SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q
þ ~~QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)~~
~~OF THE SECURITIES EXCHANGE ACT OF 1934~~
~~For the Quarterly Period Ended March 31, 2005~~
OR
o ~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)~~
~~OF THE SECURITIES EXCHANGE ACT OF 1934~~
~~For the transition period from to~~
~~Commission file number 0-14902~~
~~MERIDIAN BIOSCIENCE, INC.~~


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2005


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number0-14902

MERIDIAN BIOSCIENCE, INC.

Incorporated under the laws of Ohio		31-0888197

		~~(I.R.S. Employer Identification No.)~~

(I.R.S. Employer Identification No.)

3471 River Hills Drive
Cincinnati, Ohio 45244
(513) 271-3700

Indicate by check whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yesþ Noo

Indicate by check whether the Registrant is an accelerated filer (as defined in Rule 12-b2 of the Exchange Act).

Yesþ Noo

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class	Outstanding ~~April 30,~~July 31, 2005

Common Stock, no par value	~~15,708,240~~	16,005,099

~~Page 1 of 25~~

MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES

INDEX TO QUARTERLY REPORT ON FORM 10-Q


		Page(s)
PART I I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)
	~~Consolidated Statements of Operations~~
	Consolidated Statements of Operations Three Months Ended ~~March 31,~~June 30, 2005 and 2004
	~~Six~~ Nine Months Ended ~~March 31,~~June 30, 2005 and 2004		3

	Consolidated Statements of Cash Flows
	~~Six~~ Nine Months Ended ~~March 31,~~June 30, 2005 and 2004		4

	Consolidated Balance Sheets
	~~March 31,~~ June 30, 2005 and September 30, 2004		5-6

	Consolidated Statement of Changes in Shareholders’ Equity
	~~Six~~ Nine Months Ended ~~March 31,~~June 30, 2005		7

	Notes to Consolidated Financial Statements		8-14

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		14-22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		22

Item 4.	Controls and Procedures		23

PART II.	OTHER INFORMATION

Item 4.6.	~~Submission of Matters to a Vote of Security Holders~~Exhibits		2423

~~Item 6.~~Signature	~~Exhibits~~		24

~~Signature~~			2524
EX-31.1
EX-31.2
EX-32

Forward Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements accompanied by meaningful cautionary statements. Except for historical information, this report contains forward-looking statements which may be identified by words such as “estimates”, “anticipates”, “projects”, “plans”, “seeks”, “may”, “will”, “expects”, “intends”, “believes”, “should”, and similar expressions or the negative versions thereof and which also may be identified by their context. Such statements are based upon current expectations of the Company and speak only as of the date made. The Company assumes no obligation to publicly update any forward-looking statements. These statements are subject to various risks, uncertainties and other factors that could cause actual results to differ, including, without limitation, the following: Meridian’s continued growth depends, in part, on its ability to introduce into the marketplace enhancements of existing products or new products that incorporate technological advances, meet customer requirements and respond to products developed by Meridian’s competition. While Meridian has introduced a number of internally developed products, there can be no assurance that it will be successful in the future in introducing such products on a timely basis. Ongoing consolidations of reference laboratories and formation of multi-hospital alliances may cause adverse changes to pricing and distribution. Costs and difficulties in complying with laws and regulations administered by the United States Food and Drug Administration ~~and other governmental bodies~~ can result in unanticipated expenses and delays and interruptions to the sale of new and existing products. Changes in the relative strength or weakness of the U.S. dollar can change expected results. One of Meridian’s main growth strategies is the acquisition of companies and product lines. There can be no assurance that additional acquisitions will be consummated or that, if consummated, will be successful and the acquired businesses successfully integrated into Meridian’s ~~operations.~~operations

Page 2 of 2524

MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)

(dollars in thousands)



Six Months Ended March 31,	2005			2004
Nine Months Ended June 30,							2005			2004

CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	5,306		$	4,084		$	8,804		$	6,241
Non-cash items:
Depreciation of property, plant and equipment		1,289			1,314			1,941			1,966
Amortization of intangible assets and deferred costs		742			808
Amortization of intangible assets and debenture offering costs								1,179			1,134
Stock based compensation		63			3			174			30
Deferred income taxes		4			(87	)		(410	)		472
Change in current assets, excluding cash and deferred taxes and net of effects of acquisitions		(684	)		(1,702	)		(535	)		(218	)
Change in current liabilities, excluding debt obligations and net of effects of acquisitions		(372	)		(1,540	)		1,394			(936	)
Other		216			407			(111	)		255

Net cash provided by operating activities		6,564			3,287			12,436			8,944


CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property, plant and equipment		(1,484	)		(1,122	)		(2,726	)		(1,782	)
Viral Antigens earnout payments		(678	)		(456	)		(678	)		(456	)
Purchase of intangible assets								—			(270	)
Acquisition of OEM Concepts, Inc.		(6,226	)		—			(6,391	)		—

