HemaCare Corp. (fka HEMA)

[MWM]

HemaCare Reports Profitable Fourth Quarter Results From Continuing Operations

HemaCare Corporation (OTCBB: HEMA) announced today fourth quarter and year ended December 31, 2007 results. Including discontinued operations, the Company generated a loss in the quarter of $1,431,000, or $.16 per basic and fully diluted share, and for the year an overall loss of $7.8 million, or $0.90 per basic and fully diluted share. In 2006, net income for the quarter and year was $957,000 and $1.9 million, respectively.

Discussion of 2007 Continuing Operations

Fourth quarter revenues were $9.0 million, a decrease of 6% from the prior-year period. Income was $130,000 compared to $745,000 for the same quarter of 2006, which included an income tax benefit of $622,000 from the recognition of a deferred tax asset. Revenue for the year was $34.2 million, a 2% decrease from 2006, with a loss of $1.8 million compared to prior year income of $1.5 million.

The blood products segment gross profit in the quarter decreased $95,000, or 7%, when compared to 2006, principally due to a decline in whole blood collections at the Company's California-based mobile operations and cost increases for product testing, facilities and fuel. The blood services segment reported an $87,000, or 21%, improvement in gross profit for the fourth quarter of 2007 compared to the prior year period, driven mostly by a decrease in staff costs at the Company's Mid-Atlantic operation. For the year, gross profit decreased $1.2 million, or 18%, when compared to 2006.

General and administrative expenses for the year increased $946,000, or 18%, to $6.3 million from $5.4 million in 2006. This increase resulted principally from an increase in outside service costs for accounting, legal and Sarbanes-Oxley compliance consulting and $326,000 in non-recurring severance expense for the Company's former Chief Executive Officer. For all of 2007, general and administrative expenses represented 19% of revenue, an increase from 16% reported in 2006. General and administrative expenses in the fourth quarter increased $15,000, or 1%, compared to the prior year period, and represented 17% of sales.

Discussion of Discontinued Operations

The Company's Florida-based research blood products subsidiary was closed on November 5, 2007. This subsidiary generated a fourth quarter loss of $1,561,000 compared to a $212,000 profit in the same quarter of 2006. The loss includes operating losses for the period, severance and write-downs of assets to expected realizable value. Total losses incurred by this subsidiary in 2007 were $6.0 million, including a third quarter recognition of $4.3 million for goodwill impairment. The Company believes no further negative impact on its financial performance is likely from the closure of this operation.

Commenting on the 2007 results, Jay Steffenhagen, the Company's Interim Chief Executive Officer, stated, "We are pleased to report progress toward a return to profitable operations. Renewed focus on collections and cost containment initiatives have produced some positive results in the fourth quarter, strengthened by collections at schools, which re-opened after the summer break. The company continues to seek better operating results, but it is important to note that the first quarter of 2008 is expected to be seasonally weak, with sequentially lower sales when compared to the fourth quarter of 2007. Challenges remain, but everyone at HemaCare is striving for sales growth and profitability. I look forward to reporting on our progress in future quarters."

About HemaCare Corporation

Founded in 1978, HemaCare is a provider of blood products and services to the healthcare industry. HemaCare is licensed by the FDA and accredited by the AABB. The Company focuses on the customized delivery of human blood-related products and services.