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Meridian Bioscience Reports Record Operating Results, Declares Regular Cash Dividend, and Reaffirms Higher Fiscal 2005 Guidance

CINCINNATI--(BUSINESS WIRE)--July 21, 2005--Meridian Bioscience, Inc., Cincinnati, Ohio (NASDAQ:VIVO) today:

  • reported record third quarter sales of $25,421,000, a 39% increase over the same period of the prior fiscal year and an all-time record for any quarter in the Company's history;
  • reported record third quarter operating income of $5,708,000, an increase of 70% over the same period of the prior fiscal year and an all-time record for any quarter in the Company's history;
  • reported record third quarter diluted earnings per share of $0.22, a 57% increase over the same period of the prior fiscal year based on 16,201,000 average diluted shares outstanding compared to 15,260,000 for the same period of fiscal 2004;
  • declared the regular quarterly cash dividend of $0.12 per share, 20% higher than the regular quarterly rate of fiscal 2004; and
  • reaffirmed its recently increased guidance of net sales between $89 million and $92 million and per share diluted earnings between $0.73 and $0.76 for the fiscal year ending September 30, 2005.

                         FINANCIAL HIGHLIGHTS
                  In Thousands, Except per Share Data
                  -----------------------------------

                                           Three Months Ended June 30
----------------------------------------------------------------------
                                             2005     2004    Change
----------------------------------------------------------------------
Net Sales                                   $25,421  $18,256       39%
----------------------------------------------------------------------
Operating Income                              5,708    3,366       70%
----------------------------------------------------------------------
Net Earnings                                  3,498    2,157       62%
----------------------------------------------------------------------
Earnings per Share (diluted)                  $0.22    $0.14       57%
----------------------------------------------------------------------

----------------------------------------------------------------------
Cash                                         $4,028   $2,056   $1,972
----------------------------------------------------------------------
Working Capital                              18,477   16,640    1,837
----------------------------------------------------------------------
Long-term Debt Obligations                    5,386   16,495  (11,109)
----------------------------------------------------------------------
Shareholders' Equity                         48,965   30,736   18,229
----------------------------------------------------------------------
Total Assets                                $80,666  $65,849  $14,817
----------------------------------------------------------------------

THIRD QUARTER RESULTS

Net sales for the third fiscal quarter ended June 30, 2005, were $25,421,000 as compared to $18,256,000 for the same period of the prior fiscal year, an increase of 39%. Net earnings for the third quarter of fiscal 2005 were $3,498,000, or $0.22 per diluted share, up 62% and 57%, respectively, over the third quarter of fiscal 2004. Diluted common shares outstanding for the third quarter of fiscal 2005 and 2004 were 16,201,000 and 15,260,000 respectively, an increase of 6% due primarily to the conversion of 7% convertible debentures to common stock.

YEAR-TO-DATE RESULTS

Net sales for the nine months ended June 30, 2005, were $67,949,000 as compared to $57,362,000 for the same period of the prior fiscal year, an increase of 18%. Net earnings for the nine months ended June 30, 2005, were $8,804,000, or $0.55 per diluted share, up 41% and 34%, respectively, over the same period of prior fiscal year 2004. Diluted common shares outstanding for the first nine months of fiscal 2005 and 2004 were 15,928,000 and 15,236,000 respectively, an increase of 5%.

CASH DIVIDEND MATTERS

The Board of Directors declared the regular quarterly cash dividend of $0.12 per share for the third quarter ended June 30, 2005. The record date is August 4, 2005 and the dividend is payable August 8, 2005. The annual indicated cash dividend rate for fiscal 2005 is $0.48 per share, an increase of 20% over the fiscal 2004 rate of $0.40 per share. Meridian has increased its regular cash dividend rate thirteen times since it established a regular dividend fourteen years ago. Guided by the Company's policy of setting a payout ratio of between 75% and 85% of each fiscal year's expected net earnings, the actual declaration and amount of dividends will be determined by the Board of Directors in its discretion based upon its evaluation of earnings, cash flow requirements and future business developments, including acquisitions.

