ERBA Diagnostics, Inc. Reports Third Quarter 2012 Financial Results

  ERBA Diagnostics, Inc. Reports Third Quarter 2012 Financial Results

    Comparing Third Quarter 2012 to Third Quarter 2011, Operating Expenses
    Decreased by $979,000 and Loss from Operations Was Reduced by $955,000

  Comparing Nine Month Period Ended September 30, 2012 to the Same Period of
2011, Operating Expenses Decreased by $3,040,000 and Loss from Operations Was
                            Reduced by $2,870,000

Business Wire

MIAMI -- November 14, 2012

ERBA Diagnostics, Inc. (NYSE MKT: ERB), a fully integrated in vitro
diagnostics company, reported its financial results for the quarter and nine
months ended September 30, 2012. Kevin D. Clark, Chief Executive Officer,
Chief Operating Officer and President of ERBA Diagnostics, said, “I am pleased
to report a continuation in the third quarter of 2012 of the turnaround we are
experiencing this year. A significant year-over-year reduction in operating
loss to almost break-even has resulted from significant decreases in operating
expenses. Comparing the third quarter of 2012 to the third quarter of 2011,
our operating expenses decreased by $979,000 and we have reduced our loss from
operations by $955,000. Comparing the nine month period ended September 30,
2012 to the same period of 2011, our operating expenses decreased by
$3,040,000 and we have reduced our loss from operations by $2,870,000. The
Company continues to implement certain initiatives in an effort to keep
operating expenses under control for 2012. Looking ahead into the fourth
quarter of 2012, we intend to continue to focus on implementing a number of
new initiatives in an effort to grow sales in the US and internationally.”

As previously reported, on October 3, 2012, ERBA Diagnostics acquired all of
the issued and outstanding shares of capital stock of Drew Scientific, Inc., a
Delaware corporation, from Drew Scientific Inc., a Texas corporation, a
subsidiary of Escalon Medical Corp., a Pennsylvania corporation. The acquired
businesses had been commonly known as the Escalon Clinical Diagnostics
Business, which consists of Drew Scientific, Inc. (located in Waterbury,
Connecticut, and Dallas, Texas), and its wholly owned subsidiaries JAS
Diagnostics, Inc. (located in Miami Lakes, Florida), and Drew Scientific
Limited Co. (located in Barrow-in-Furness, United Kingdom). This group of
companies develops and sells Diabetes A1c and Hematology diagnostic
instruments, reagents and chemistries. According to the World Health
Organization more than 347 million people are afflicted with Diabetes
worldwide. Drew Scientific provides instrumentation and consumables for the
physician office labs, small hospital labs and veterinary research
laboratories. Drew Scientific also supplies the reagent and other consumable
materials needed to operate the instruments. JAS Diagnostics manufactures of a
broad range of liquid stable, diagnostics chemistry reagents used in in vitro
diagnostics tests.

Financial Highlights for the Quarter and Nine Months Ended September 30, 2012

Net revenues for the third quarter of 2012 were $3,789,000 compared with
$4,060,000 in the third quarter of 2011, a decrease of $271,000 or 6.7%. The
decrease in revenue was primarily the result of reduced sales in international
markets from our European operations. Net revenue in the nine months ended
September 30, 2012 decreased by $196,000, or 1.6%, from the same period last
year, with net revenues from domestic operations decreasing by $121,000 or
1.4% and net revenues from European operations decreasing by $75,000 or 1.9%.

Gross profit for the third quarter of 2012 was $2,062,000 or 54.4% of net
revenue, compared with $2,086,000 or 51.4% of net revenue for the third
quarter of 2011. The decrease in gross profit resulted from lower sales and
the increase in gross profit margin percentage was principally as a result of
an increase in sales of our proprietary instruments in the US, which have a
higher average margin. Gross profit for the nine months ended September 30,
2012 decreased by $172,000, or 2.9%, from the same period last year. The
decrease in gross profit was primarily attributable to a decrease in sales.

