HMGN Hemagen Diagnostics Inc (CE)

Hemagen Diagnostics, Inc. (OTC:HMGN.OB) a biotechnology company that develops, manufactures, and markets proprietary medical diagnostic test kits, today reported operating results for the second fiscal quarter and six-months ended March 31, 2006 as compared to the prior year. For the three-month period ended March 31, 2006, the net loss was $61,000 or ($0.00) per share, compared to a net loss of $349,000 or ($0.02) per share for the period ended March 31, 2005. For the six-month period ended March 31, 2006, the company reported net income of $61,000 or ($0.00) per share as compared to a net loss of $584,000 or ($0.04) per share for the same period ended March 31, 2005. After adjusting for non-cash charges including depreciation, amortization, and non-cash interest, the net loss for the quarter ended March 31, 2006 was $39,000 compared to a net loss of $215,000 for the quarter ended March 31, 2005. The net income for the six months ended March 31, 2006, after adjusting for non-cash charges including depreciation, amortization, and non-cash interest was $110,000 as compared to a net loss of $318,000 for the six months ended March 31, 2005. William P. Hales, President and CEO, said, "We are pleased to report improved results. We continue to focus on improving our operations, increasing revenues through core growth and containing costs. We remain focused on our number one goal of building shareholder value and positioning the company for sustained profitability." Revenues for the quarter ended March 31, 2006 were $1,903,000 as compared to revenues of $1,987,000 for the quarter ended March 31, 2005, a decrease of $84,000 or 4%. Revenues for the six-month period ended March 31, 2006 were $3,868,000 as compared to revenues of $3,765,000 for the six-month period ended March 31, 2005, an increase of $103,000 or 3%. Gross Margins increased to 40% in the quarter ended March 31, 2006 as compared to 20% for the quarter ended March 31, 2005. Gross margins increased to 43% in the six-month period ended March 31, 2006 as compared to 24% for the six-month period ended March 31, 2005. Higher margins in the current period resulted from reduced spending levels and increased production levels for the Raichem and VIRGO product lines. At March 31, 2006, Hemagen had working capital of $1,775,000 and a current ratio of 1.67 to 1.0, compared to working capital of $2,959,000 and a current ratio of 2.9 to 1.0, at March 31, 2005. Hemagen had $207,000 of cash on hand at March 31, 2006, as compared to cash on hand of $206,000 at March 31, 2005. -0- *T HEMAGEN DIAGNOSTICS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended Six Months Ended March 31, March 31, March 31, March 31, ----------------------------------------------- 2006 2005 2006 2005 ----------------------------------------------- Revenues $1,903,000 $1,987,000 $3,868,000 $3,765,000 Costs and Expenses: Cost of Product sales 1,135,000 1,592,000 2,196,000 2,865,000 Research and development 96,000 80,000 156,000 142,000 Selling, general and administrative 595,000 562,000 1,177,000 1,134,000 ----------------------------------------------- Operating Income (Loss) 77,000 (247,000) 339,000 (376,000) Other expenses, net (118,000) (97,000) (235,000) (192,000) ----------------------------------------------- Net loss before income taxes $(40,000) $(343,000) $105,000 $(568,000) Income tax expense (20,000) (5,000) (44,000) (16,000) Net loss $(61,000) $(349,000) $61,000 $(584,000) =============================================== Net loss per share- Basic and Diluted $0.00 $(0.02) $0.00 $(0.04) =============================================== RECONCILIATION OF EARNINGS BEFORE NON-CASH CHARGES FOR THE THREE AND SIX-MONTH PERIODS ENDED MARCH 31, 2005 AND MARCH 31, 2004 (UNAUDITED) Three Months Ended Six Months Ended March 31, March 31, March 31, March 31, ----------------------------------------------- 2006 2005 2006 2005 ----------------------------------------------- Net loss $(61,000) $(349,000) $61,000 $(584,000) Adjusted for: Depreciation and Amortization 11,000 116,000 $23,000 233,000 Non-cash amortization of debt discount 11,000 18,000 26,000 33,000 Other non-cash charges -- -- ----------------------------------------------- Net Income (Loss) before non-cash charges $(39,000) $(215,000) $110,000 $(318,000) =============================================== *T Hemagen Diagnostics, Inc., is a biotechnology company that develops, manufactures, and markets more than 150 FDA-cleared proprietary medical diagnostic test kits. Hemagen has three different product lines. The Virgo(R) product line of diagnostic test kits is used to aid in the diagnosis of certain autoimmune and infectious diseases, using ELISA, Immunoflourescence, and hemagglutination technology. Hemagen manufactures and markets a complete line of clinical chemistry reagents through its wholly owned subsidiary Reagents Applications, Inc., under the brand name Raichem, as well as under various OEM arrangements. In addition, Hemagen manufactures and sells the Analyst(R) an FDA-cleared clinical chemistry analyzer used to measure important constituents in human and animal blood, and the Endochek, a clinical chemistry analyzer used to measure important constituents in animal blood. In the United States, the Company sells its products directly to physicians, veterinarians, clinical laboratories and blood banks and on a private-label basis through multinational distributors of medical diagnostics and supplies. Internationally, the Company sells its products primarily through distributors. The Company sells the Analyst(R) and the Endochek both directly and through distributors servicing physicians' office laboratories and veterinarians' offices. Hemagen's products are used in many of the largest laboratories, hospitals, and blood banks around the world. The Company focuses on markets that offer significant growth opportunities. The Company was incorporated in 1985 and became a public company in 1993. Except for any historical information contained herein, the matters discussed in this press release contain forward-looking statements that involve risks and uncertainties, including those described in the Company's Securities and Exchange Commission Reports and Filings. Certain Statements contained in this News Bulletin that are not historical facts constitute forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, and are intended to be covered by the safe harbors created by that Act. Reliance should not be placed on forward looking statements because they involve unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to differ materially from those expressed or implied. Forward looking statements may be identified by words such as estimates, anticipates, projects, plans, expects, intends, believes, should and similar expressions and by the context in which they are used. Such statements are based upon current expectations of the Company and speak only as of the date made. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which they are made. Statements concerning the establishments of reserves and adjustments for dated and obsolete products, expected financial performance, on-going business strategies and possible future action, which Hemagen intends to pursue to achieve strategic objectives, constitute forward-looking information. The sufficiency of such reserves and adjustments, expected performance, implementation of on-going business strategies and possible future action, the achievement of financial performance are each subject to numerous conditions, uncertainties and risk factors. Factors which could cause actual performance to differ materially from these forward looking statements, include without limitation, management's analysis of Hemagen's assets, liabilities and operations, the failure to sell date sensitive inventory prior to its expiration, the inability of particular products to support goodwill allocated to them, competition, new product development by competitors which could render particular products obsolete, the inability to develop or acquire and successfully introduce new products or improvements of existing product costs and difficulties in complying with laws and regulations administered by the U.S. Food and Drug Administration and the ability to assimilate successfully product acquisitions.