RECENT FISCAL 2005 INCREASED GUIDANCE REAFFIRMED

On July 11, 2005, Meridian announced that it increased its previous guidance for fiscal 2005 earnings from a range of $0.66 to $0.70 per diluted share to a new range of $0.73 to $0.76 per diluted share. The per share estimates assume an increase in average shares outstanding from approximately 15.3 million at fiscal 2004 year end to 16.1 million at fiscal 2005 year end. Net sales guidance for fiscal 2005 was increased from $84 to $88 million to a new range of $89 million to $92 million. This new guidance included a modest accretion from O.E.M. Concepts, acquired in the second quarter of fiscal 2005.

FINANCIAL CONDITION

The Company's financial condition is sound. At June 30, 2005, current assets were $40,252,000 compared to current liabilities of $21,775,000 thereby producing working capital of $18,477,000 and a current ratio of 1.85. Cash on hand was $4,028,000 and the Company had an unused borrowing capacity of $18,233,000 under its commercial bank credit facility. Long-term debt obligations were $5,386,000 compared to shareholders' equity of $48,965,000. Subordinated convertible debt of $4,935,000 with a maturity date of September 1, 2013 represented 92% of the total long-term debt obligations outstanding.


                      UNAUDITED OPERATING RESULTS
                  In Thousands, Except per Share Data
                  -----------------------------------

The following table sets forth the unaudited comparative operating
results of Meridian Bioscience for the interim periods of fiscal 2005
and fiscal 2004.

                                  Three Months Ended Nine Months Ended
                                        June 30,          June 30,
----------------------------------------------------------------------
                                      2005     2004    2005     2004
----------------------------------------------------------------------
Net sales                            $25,421 $18,256  $67,949 $57,362
----------------------------------------------------------------------
Cost of goods sold                     9,735   7,355   27,673  24,311
----------------------------------------------------------------------
         Gross profit                 15,686  10,901   40,276  33,051
----------------------------------------------------------------------

----------------------------------------------------------------------
Operating expenses
----------------------------------------------------------------------
   Research and development            1,190   1,050    2,884   3,217
----------------------------------------------------------------------
   Sales and marketing                 3,647   3,077   11,019   9,389
----------------------------------------------------------------------
   General and administrative          5,141   3,408   12,000   9,950
----------------------------------------------------------------------
      Total operating expenses         9,978   7,535   25,903  22,556
----------------------------------------------------------------------

----------------------------------------------------------------------
Operating income                       5,708   3,366   14,373  10,495
----------------------------------------------------------------------
Other income (expense), net             (193)   (399)    (545) (1,172)
----------------------------------------------------------------------
   Income before income taxes          5,515   2,967   13,828   9,323
----------------------------------------------------------------------
   Income tax provision                2,017     810    5,024   3,082
----------------------------------------------------------------------
      Net earnings                     3,498   2,157    8,804   6,241
----------------------------------------------------------------------

----------------------------------------------------------------------
Net earnings per basic common share    $0.22   $0.14    $0.57   $0.42
----------------------------------------------------------------------
Basic common shares outstanding       15,768  14,899   15,478  14,846
----------------------------------------------------------------------

----------------------------------------------------------------------
Net earnings per diluted common
 share                                 $0.22   $0.14    $0.55   $0.41
----------------------------------------------------------------------
Diluted common shares outstanding     16,201  15,260   15,928  15,236
----------------------------------------------------------------------


                             SEGMENT DATA
                             In Thousands
                             ------------

The following table sets forth the unaudited operating segment data
for the interim periods in fiscal 2005 and fiscal 2004.

                                  Three Months Ended Nine Months Ended
                                       June 30,          June 30,
                                  ------------------ -----------------
                                     2005     2004     2005     2004
                                  ------------------------------------
Net sales (third-party)
   U.S. Diagnostics                 $13,646 $10,470   $40,035 $35,402
   European Diagnostics               4,880   4,086    13,805  11,619
   Life Science                       6,895   3,700    14,109  10,341
                                  ------------------ -----------------
                                    $25,421 $18,256   $67,949 $57,362
                                  ================== =================
Operating Income
   U.S. Diagnostics                  $3,296  $1,784    $9,949  $7,582
   European Diagnostics                 835     828     1,985   1,557
   Life Science                       1,744     751     2,548   1,407
   Eliminations                        (167)      3      (109)    (51)
                                  ------------------ -----------------
                                     $5,708  $3,366   $14,373 $10,495
                                  ================== =================

COMPANY COMMENTS

John A. Kraeutler, President and Chief Operating Officer, commented, "Double-digit revenue increases from each of our business units, plus strong operating leverage, produced record earnings and increases in margin and other key operating ratios. Our diagnostic business continues to gain market share as a result of focused sales effort and new product introductions, such as ImmunoCard(R) Toxins A&B, our newest rapid test for C.difficile. Our Life Science business continues to expand its capabilities, including contract services. We anticipate continued growth and operating strength in all of our businesses."

