LabOne Announces Third Quarter Earnings.

LENEXA, Kansas--(BUSINESS WIRE)--Oct. 21, 1998--LabOne, Inc. reported net earnings for the third quarter 1998 of $2.2 million, an increase of 45 percent from $1.5 million for the third quarter 1997. Basic and diluted earnings per share increased to $0.17 for the third quarter 1998, compared to $0.12 for the third quarter 1997. Revenue for the third quarter was $25.8 million compared to revenue of $19.7 million in the same quarter last year, an increase of 31 percent. Earnings before interest, taxes, depreciation, and amortization rose to $4.6 million from $3.5 million in the same quarter last year.

LabOne's clinical revenue increased $3.2 million (180 percent) from the third quarter 1997, to $5 million during the third quarter 1998. The insurance division increased $1.5 million (10 percent) to $16.7 million, and the substance abuse testing division increased $1.4 million (51 percent) to $4.1 million.

"Once again, all three of our business divisions experienced excellent growth," said W. Thomas Grant II, chairman, president and CEO of LabOne. "The clinical division, with its Laboratory Benefit Management programs, had another record quarter. Revenue from Lab Card(R) accounts that have been active for more than one year rose 51 percent over the same quarter last year. The substance abuse testing division also had a record quarter and continued to add market share. We will continue to invest in capacity and technology for this dynamic and growing division."

As previously announced, LabOne's insurance division recently increased its service offerings through an alliance with Lincoln National Risk Management (LNRM), Fort Wayne, Ind., and the proposed acquisition of Systematic Business Services, Inc. (SBSI), Independence, Mo. Both of these developments will expand the services LabOne offers life insurers.

"With the LNRM alliance and the additional services of SBSI, LabOne will be able to provide life insurers with the ability to order and receive lab results, motor vehicle reports, inspection reports, attending physician statements and application information through LabOne NET," said Grant. "The addition of these services will greatly enhance our ability to serve our insurance clients in the United States and Canada. We have already had a positive response from many of our clients."

LabOne also announced that it has closed on $33 million in industrial revenue bonds, and has bought $13 million of the bonds. The bonds will be used to finance the company's new 270,000 square foot facility which will expand its testing capacity and consolidate its three current facilities in the Kansas City area. The facility is scheduled to open for operation in January 1999.

LabOne operates a centralized laboratory in the Kansas City area and markets clinical, insurance and substance abuse testing services in the United States and Canada.

                      SELECTED FINANCIAL DATA

                           THREE MONTHS ENDED SEPT. 30,     % INCREASE
                                 1998          1997

Sales                        $25,834,181    19,728,262          31%
Net earnings                 $ 2,226,704     1,536,120          45%
Earnings per common share    $      0.17          0.12
Dividends per common share   $      0.18          0.18
Total assets
Working capital

                              NINE MONTHS ENDED SEPT. 30,   % INCREASE
                                 1998          1997

Sales                        $74,929,877    57,775,736          30%
Net earnings                 $ 6,743,074     4,582,102          47%
Earnings per common share    $      0.51          0.34
Dividends per common share   $      0.54          0.54
Total assets                 $80,634,190    63,833,947
Working capital              $40,327,332    32,390,630



CONSOLIDATED BALANCE SHEETS
                                 September 30,     December 31,
ASSETS                               1998              1997

Current assets:
  Cash and cash equivalents       $ 21,175,673    $ 18,284,672
  Short-term investments               500,209       1,204,638
  Accounts receivable -
   trade, net of allowance
   for doubtful accounts of
   $1,886,098 in 1998 and
   $968,295 in 1997                 17,596,220      12,604,687
  Income taxes receivable              752,365         508,704
  Inventories                        1,537,379       2,203,471
  Real estate available for
   sale                              3,515,000       3,515,000
  Prepaid expenses and other
   current assets                    2,654,949       2,279,619
  Deferred income taxes              3,775,732       3,299,387
    Total current assets            51,507,527      43,900,178
Investments with maturities
 of more than one year, at
 cost                                     --              --
Property, plant and equipment       58,778,165      43,956,571
  Less accumulated
   depreciation                     34,762,000      33,515,280
    Net property, plant and
     equipment                      24,016,165      10,441,291
Other assets:
  Intangible assets, net of
   accumulated amortization          4,804,124       5,229,708
  Deferred income taxes
   - noncurrent                        252,505         321,799
  Deposits and other assets             53,869          80,497
    Total assets                  $ 80,634,190    $ 59,973,473

LIABILITIES AND STOCKHOLDERS'
 EQUITY
Current liabilities:
  Accounts payable                $  4,258,495    $  3,326,451
  Bonds payable - current            1,850,000            --
  Deferred income taxes                 21,033            --
  Accrued payroll and
   benefits                          4,144,319       4,530,235
  Other accrued expenses               666,262         423,396
  Other current liabilities            240,086         194,148
    Total current liabilities       11,180,195       8,474,230
  Bonds payable - noncurrent        18,050,758            --
  Deferred income taxes
   - noncurrent                        331,176            --
    Total liabilities               29,562,129       8,474,230

Stockholders' equity:
Preferred stock, $.01 par
 value per share; 1,000,000
 shares authorized, none
 issued                                   --              --
  Common stock, $.01 par
   value per share;
   40,000,000 shares
   authorized, 15,000,000
   shares issued                       150,000         150,000
  Additional paid-in capital        13,829,993      13,723,250
  Equity adjustment from
   foreign currency
   translation                        (883,707)       (666,927)
  Retained earnings                 59,907,841      60,259,272
                                    73,004,127      73,465,595
  Less treasury stock of
   1,857,435 shares in 1998
   and 1,874,706 shares in 1997     21,932,066      21,966,352
    Total stockholders' equity      51,072,061      51,499,243
    Total liabilities and
     stockholders' equity         $ 80,634,190    $ 59,973,473

CONSOLIDATED STATEMENTS OF EARNINGS

                               THREE MONTHS ENDED SEPT.30,
                                   1998           1997

Sales                           $25,834,181    19,728,262
Cost of sales                    14,529,055    10,664,417
  Gross profit                   11,305,126     9,063,845
Selling, general and
 administrative expenses          7,806,049     6,749,261
  Earnings from operations        3,499,077     2,314,584
Other income                        131,390       288,218
  Earnings before income
   taxes                          3,630,467     2,602,802
Income tax expenses               1,403,763     1,066,682
  Net earnings                  $ 2,226,704     1,536,120
Basic and diluted earnings
 per common share               $      0.17          0.12
Dividends per common share      $      0.18          0.18
Basic weighted average common
 shares outstanding              13,142,447    13,113,808
Diluted weighted average
 common shares outstanding       13,236,865    13,321,213


                               NINE MONTHS ENDED SEPT.30,
                                  1998            1997

Sales                           $74,929,877    57,775,736
Cost of sales                    41,319,906    30,750,771
  Gross profit                   33,609,971    27,024,965
Selling, general and
 administrative expenses         22,981,153    20,279,650
  Earnings from operations       10,628,818     6,745,315
Other income                        532,186       997,689
  Earnings before income
   taxes                         11,161,004     7,743,004
Income tax expenses               4,417,930     3,160,902
  Net earnings                  $ 6,743,074     4,582,102
Basic and diluted earnings
 per common share               $      0.51          0.34
Dividends per common share      $      0.54          0.54
Basic weighted average common
 shares outstanding              13,138,125    13,100,304
Diluted weighted average
 common shares outstanding       13,292,928    13,325,123