 employees. These actions, coupled with a greater
reliance on distributors, are expected to provide Allied with better sales
coverage at lower fixed costs. The company's new financing has already had a
positive impact by lowering interest costs, with better asset turnover
generating further reductions. Management is continuing to examine all line
item expenses and looks forward to further opportunities to reduce costs and
improve margins.

1997 Annual Report 3

Despite a difficult operating environment, Allied made investments in capital
improvements to modernize its St. Louis and Toledo facilities, converted to a
new MIS system at its St. Louis facility and consolidated the company's field
sales force. The outside sales force for ventilation products was combined
with the company's traditional hospital products sales force. The company's
home care sales efforts were strengthened by placing more emphasis on
telemarketing and the use of manufacturers' representatives.

These initiatives, combined with the completion of the new credit facility,
will enable Allied to focus more attention on improving operations and
returning the company to profitability.

[PHOTO]

Allied's sales efforts are supported by a network of dealers, agents and U.S.
exporters who distribute products throughout the world -- including the
United States, Canada, Mexico, Central and South America, Europe, the
Middle East and the Far East.

- --------------------------------------------------------------------------------

2. Managing
Assets

Improving the management of assets is essential to Allied's return to
profitability. At June 30, 1997, the company's accounts receivable and
inventory balances were $23.1 million and $26.1 million, respectively --
representing two of Allied's largest assets.

Receivables outstanding improved from the prior year. The company's focus on
improving collection of accounts receivables and days sales outstanding is
attributable to initiatives implemented during fiscal 1997. These initiatives
included:

* Increased discipline in credit approval, enforcement of international
letters of credit and other security documentation, and
improvements in communications with delinquent accounts;

* Consolidation of credit and collection efforts for the home care and
construction market, which provides important administrative
synergies and increases the frequency of customer contacts; and

* Upgrading the credit and collection department through the addition of
professional credit analysts.

Improvements in inventory management during fiscal 1997 benefited from:

* Better coordination of operations through upgraded information
technologies, including planning, shop floor tracking and work
order completion;

* Investments in plant modernization at the company's St. Louis and
Toledo facilities, which have shortened production cycle times
and improved quality;

* A focus on improved forecasting of product mix, with an emphasis
on producing and stocking those items which constitute 80 percent
or more of total customer requirements; and

* An inventory reduction of low volume products.

4 1997 Annual Report Letter to Shareholders (continued from page three)

During fiscal 1997, Allied continued efforts initiated in the prior fiscal
year to strengthen the company's management team, while developing strategic
programs to return the company to respectable levels of performance.

In November 1996, Uma Nandan Aggarwal joined Allied as president and chief
executive officer, with a commitment to improve operations, develop new
technologies and products, and strengthen the company's overall marketing
efforts. David Grabowski, previously vice president, international, was
promoted to the position of vice president, sales and marketing.

[PHOTO]

The Gomco(R) Portable Aspirator offers health care professionals
the ability to perform suctioning requirements in a variety of settings,
including emergency, acute care, sub-acute care and home care.

- --------------------------------------------------------------------------------

3. Upgrading
Service

Today's competitive health care environment involves managing a variety of
related activities, including a commitment to customer service, a focus on
sales and marketing, an emphasis on production efficiency, FDA compliance
and new product development.

Allied's commitment to quality is well recognized throughout the health care
industry, with products offering high performance standards. The company is
currently working to achieve ISO 9001 certification at its St. Louis
operation in the near future. ISO 9001 certification is a general
manufacturing quality standard established by the European Community, and EN
46001 is the specific quality standard required for medical device
manufacturers selling products in Europe. The European Community is in the
process of requiring all medical device manufacturers to comply with uniform
quality standards by 1998. Allied intends to meet or exceed these
requirements for all of the company's products.

In 1995 Bear Medical Systems(R), Inc. was granted both ISO 9001 and EN 46001
certifications from the National Standards Association of Ireland. It is
believed that Bear Medical was the first U.S. ventilator manufacturer to
receive both certifications.

Customer satisfaction requires a commitment to after-sales service support,
staffed by cross-trained representatives who are responsive and technically
knowledgeable about a variety of products. In addition, Allied employs a
network of dealers to service customers, along with field service personnel,
in-house repair and technical support capabilities.

In today's medical environment, hospitals have greatly reduced their
inventories, placing increased pressure on manufacturers to deliver products
in shorter periods of time. The company's forecasting system has been updated
to better satisfy customer orders with off-the-shelf availability of
key products.

