Enzo Biochem streamlines operations, expects gross margin improvements

Enzo Biochem, Inc. (NYSE:ENZ), announced today that it has streamlined its operations, which is anticipated to result in a reduction in annualized operating expenses of more than $4 million beginning in the fiscal 2011 first quarter. These initiatives are also expected to result in increased gross margins. The Company believes that the operating cost reductions, which affect all of its operating businesses as well as corporate overhead, will result in Enzo generating positive cash flow from operations in 2011. The overall improvements are primarily a result of streamlining operations at Enzo Life Sciences, where the Company completed a series of acquisitions over the past three years, and Enzo Clinical Labs, where Enzo has invested significantly over the past year in technology and process improvements. The Company will continue to drive operating efficiencies through process improvements.

“The initiatives we are announcing today are the result of ongoing intensive analysis designed to ramp up our activities, enhance operations and position Enzo for fresh growth”

At Enzo Clinical Labs, the Company expects gross margin improvements and expense reductions, primarily through selective work force rationalization and process improvements, including customer service and billing designed to reduce processing and collection costs of receivables, improved laboratory service operations and lower reagent costs. At Enzo Life Sciences, as a result of the acquisitions that the Company has completed, certain operations have become redundant, which provided opportunities to reduce costs through realignment or centralization of R&D, customer service and manufacturing activities. Enzo Life Sciences has also undertaken a repositioning of its product offerings, refocusing its marketing efforts on higher-margin, higher volume products. As a result, the Company will record a charge in the fourth quarter as certain low-volume products are rationalized. Enzo expects the benefits of the operational improvements to occur commencing with the Company's fiscal 2011 first quarter ending October 31, 2010. In connection with the streamlining, the Company expects to record a one-time charge of approximately $500,000 in its fiscal 2010 fourth quarter to reflect severance payments to terminated employees.

Preliminary fourth quarter operating results anticipate a slight increase in fourth quarter revenue over last year, with consistent gross margins exclusive of one time and non-cash streamlining charges.

"The initiatives we are announcing today are the result of ongoing intensive analysis designed to ramp up our activities, enhance operations and position Enzo for fresh growth," said Barry Weiner, Enzo's President. "Over the past three years, Enzo has built, through a series of acquisitions at its Life Sciences unit, a global life sciences biomedical products company which is positioned for growth with over 10,000 in-house manufactured products The acquired companies R&D efforts, sales and marketing and back office operations have now been consolidated, resulting in reduced costs and improved efficiencies, and a focus on higher margined products.

"At Enzo Clinical Labs, we have lowered costs, including staffing levels, through the significant investments we have made in technology over the past year as well as the result of management changes, which have contributed to heightened efficiency. As a result of these improved systems, we expect increased Enzo Clinical Labs gross margins, improvement in the collections process and enhanced operating results.

'Now that we have completed the heavy investment phase of our development, it is time to drive operating results. The actions will allow us to more fully focus on the operational synergies between divisions, and, as a result, position us even more strongly for the development of higher-margin innovative products and services for the markets we serve."