Meridian Bioscience announces record first-quarter net sales of $42.5M

Meridian Bioscience, Inc., Cincinnati, Ohio (NASDAQ: VIVO) today:

• reported record first quarter net sales of $42.5 million, an increase of 24%, over the same period of the prior fiscal year;
• reported record first quarter operating income of $13.8 million, an increase of 13%, over the same period of the prior fiscal year;
• reported record first quarter earnings and diluted earnings per share of $8.9 million and $0.22, both increases of 10% over the same period of the prior fiscal year;
• declared the regular quarterly cash dividend of $0.19 per share for the first quarter of fiscal 2010, (indicated annual rate of $0.76 per share), 12% higher than the regular quarterly rate of fiscal 2009; and
• reaffirmed its fiscal 2010 guidance of per share diluted earnings between $0.90 and $0.95 on net sales of $160 million to $165 million.

FINANCIAL HIGHLIGHTS (UNAUDITED)
In Thousands, Except per Share Data

FIRST QUARTER OPERATING RESULTS

Net sales for the first quarter of fiscal 2010 were $42,457,000 as compared to $34,293,000 for the same period of the prior fiscal year, an increase of 24%. Net earnings for the first quarter of fiscal 2010 were $8,921,000 or $0.22 per diluted share, both increases of 10% over the first quarter of fiscal 2009. Diluted common shares outstanding for fiscal 2010 and 2009 were 41,185,000 and 41,125,000, respectively.

CASH DIVIDEND MATTERS

The Board of Directors declared the regular quarterly cash dividend of $0.19 per share for the quarter ended December 31, 2009. The dividend is of record February 1, 2010 and payable February 11, 2010. This annual indicated dividend rate of $0.76 per share represents a 12% increase over the fiscal 2009 rate of $0.68 per share. Meridian has now increased its regular cash dividend rate nineteen times since it established a regular dividend in 1991. 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.

FISCAL 2010 GUIDANCE REAFFIRMED

For the fiscal year ending September 30, 2010, management expects net sales to be in the range of $160 million to $165 million and per share diluted earnings to be between $0.90 and $0.95. The sales and earnings guidance provided in this press release does not include the impact of any acquisitions the Company might complete during fiscal 2010.

FINANCIAL CONDITION

The Company’s financial condition is sound. At December 31, 2009, current assets were $116.2 million compared to current liabilities of $13.5 million, thereby producing working capital of $102.7 and a current ratio of 8.6. Cash and short-term investments were $66.7 million and the Company had 100% borrowing capacity under its $30,000,000 commercial bank credit facility. The Company has no bank-debt obligations outstanding.

COMPANY COMMENTS

John A. Kraeutler, Chief Executive Officer, said, “Revenue growth for the first quarter of 2010 was up due to strength in the U.S. Diagnostics business, with the greatest contribution coming from the sale of respiratory tests, especially influenza, along with continued growth in the foodborne category. C. difficile sales were weaker due to increased competition from new immunoassays as well as emerging molecular methods, plus distributor buying patterns. We are expecting flat sales in this product line until the launch of our new illumigene^™ molecular-based technology platform later this fiscal year. In addition, Meridian Life Science began the year with increased organic growth and this business unit is expecting a strong sales year. Meridian Bioscience Europe, which recently launched two new products into the Italian market, reported increased sales due primarily to positive currency effects. Currency adjusted sales for MBE were flat versus last year despite a strong start in October and November.

Overall, gross profit margin for the quarter of 60% was lower than plan due to the H1N1 pandemic driving a higher sales volume of lower margin, OEM influenza and RSV tests. Offsetting the downward pull on margins were our TRU Flu^® and TRU RSV^® tests which comprised more than 40% of unit sales in this category. Operating income margin exceeded 32% as we continued to control spending and focus on efficiency.

Notably, this month we began our formal clinical trials for our illumigene C. difficile product, our first DNA amplification test utilizing the loop amplification (LAMP) technology licensed from Eiken Chemical Co. of Japan. These trials are expected to last approximately 8 weeks and we plan to submit our 510k for FDA marketing clearance in April of this year. We are encouraged by our preliminary trials of illumigene as well as the response from our key customer previews. We are continuing to invest in this development program and anticipate launching additional illumigene tests in the future. Barring any unforeseen delays, we are now targeting revenue contributions from the illumigene C. difficile product during the second half of fiscal 2010.

The outlook for fiscal 2010 is bright. Our Diagnostics business units continue to add market share and improved profitability in respiratory testing. The growth of foodborne testing continues at double-digit rates and our managed care programs are generating strong H. pylori demand. New products, new technologies and potential acquisitions are likely to drive further growth this year. The resources that we have applied to our Life Science business are producing growth along with enhanced profitability. Our commitment to international growth is being realized, especially through our new distribution partners."

William J. Motto, Executive Chairman of the Board, said, “Fiscal 2010 started strong primarily due to increased demand for upper respiratory tests, improved operating results at our Life Science unit, and continued growth in foodborne tests. We are maintaining our previously issued fiscal 2010 guidance of net sales in the $160 million to $165 million range and per share diluted earnings between $0.90 and $0.95. Our cash dividend declared for the first quarter reflects the increased indicated annual rate of $0.76 per share, up 12% from the prior fiscal year.

We look forward to the commercial introduction of our illumigene molecular-based platform later this fiscal year, as well as other new product introductions and continued efficiency improvements. Our financial condition is sound and our cash flow strong. As always, we continue to investigate potential external growth opportunities through acquisitions and alliances.”