Medical Action Industries Agrees to Acquire Medegen Medical Products LLC; Largest Acquisition in Company's History with Annual Sales of Approximately $100 Million.

HAUPPAUGE, N.Y. -- Medical Action Industries Inc. (NASDAQ:MDCI), a leading supplier of medical and surgical disposable products, today announced that it has agreed to acquire Medegen Medical Products LLC ("Medegen Medical"). Medegen Medical, which maintains manufacturing facilities in Colorado and Tennessee, is the market leader in the manufacture of plastic patient utensils consisting of wash basins, bed pans, urinals and emesis basins. This acquisition will be Medical Action's tenth and is by far the most significant acquisition in the Company's history. Medegen Medical has annual revenues of approximately $100,000,000 and will continue to operate out of its current facilities after closing. The purchase price of approximately $80,000,000 will be payable in cash, funded from cash on hand, together with borrowings from lending institutions.

Paul D. Meringolo, Chief Executive Officer and President of Medical Action, commented, "This transaction, which is expected to close in approximately 45 days will be accretive to earnings immediately. This acquisition further diversifies our breadth of product offering to our existing customers, as well as adding customers outside of our current channels of distribution. The combination of expanded contracts, increased volumes and strategic product line extensions will all lead to increased synergies for Medical Action."

Medical Action is a diversified manufacturer of disposable medical devices. Its products are marketed primarily to acute care facilities in domestic and certain international markets. Further, Medical Action has expanded its target market to include physician, dental and veterinary offices, out-patient surgery centers and long-term care facilities. Medical Action is a leading manufacturer and distributor of many of its products in the markets we compete in. Our products are marketed through an extensive network of direct sales personnel and independent distributors. Medical Action has preferred vendor agreements with national distributors, as well as contracts with nearly every major group purchasing alliance. The Company's common stock trades on the NASDAQ Global Select Market under the symbol MDCI and is included in the Russell 2000 Index.