Operating expenses for the third quarter of 2012 decreased to $2,104,000 from
$3,083,000 for the third quarter of 2011. Operating expense for the nine
months ended September 30, 2012 decreased to $6,686,000 from $9,726,000 in the
nine months ended September 30, 2011 as a result of decreases in all three
categories of operating expenses. Selling expenses decreased mainly due to
open sales positions in the United States and, in Italy, reduction in
workforce and lower commissions. General and administrative expenses decreased
as a result of reduction in workforce, reduction in leased office space and
reduction in provision for doubtful accounts. Research and development
expenses decreased principally due to reduction of research and development
activities in the United States and funding of research and development in
Italy.

Loss from operations for the third quarter of 2012 was $42,000 compared with
loss from operations of $997,000 in the third quarter of 2011. Loss from
operations totaled $298,000 for the nine months ended September 30, 2012
compared to the loss from operations of $3,166,000 in the nine months ended
September 30, 2011. Net loss for the third quarter of 2012 was $97,000, or
$0.01 loss per share, compared with a net loss of $1,234,000, or $0.04 loss
per share, in the third quarter of 2011. Net loss for the nine months ended
September 30, 2012 was $534,000 or $0.02 loss per share, compared to net loss
of $3,021,000, or $0.10 loss per share in the same period of 2011. In the
third quarter of 2012, we incurred acquisition expenses of $85,000.

About ERBA Diagnostics, Inc.

ERBA Diagnostics, Inc. (www.erbadiagnostics.com), headquartered in Miami,
Florida, is a fully integrated in vitro diagnostics company that develops,
manufactures and distributes in the United States and internationally,
proprietary diagnostic reagents, test kits and instrumentation, primarily for
autoimmune and infectious diseases, through its three subsidiaries: Diamedix
Corporation (U.S.), Delta Biologicals S.r.l. (Europe) and ImmunoVision, Inc.
(U.S.). As described in further detail above, on October 3, 2012, ERBA
Diagnostics acquired the businesses which had been commonly known as the
Escalon Clinical Diagnostics Business, consisting of Drew Scientific, Inc.
(located in Waterbury, Connecticut, and Dallas, Texas), and its wholly owned
subsidiaries JAS Diagnostics, Inc. (located in Miami Lakes, Florida), and Drew
Scientific Limited Co. (located in Barrow-in-Furness, United Kingdom).

Safe Harbor Statement

Except for the historical matters contained herein, statements in this press
release are forward-looking and are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Investors
are cautioned that forward-looking statements involve risks and uncertainties
that may affect the business and prospects of ERBA Diagnostics, Inc.,
including, without limitation, the risks and uncertainties related to: ERBA
Diagnostics’ ability to successfully improve its financial condition, results
of operations and cash flows; ERBA Diagnostics’ ability to successfully
maintain its cost containment efforts and reduced expenses; ERBA Diagnostics’
ability to successfully achieve sales growth; ERBA Diagnostics’ ability to
successfully maintain stability in its cash flows and liquidity position; ERBA
Diagnostics’ ability to successfully grow its business, sales and product
range in the United States and other markets, whether organically or
inorganically, during the anticipated time frame or at all; ERBA Diagnostics’
ongoing initiatives to reduce manufacturing costs, manage operating expenses,
increase sales in the United States and other markets and otherwise improve
its operating results and performance may not be successful or result in the
positive financial impact expected, whether in the time frame anticipated, or
at all; ERBA Diagnostics’ ability to integrate acquired businesses or
products, including, without limitation, its ability to integrate the
businesses that had been commonly known as the Escalon Clinical Diagnostics
Business; acquisitions of businesses and products, and the integration of
acquired businesses and products, may disrupt ERBA Diagnostics’ business,
distract its management and may not proceed as planned, including, without
limitation, its acquisition of and its ability to integrate the businesses
that had been commonly known as the Escalon Clinical Diagnostics Business;
economic, competitive, political, governmental and other factors affecting
ERBA Diagnostics and its operations, markets and products. In addition to the
risks and uncertainties set forth above, investors should consider the
economic, competitive, governmental, technological and other risks and
uncertainties discussed in ERBA Diagnostics’ filings with the Securities and
Exchange Commission, including, without limitation, the risks and
uncertainties discussed under the heading “Risk Factors” in such filings.

Contact:

ERBA Diagnostics, Inc.
Kevin Clark, 305-324-2300
CEO, COO and President