MDS announces unaudited financial results for fiscal 2009

MDS Inc. (TSX: MDS; NYSE: MDZ), a leading provider of products and services to the global life sciences markets, today reported preliminary and unaudited financial results for the three-month period ended October 31, 2009 and for the full 2009 fiscal year ended October 31, 2009. MDS intends to file financial results for fiscal 2009 on or before January 29, 2010.

As a result of the strategic repositioning announced in September 2009, including the expected sale of MDS Analytical Technologies and the intended sale of MDS Pharma Services, the Company has reported the results for these businesses as discontinued operations for all periods presented herein. Continuing operations now focus solely on the MDS Nordion business, as well as Corporate and Other functions.

For the fourth quarter of 2009, MDS reported revenues from continuing operations of $51 million, a loss of $19 million and a loss per share of $0.15. This compares with revenues of $84 million, a loss of $264 million, and a loss per share from continuing operations of $2.19 for the corresponding period in 2008, which included a $246 million after-tax charge to write off the MAPLE Facilities. Adjusted EBITDA from continuing operations was $4 million, compared with $2 million in the prior year. Adjusted loss per share was $0.10 versus $0.08 for the same period in 2008.

Including discontinued operations, MDS reported a loss of $58 million in the fourth quarter, compared with a $575 million loss in the prior year. Current quarter results include a $25 million loss related to the sale of the Company's Late Stage operations and an estimated loss of $13 million related to the intended sale of Early Stage operations, both of which were reported in discontinued operations. In the fourth quarter of 2008, the Company wrote down $320 million of goodwill related to MDS Pharma Services.

Fourth Quarter 2009 and Selected Fiscal 2009 Highlights

- MDS reported revenues from continuing operations of $51 million for the fourth quarter of 2009, down from revenue of $84 million in the corresponding period in 2008. Excluding the impact of foreign exchange and divestitures, revenues decreased 40%. For the full 2009 fiscal year, the Company reported revenues from continuing operations of $231 million, down from $296 million in the corresponding period in 2008. Excluding the impact of foreign exchange and divestitures, revenues decreased 10%. - MDS recorded adjusted EBITDA from continuing operations of $4 million for the three months ended October 31, 2009, compared to $2 million in the prior year. For the 2009 fiscal year, MDS recorded adjusted EBITDA from continuing operations of $32 million versus $26 million in 2008. - MDS Nordion continued to be adversely impacted by the prolonged shutdown of Atomic Energy of Canada Ltd.'s (AECL) National Research Universal (NRU) reactor. Adjusted EBITDA in the fourth quarter 2009 for MDS Nordion was $11 million, versus $21 million last year. The fourth quarter of 2009 includes an unrealized embedded derivative charge of $1 million versus a charge of $13 million in 2008. For fiscal 2009, MDS Nordion recorded adjusted EBITDA of $73 million, versus $79 million last year. Fiscal 2009 includes an unrealized embedded derivative gain of $8 million, versus a charge of $15 million in 2008. - MDS continues to have a strong cash position, with $298 million as of the end of the fourth quarter of 2009. - On September 2, 2009, MDS entered into an agreement to sell its MDS Analytical Technologies business to Danaher Corporation for $650 million in cash. Following the close of this transaction, the Company currently intends to return approximately $400 million to $450 million of sale proceeds to shareholders by way of a share buyback. Also on September 2, 2009, MDS announced that it intends to sell its remaining MDS Pharma Services business. - On September 17, 2009, the Company announced a CEO transition plan and Steve West, President of MDS Nordion, was appointed Chief Operating Officer of MDS Inc. Subsequent to the end of the quarter, on January 8, 2010, MDS announced the appointment of Mr. West as Chief Executive Officer of MDS Inc., and the departure of President and Chief Executive Officer Stephen P. DeFalco from the Company. MDS also announced that Peter Dans, currently Senior Vice-President, Finance, MDS Inc., will become Chief Financial Officer, effective February 1, 2010. Doug Prince, currently Executive Vice-President and CFO, MDS Inc., is expected to leave the organization in March 2010.

"With the strategic repositioning of MDS under way, we are focused on completing the announced transactions, and on preparing MDS Nordion to become a stand-alone company," said Mr. West. "Despite the prolonged shutdown of AECL's NRU reactor, MDS Nordion continued to deliver positive returns from its radiotherapeutics and sterilization operations."