ERBA Diagnostics reports decrease in Q1 2014 net revenues

ERBA Diagnostics, Inc. (NYSE MKT:ERB), a fully integrated in vitro diagnostics company, reported its financial results for the three months ended March 31, 2014.

Sanjiv Suri, Interim Chief Executive Officer of ERBA Diagnostics, said, "I am pleased to report a continuation in the first quarter of 2014 of the turnaround we are experiencing, with year-over-year improvement to positive net income in the first quarter of 2014 from a net loss in the first quarter of 2013. We have also now achieved positive net income in four consecutive quarters. We continued to see growth in high margin reagents sales in the first quarter of 2014."

Mr. Suri continued, "Comparing the three months ended March 31, 2014, to the three months ended March 31, 2014, revenues decreased by 5%, driven mainly by slow sales in Russia due to the political conflict in the region and by our ongoing reorganization of our international sales organization. Gross profit margin improved by approximately 80 basis points and operating expenses were lower by approximately $286,000 in the three months ended March 31, 2014, compared to the three months ended March 31, 2013, resulting in positive net income of $164,246 in the three months ended March 31, 2014, compared to a net loss of $ 247,052 in the three months ended March 31, 2013.

"We continue to consolidate our operations, as can be seen in the improved gross margin and lower operating expenses, as well as to implement a number of new initiatives in an effort to grow sales and expand the product range. We expect the sales reorganization for the international markets to drive revenue growth in the second half of 2014. We continue to explore potential acquisitions, both in the United States and internationally. These efforts are backed by our previously reported stock purchase agreement and warrant with our principal stockholder, ERBA Diagnostics Mannheim GmbH."

Financial Highlights for the Three Months ended March 31, 2014

Net revenues decreased by $336,995 to $6,371,112 in the three months ended March 31, 2014, from $6,708,107 in the three months ended March 31, 2013. Gross profit decreased by $100,929 to $2,946,425 in the three months ended March 31, 2014, from $3,047,174 in the three months ended March 31, 2013.

Income from operations totaled $249,246 in the three months ended March 31, 2014, as compared to operating income of $63,831 in the three months ended March 31, 2013. This increase was primarily related to the reversal of bad debt allowance at Delta Biologicals, S.r.L., our wholly-owned subsidiary located in Italy, of approximately $153,000 and to the billing to ERBA Diagnostics Mannheim GmbH of approximately $190,000 of research and development costs at Delta Biologicals, S.r.L., offset by the decrease in gross profit from decreased net revenues as described above.

We generated net income of $164,246 in the three months ended March 31, 2014, as compared to incurring a net loss of $247,052 in the three months ended March 31, 2013. Basic and diluted net income per common share were $0.00 in the three months ended March 31, 2014, as compared to basic and diluted net loss per common share of $0.01 in the three months ended March 31, 2013.