Net cash used for investing activities		(8,388	)		(1,578	)		(9,795	)		(2,508	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net activity on revolving credit facility		5,397			4,596			4,267			1,509
Repayment of debt obligations		(1,141	)		(5,299	)		(2,277	)		(5,435	)
Euro term loan borrowings								—			930
Debt issuance costs paid		—			(311	)		—			(311	)
Dividends paid		(3,386	)		(2,819	)		(5,270	)		(4,308	)
Proceeds from exercise of stock options		2,476			1,086			2,748			1,106
Other		(11	)		(36	)		(11	)		(36	)

Net cash provided by (used for) financing activities		3,335			(2,783	)
Net cash used for financing activities								(543	)		(6,545	)


Effect of Exchange Rate Changes on Cash		105			(43	)		(53	)		82


Net Increase (Decrease) in Cash		1,616			(1,117	)		2,045			(27	)

Cash at Beginning of Period		1,983			2,083			1,983			2,083


Cash at End of Period	$	3,599		$	966		$	4,028		$	2,056


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes paid	$	2,304		$	2,638		$	4,217		$	3,090
Interest		326			746			387			777
Non-cash transactions:
Debenture exchange		—			3,889			—			3,889
Debenture conversions								9,655			—

MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets (Unaudited)

(dollars in thousands)

ASSETS



	March 31,		September 30,		June 30,		September 30,
CURRENT ASSETS:	2005		2004		2005		2004

Cash	$	3,599	$	1,983	$	4,028	$	1,983
Accounts receivable, less allowances of $517 and $479 for doubtful accounts		17,007		17,857
Accounts receivable, less allowances of $497 and $479 for doubtful accounts						16,753		17,857
Inventories		17,227		14,107		16,829		14,107
Prepaid expenses and other current assets		1,393		1,669		1,896		1,669
Deferred income taxes		534		495		746		495


Total current assets		39,760		36,111		40,252		36,111


PROPERTY, PLANT AND EQUIPMENT:
Land		703		696		693		696
Buildings and improvements		15,366		15,214		15,482		15,214
Machinery, equipment and furniture		19,951		18,794		20,554		18,794
Construction in progress		900		525		1,289		525

Total property, plant and equipment		36,920		35,229		38,018		35,229
Less-accumulated depreciation and amortization		19,138		17,887		19,694		17,887


Net property, plant and equipment		17,782		17,342		18,324		17,342


OTHER ASSETS:
Deferred debenture offering costs, net		270		433		249		433
Goodwill		7,475		5,423		7,639		5,423
Other intangible assets, net		13,871		9,275		13,449		9,275
Restricted cash		600		600		600		600
Other assets		145		138		153		138


Total other assets		22,361		15,869		22,090		15,869


TOTAL ASSETS	$	79,903	$	69,322	$	80,666	$	69,322

MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets (Unaudited)

(dollars in thousands)

LIABILITIES AND SHAREHOLDERS’ EQUITY



	March 31,			September 30,			June 30,			September 30,
CURRENT LIABILITIES:	2005			2004			2005			2004

Current portion of long-term debt	$	817		$	696		$	717		$	696
Borrowings under revolving credit facility		5,397			—			4,267			—
Accounts payable		3,628			2,631			2,999			2,631
Accrued payroll costs		3,665			6,311			5,547			6,311
Purchase business combination liability		—			678			—			678
Other accrued expenses		4,020			3,159			4,048			3,159
Income taxes payable		3,760			3,175			4,197			3,175


Total current liabilities		21,287			16,650			21,775			16,650


LONG-TERM DEBT:
Bank debt		771			1,093			451			1,093
Convertible subordinated debentures		8,391			16,000			4,935			16,000

DEFERRED INCOME TAXES		4,742			2,647			4,540			2,647

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS’ EQUITY:

Preferred stock, no par value, 1,000,000 shares authorized, none issued		—			—			—			—
Common stock, no par value, 50,000,000 shares authorized, 15,695,826 and 14,970,998 shares issued and outstanding, respectively, stated at		2,528			2,535
Common stock, no par value, 50,000,000 shares authorized, 15,894,567 and 14,970,998 shares issued and outstanding, respectively, stated at								2,528			2,535
Treasury stock, at cost, 8,300 shares		(32	)		(32	)		(32	)		(32	)
Additional paid-in capital		33,021			23,401			36,093			23,401
Retained earnings		9,242			7,322			10,856			7,322
Accumulated other comprehensive income (loss)		(47	)		(294	)		(480	)		(294	)


Total shareholders’ equity		44,712			32,932			48,965			32,932


TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	79,903			69,322		$	80,666		$	69,322

MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES

Consolidated Statement of Changes in Shareholders’ Equity (Unaudited)

(dollars and shares in thousands)



																	Accumulated																								Accumulated
	Common		Shares									Additional					Other					Total			Common		Shares									Additional					Other						Total
	Shares		Held in			Common			Treasury			Paid-in		Retained			Comprehensive			Comprehensive		Shareholders’			Shares		Held in			Common			Treasury			Paid-in					Comprehensive			Comprehensive			Shareholders’
	Issued		Treasury			Stock			Stock			Capital		Earnings			Income (Loss)			Income (Loss)		Equity			Issued		Treasury			Stock			Stock			Capital		Retained Earnings			Income (Loss)			Income (Loss)			Equity