1997 Annual Report 5

Subsequent to year end, John Weil, president of St. Louis-based Clayton
Management Company, was appointed to the company's board of directors,
increasing the board to nine members. His financial background and experience
serving on the boards of several other publicly traded companies will be a
valuable addition as management continues to improve operations and return
Allied to profitability.

Financial Position

Net sales for fiscal year 1997 were $118.1 million compared with $120.1
million in the prior year. For the 12-month period, Allied reported a net
loss of $4.5 million, or $0.58 per share, compared with net income of $1.8
million, or $0.25 per share, in the prior year.

[PHOTO]

The Chemetron(R) and Timeter(R) flowmeters have been redesigned to more
effectively utilize space with the metering knob located in the front.

- --------------------------------------------------------------------------------

4. Product
Enhancement

Customers worldwide have come to expect high quality products from Allied,
supported by innovative and aggressive product development programs. As part
of this effort, during fiscal 1997, the company introduced a new Mini
Vacutron,(R) the first in a series of suction regulators to be offered in a
reduced size, with enhanced durability and readability.

Other product enhancements in fiscal 1997 included:

* A Hybrid Flowmeter redesigned with front controls for better space
utilization and an extended warranty;

* OptiVac(TM) by Gomco(R), featuring both AC and DC operation for
easier portability; and

* A patented medical gas Connect II(TM) Outlet, which combines the
outlet configurations of the market leaders -- Chemetron(R) and
competitive gas outlets.

6 1997 Annual Report Letter to Shareholders (continued from page five)

Positioning for Tomorrow

Management is continuing its efforts to improve operational efficiencies,
implement plans to reduce costs and focus on enhancing results throughout the
organization.

In summary, fiscal 1997 constituted a year of transition for the company
with a focus that included:

* Resolving the company's financial situation with its former lenders and
establishing a new foundation with Foothill Capital Corporation;

* Reducing manufacturing costs through plant modernization at two primary
facilities;

* Reducing selling costs through sales force consolidation;

[PHOTO]

The new Mini Vacutron(R) has been greatly reduced in size for better space
utilization in acute care and non-acute care facilities.

- --------------------------------------------------------------------------------

4. Product (continued from page five)
Enhancement

Allied expects to introduce several additional new and enhanced products in
fiscal 1998, encompassing the company's entire market spectrum including
hospital construction, respiratory therapy, emergency medicine and home
health care. Products expected to be introduced in the near future include:

* The RespiCal(TM) calibration analyzer, a new version of the Timeter(R)
RT-200;

[PHOTO]

Building on the RT200's time- tested ability, the RespiCal(TM) Calibration
Analyzer delivers expanded capabilities, greater flexibility and easier
operation.

* The Life Support Product's(R) Rhino Pressure Regulator, featuring an
innovative patent-pending protective aluminum shroud which is shock
resistant and designed to prevent gauge damage and contamination;

* Streamlined modular trauma packs, featuring a variety of styles to
transport critical equipment tools to emergency care situations; and

[PHOTO]

The new LSP Rhino Pressure Regulator features a patent-pending aluminum
shroud designed to prevent gauge
damage and contamination.

1997 Annual Report 7

* Improving the use of working capital and reducing total debt by $6.0
million; and

* Enhancing domestic and international distribution.

On behalf of all the employees at Allied Healthcare Products, we appreciate
your support during this difficult period and look forward to positive
changes in fiscal 1998.

Sincerely,

/s/ Uma Nandan Aggarwal /s/ Dennis W. Sheehan

Uma Nandan Aggarwal Dennis W. Sheehan

President and Chief Executive Officer Chairman

[PHOTO]

The Connect II(TM) medical gas outlet station incorporates a patented
design to accept both Chemetron(R) and competitive adapters -- a distinct
advantage in hospital settings, eliminating the need to stock both adapter
styles.

- --------------------------------------------------------------------------------

[PHOTO]

Our trauma bags are designed to allow immediate access to critical
components in the treatment of injured patients during emergency
situations.

* Newly designed suction canisters used throughout the hospital setting
to collect secretions and fluids during surgery and post-operative
care -- utilizing a snap-on lid for ease of assembly, a self-sealing
filter for overflow protection and a variety of ports to support
special procedures.

[PHOTO]

Allied's new collection canister is scheduled for release in the second
quarter of fiscal 1998, incorporating a redesigned snap-on lid for easy
assembly and a self-sealing filter for improved flow.

