HEMAGEN DIAGNOSTICS REPORTS REDUCTION IN GROSS REVENUES.

Hemagen Diagnostics, Inc. (NASDAQ:HMGN) (NASDAQ:HMGNW) (BSE:HGN), Waltham, Mass., a developer, manufacturer and marketer of proprietary medical diagnostic test kits, has announced its financial results for the fourth-quarter and fiscal 1998 year ended September 30, 1998. The company reported net income of $10,000, or $0.00 per diluted share, on revenues of $12,327,000 for fiscal 1998, compared with net income of $405,129, or $0.05 per diluted share, on revenues of $12,991,000 for fiscal 1997. The reduction in gross revenues was primarily the result of a significant decrease in contract manufacturing sales to one customer in the United States. The company's Hemagen/Virgo products showed a nine percent increase in sales during the year while RAICHEM and Cellular Products, Inc. reported slightly lower sales in fiscal 1998. "During the year, we established the necessary cornerstones to build Hemagen into a sizable medical device company," stated Dr. Carl Franzblau, Hemagen chairman, president and chief executive officer. "While we were very pleased with our fiscal 1998 financial performance through the third quarter, the decrease in revenues and net income during the fourth quarter led to a disappointing result for the year. As we enter fiscal 1999, however, we are extremely pleased with the market acceptance and the demand for our products, particularly our new Analyst(R) system. Furthermore, the contract manufacturing customer which was responsible for the revenue shortfall this year has indicated to us that sales are expected to increase during this coming fiscal year." For the fourth quarter of fiscal 1998, Hemagen reported a net loss of $366,000, or $0.05 per diluted share, on revenues of $3,290,000, compared with net income of $185,000, or $0.02 per diluted share, on revenues of $3,555,000 for the same quarter last year. The earnings decrease in the fourth quarter of fiscal 1998 was due to higher sales of lower margin products and increased marketing expenses relating to establishing a new outside sales force for the Analyst(R) clinical chemistry system. The company acquired the Analyst(R) product in September 1998 from Dade Behring, Inc. "With the acquisition of the Analyst(R) system, we now have the necessary product offerings to provide our customers with the complete diagnostic solutions that they seek," continued Dr. Franzblau. "The Analyst(R) is a compact centrifugal analyzer capable of performing 14 different blood chemistry tests in 8-10 minutes. This product enhances our opportunities in several high-growth markets. In 1999, we plan to leverage the Analyst's potential to increase our presence in the point-of-care, physician office laboratory and veterinary diagnostic markets." "During fiscal 1998, we were pleased to obtain FDA clearance for six new products in our diagnostic family. In the coming year, we believe that our direct sales force and more aggressive new marketing efforts will help us to capitalize on the burgeoning growth opportunities in our target markets," concluded Dr. Franzblau. Hemagen Diagnostics, Inc. develops, manufactures and markets more than 110 FDA-cleared proprietary medical diagnostic test kits used to aid in the diagnosis of autoimmune and infectious diseases and to measure important constituents in human blood. The company focuses on markets which offer significant growth opportunities. For more information, call 781/890-3766.