Meridian Medical Technologies Reports 3rd Quarter Results, Forecasts Return to Profitability for Fiscal Year 2000.

COLUMBIA, Md.--(BW HealthWire)--June 10, 1999--

Meridian Medical Technologies, Inc. (Nasdaq: MTEC) today announced unaudited results of operations for the third quarter and first nine months of fiscal year 1999 ended April 30, 1999, and said it expects to return to profitability for fiscal year 2000.

Meridian reported a third quarter loss of ($1.3 million) or ($0.44) per diluted share on revenues of $9.6 million, compared to a prior year third quarter net loss of ($1.2 million) or ($0.41) per diluted share on revenues of $13.4 million.

For the first nine months, Meridian reported a net loss of ($1.8 million) or ($ 0.61) per diluted share on revenues of $30.3 million, compared with a net income of $42,000 or $0.01 per diluted share on revenues of $34.8 million during the same period in fiscal 1998.

The net results reflect the impact of the indirect costs and diminished sales resulting from the shipment of free EpiPen(R) units associated with the EpiPen recall of May 8, 1998.

While unfavorable, the results were generally in line with management's expectations and the company's estimates that, excluding the effects of the EpiPen recall, 1999 year to date revenues would have been comparable to the same period in 1998 and that the company would have been profitable.

"The impact of the EpiPen recall is now substantially behind us, and we are anticipating dramatically improved operating performance in the fourth quarter," said James H. Miller, chairman, president and chief executive officer of Meridian.

"Moreover, important new product developments, market expansion and the return to normal revenue volume from EpiPen are expected to produce a significant rise in sales and a return to profitability for fiscal year 2000."

"Increasing sales from our Cardiopulmonary Systems Division are expected to become a major source of growth in the years ahead with the introduction of our innovative PRIME ECG(R) cardiac mapping system, which has been approved in Europe and allows accurate early diagnosis of heart attacks in chest pain patients at the critical time when heart damage can be prevented," Miller said.

"We are now negotiating with major health care companies for the worldwide marketing of this revolutionary new technology, which offers the potential to save an estimated 100,000 lives while reducing health care costs by more than $6 billion a year. With successful negotiations we would expect to launch PRIME ECG in fiscal 2000 with high expectations of market acceptance."

Cardiopulmonary Systems' sales rose sharply in the third quarter to $635,000, compared to $314,000 in the same period a year ago, and year-to-date revenues of $1.2 million were 48 percent higher than revenues of $844,000 for the first nine months in fiscal 1998.

The increased sales reflect the initial introduction in Israel of the new pocket-sized ECG monitor, called the CardioPocket, which has now additionally received clearance from the U.S. Food and Drug Administration (FDA). Introduction to the U.S. market awaits the development of a marketing plan by our partner in Israel.

During the third quarter, Meridian also received FDA approval of diltiazem HCl injection, a generic injectable drug for the treatment of irregular heartbeats (arrhythmias).

Earlier in the year, the company received FDA approval for acyclovir injection for the treatment of herpes simplex one and two, herpes simplex encephalitis and varicella, and approval of a third generic injectable drug is anticipated in the near future.

These new products constitute a line of generic injectable drugs to be developed and manufactured by Meridian and marketed by Bertek Pharmaceuticals, a subsidiary of Mylan Laboratories, a major pharmaceutical company.

Revenues from the new product line are expected to grow throughout fiscal 2000.

Meridian's Government Systems revenues were $6.7 million in the third quarter, compared to $8.6 million for the same period in 1998. Year-to-date Government Systems' revenues were $19.3 million, compared to revenues of $18.1 million in the first nine months of fiscal 1998.

The quarterly decrease from the prior year third quarter resulted primarily from the timing of sales of military auto-injectors during the second quarter of fiscal 1999 to the U.S. Department of Defense, which related to military readiness and resulted in a 92 percent increase over the second quarter of fiscal 1998.

On March 31, Meridian announced that it received regulatory approval in the United Kingdom to supply the U.K. Ministry of Defense with a morphine auto-injector for use by military and emergency medical personnel in the immediate management of pain.

The company plans to seek approval under the Mutual Recognition Procedures to supply the newly approved product to allied armed forces throughout Europe.

Drug Delivery Systems revenues in the third quarter were $2.2 million, a decline of $2.2 million from the comparable prior year period. Drug Delivery Systems revenues were $9.7 million for the first nine months of fiscal 1999, compared to $15.9 million for the same period a year ago.

The decrease was caused by lower sales of EpiPens, which have been heavily diminished by the supply of free EpiPens to replace returned products and to reimbursement costs incurred by the distributor as a result of the May 8, 1998 product recall.

The company initiated a renovation and upgrade of its clean room manufacturing facility during the quarter in preparation for the manufacturing and launch of the new multi-chambered auto-injector. This planned activity resulted in the temporary closure of its sterile filling facility and resulted in unabsorbed plant overheads being charged in the quarterly cost of sales.

This burden, in addition to the impact of shipping free EpiPens, decreased gross margins to 17.5 percent of sales in the third quarter and to 27.3 percent of revenues for the first nine months. The company said that margins are expected to return to pre-recall levels during the fourth quarter.

"Despite the impact of the recall on Meridian sales, the EpiPen has maintained its leading market share for the emergency treatment of allergic reactions, and its growth rate is expected to return to historical levels during the coming year," Miller said.

"Meanwhile, our growth strategies have continued to produce successful results as planned, and we now have major opportunities in virtually all business areas to achieve substantial increases in shareholder value."

Meridian Medical Technologies is a worldwide leader in the development of auto-injector drug delivery systems.

The company provides technology solutions for medicine in early intervention healthcare and emergency medical technologies and has strong core technologies in non-invasive cardiopulmonary diagnostics. Additional company information is available on the World Wide Web at www.meridianmeds.com.

Certain statements contained in this press release that are not historical fact are "forward-looking" statements and involve important risks and uncertainties.

Such risks and uncertainties, which are detailed in the company's filings with the Securities and Exchange Commission, could cause the company's results to differ materially from the company's current expectations as expressed in this press release.