William J. Motto, Chairman and Chief Executive Officer, said, "Our third quarter operating results set all time records for sales and profitability. All of our business units met or exceeded their budgets for the quarter. When this happens the true earning power of the organization becomes evident - as shown by gross profit and operating income margins of 62% and 22%, respectively. Our cash flow continues to be very strong and we further strengthened our balance sheet with the conversion and retirement of the 7% convertible subordinated debentures in July--over a year before their maturity. We have effectively de-levered our capital structure which is now quite conservative with 90% equity and 10% long-term debt obligations. Our most recent acquisition, O.E.M. Concepts is working out well. We continue to look for additional product lines and businesses that fit our growth strategy. We received recognition during the third quarter including being added to Mergent's Dividend Achievers Index and the Russell 2000, as well as FORTUNE Small Business' list of "100 fastest growing small companies in America" and Business Week's list of one of "The 100 Best Small Companies." Looking forward, we expect a strong fourth quarter and a record fiscal year. Our recently increased fiscal 2005 guidance projects net sales of $89 to $92 million and per share diluted earnings of $0.73 to $0.76 is solid. As is customary, we will provide our initial guidance for fiscal 2006 by mid-August. Our long-range commitment remains unchanged, to build shareholder value through higher sales and earnings, increasing cash dividends, and a higher stock price. I look forward to reporting our fourth quarter and fiscal 2005 results to you."

FORWARD LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements accompanied by meaningful cautionary statements. Except for historical information, this report contains forward-looking statements which may be identified by words such as "estimates", "anticipates", "projects", "plans", "seeks", "may", "will", "expects", "intends", "believes", "should" and similar expressions or the negative versions thereof and which also may be identified by their context. Such statements are based upon current expectations of the Company and speak only as of the date made. The Company assumes no obligation to publicly update any forward-looking statements. These statements are subject to various risks, uncertainties and other factors that could cause actual results to differ, including, without limitation, the following: Meridian's continued growth depends, in part, on its ability to introduce into the marketplace enhancements of existing products or new products that incorporate technological advances, meet customer requirements and respond to products developed by Meridian's competition. While Meridian has introduced a number of internally developed products, there can be no assurance that it will be successful in the future in introducing such products on a timely basis. Ongoing consolidations of reference laboratories and formation of multi-hospital alliances may cause adverse changes to pricing and distribution. Costs and difficulties in complying with laws and regulations administered by the United States Food and Drug Administration can result in unanticipated expenses and delays and interruptions to the sale of new and existing products. Changes in the relative strength or weakness of the U.S. dollar can change expected results. One of Meridian's main growth strategies is the acquisition of companies and product lines. There can be no assurance that additional acquisitions will be consummated or that, if consummated, will be successful and the acquired businesses successfully integrated into Meridian's operations.

Meridian is a fully integrated life science company that manufactures, markets and distributes a broad range of innovative diagnostic test kits, purified reagents and related products and offers biopharmaceutical enabling technologies. Utilizing a variety of methods, these products provide accuracy, simplicity and speed in the early diagnosis and treatment of common medical conditions, such as gastrointestinal, viral, and respiratory infections. Meridian diagnostic products are used outside of the human body and require little or no special equipment. The Company's products are designed to enhance patient well-being while reducing the total outcome costs of healthcare. Meridian has strong market positions in the areas of gastrointestinal and upper respiratory infections, serology, parasitology and fungal disease diagnosis. In addition, Meridian is a supplier of rare reagents and specialty biologicals along with proteins and other biologicals used by biopharmaceutical companies engaged in research for new drugs and vaccines. The Company markets its products to hospitals, reference laboratories, research centers, veterinary testing centers, physician offices and diagnostics manufacturers in more than 60 countries around the world. The Company's shares are traded through Nasdaq's National Market, symbol VIVO. Meridian's website address is www.meridianbioscience.com.

CONTACT: Meridian Bioscience, Inc., Cincinnati
John A. Kraeutler or Melissa A. Lueke, 513-271-3700

SOURCE: Meridian Bioscience, Inc.