8 1997 Annual Report

Corporate Information

Directors

Dennis W. Sheehan
Chairman of the Board
Allied Healthcare Products, Inc.
St. Louis, Missouri
Chairman, President and
Chief Executive Officer
AXIA Incorporated, Lombard, Illinois

Uma Nandan Aggarwal
President and Chief Executive Officer
Allied Healthcare Products, Inc.
St. Louis, Missouri

David A. Gee
President Emeritus
The Jewish Hospital
St. Louis, Missouri

Samuel A. Hamacher
Executive Vice President
Harbour Group Industries, Inc.
St. Louis, Missouri

James C. Janning
President
Harbour Group Ltd.
St. Louis, Missouri

Robert E. Lefton, Ph.D.
President and Chief Executive Officer
Psychological Associates
St. Louis, Missouri

Donald E. Nickelson
Vice Chairman
Harbour Group Industries, Inc.
St. Louis, Missouri

William A. Peck, M.D.
Vice Chancellor of Medical Affairs
Washington University
St. Louis, Missouri

John D. Weil
President
Clayton Management Company
St. Louis, Missouri

Officers

Uma Nandan Aggarwal
President and Chief Executive Officer

Barry F. Baker
Vice President, Finance and
Chief Financial Officer

David A. Grabowski
Vice President, Sales and Marketing

Gabriel S. Kohn
Vice President, Engineering

Annual Meeting
The Annual Meeting of Shareholders of Allied Healthcare Products, Inc. will
take place on Monday, November 17, 1997, at 10 a.m. Central Time, at The
Daniele Hotel, 216 N. Meramec, Clayton, Missouri 63105.

Transfer and Dividend Disbursing Agent
Chase Mellon Trust Company
St. Louis, Missouri

Independent Accountants
Price Waterhouse LLP
St. Louis, Missouri

Legal Counsel
Dickstein Shapiro Morin & Oshinsky LLP
Washington, D.C.

Investor Relations
Gary S. Maier, Managing Director
Pondel Parsons & Wilkinson
Los Angeles, California
(310) 207-9300

Common Stock Information
The common stock is traded on the Nasdaq National Market under the
symbol AHPI.

1997 High Low
- -----------------------------------------------------------------------

September quarter $10 1/4 $ 6 1/4
December quarter 7 3/4 6 3/8
March quarter 9 1/4 7
June quarter 7 1/8 5 3/8

1996 High Low
- ------------------------------------------------------------------------

September quarter $18 3/4 $15 1/4
December quarter 19 1/2 15 1/2
March quarter 16 3/4 10 1/2
June quarter 13 1/4 8 7/16

Allied Healthcare Products, Inc. began trading on the Nasdaq National Market
under the symbol AHPI on January 14, 1992, following its initial public
offering. As of September 18, 1997, there were 261 shareholders of record.

Products

Medical Gas Construction Equipment
Gas Outlets
Digital Gas Alarms
Zone Valves
Medical Gas Manifolds
Ceiling Columns
Hose Assemblies
Medical Air Compressors
Vacuum Pumps
Air Dryers
Headwalls
Rail Systems
Patient Consoles
Neonatal Service Units
Light Fixtures

Respiratory Care Products
Critical Care Adult/Pediatric Ventilators
Critical Care Infant Ventilators
Transport Ventilators
Pulmonary Monitors
Humidifiers
Air Compressors
Tube Dryers
Calibration Analyzer
Flowmeters
Timers
Oxygen Regulators
Oxygen Cylinders
Spirometers
Mist Tents
Suction Regulators
Portable Suction Equipment
CO2 Absorbent
Disposable Cannulas
Disposable Masks
Disposable Tubing
Disposable Nebulizers
Disposable Circuits
Disposable Suction Canisters
Reusable Suction Canisters
Nebulizer Compressors
Breast Pumps
Adapters/Fittings

Emergency Products
Hand-Held Ventilators
Demand Valves
Portable Resuscitators
Aspirators
Immobilization Boards
Trauma Air Pants
Burn Kits
Disposable Bag Mask Resuscitators
Extrication Devices

Form 10-K
A copy of the annual report on
Form 10-K for the year ended
June 30, 1997, which was
submitted by Allied Healthcare
Products, Inc. to the Securities
and Exchange Commission,
is included within. Additional
copies can be obtained by any
shareholder of the company
at no charge upon request in
writing to:

Barry F. Baker
Vice President, Finance and
Chief Financial Officer
Allied Healthcare Products, Inc.
1720 Sublette Avenue
St. Louis, Missouri 63110
(314) 771-2400
fax (314) 771-0650

11
Allied [Logo]

Allied Healthcare Products, Inc.
1720 Sublette Avenue
St. Louis, Missouri 63110
(314) 771-2400
fax (314) 771-0650