Balance at September 30, 2004		14,971		(8	)	$	2,535		$	(32	)	$	23,401	$	7,322		$	(294	)	$	—	$	32,932			14,971		(8	)	$	2,535		$	(32	)	$	23,401	$	7,322		$	(294	)	$	—		$	32,932
Dividends paid		—		—			—			—			—		(3,386	)		—			—		(3,386	)		—		—			—			—			—		(5,270	)		—			—			(5,270	)
Exercise of stock options		288		—			—			—			2,476		—			—			—		2,476			322		—			—			—			2,748		—			—			—			2,748
Stock based compensation		—		—			—			—			63		—			—			—		63			—		—			—			—			174		—			—			—			174
Bond conversion		437		—			—			—			7,081		—			—			—		7,081			602		—			—			—			9,770		—			—			—			9,770
Common stock issuance costs		—		—			(7	)		—			—		—			—			—		(7	)		—		—			(7	)		—			—		—			—			—			(7	)
Comprehensive income:
Net income		—		—			—			—			—		5,306			—			5,306		5,306
Net earnings																										—		—			—			—			—		8,804			—			8,804			8,804
Foreign currency translation adjustment		—		—			—			—			—		—			247			247		247			—		—			—			—			—		—			(186	)		(186	)		(186	)

Comprehensive income																				$	5,553																							$	8,618



Balance at March 31, 2005		15,696		(8	)	$	2,528		$	(32	)	$	33,021	$	9,242		$	(47	)			$	44,712
Balance at June 30, 2005																										15,895		(8	)	$	2,528		$	(32	)	$	36,093	$	10,856		$	(480	)				$	48,965

MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

1.Basis of Presentation:

The consolidated financial statements included herein have not been audited by an independent registered public accounting firm, but include all adjustments (consisting of normal recurring entries), which are, in the opinion of management, necessary for a fair presentation of the results for such periods.

Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles has been omitted pursuant to the requirements of the Securities and Exchange Commission, although Meridian believes that the disclosures included in these financial statements are adequate to make the information not misleading.
~~It is suggested~~

Meridian suggests that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto, included in Meridian’s Annual Report on Form 10-K for the Year Ended September 30, 2004.

The results of operations for the interim periods are not necessarily indicative of the results to be expected for the year.

2.Significant Accounting Policies:

~~(a)~~a) Revenue Recognition -—
~~Revenue~~

Life Science revenue for contract services may come from standalone arrangements for process development and/or optimization work (contract research and development services), or multiple-deliverable arrangements that include process development work followed by larger-scale manufacturing (contract manufacturing services). Revenue is recognized based on the nature of the arrangements, ~~including~~using the principles in EITF 00-21,Revenue Arrangements with Multiple Deliverables. Contract research and development services may be performed on a “time and materials” basis or “fixed fee” basis. For “time and materials” arrangements, revenue is recognized as services are performed and billed. For “fixed fee” arrangements, revenue is recognized upon completion and acceptance by the customer. For contract manufacturing services, revenue is recognized upon delivery of product and acceptance by the customer.
~~During the first quarter~~

The nature of ~~fiscal 2005, the Life Science operating segment began~~this work to date has involved process development and manufacturing of biologicals and biopharmaceuticals that will be used by scientists in the research and development of new and improved diagnostic tests, vaccines, and therapies against potential agents of bioterrorism and emerging infectious diseases. Revenues from these projects are expected to be approximately ~~$2,500,000, $400,000~~$3,587,000 for fiscal 2005, $2,387,000 of which was recognized in the ~~second quarter of fiscal 2005. The remainder is expected to be recognized in the third and fourth~~first three quarters.

Page 8 of 2524

~~(b)~~b) Foreign Currency Translation -—

Assets and liabilities of foreign operations are translated using period-end exchange rates with gains or losses resulting from translation included in a separate component of accumulated other comprehensive income (loss). Revenues and expenses are translated using exchange rates prevailing during the period. Meridian also recognizes foreign currency transaction gains and losses on certain assets and liabilities that are denominated in the Euro currency. These gains and losses are included in other income and expense in the accompanying consolidated statements of operations.

Foreign currency translation is the only component of accumulated other comprehensive income (loss). Comprehensive income for the interim periods ended ~~March 31~~June 30 was as ~~follows:~~follows (amounts in thousands):


											Three Months						Nine Months
	Three Months						Six Months				Ended June 30,						Ended June 30,
	Ended March 31,						Ended March 31,				2005			2004			2005			2004
	2005			2004			2005		2004

Net income	$	3,196		$	2,289		$	5,306	$	4,084
Net earnings											$	3,498		$	2,157		$	8,804		$	6,241
Foreign currency translation		(326	)		(172	)		247		236		(433	)		(41	)		(186	)		195

Comprehensive income	$	2,870		$	2,117		$	5,553	$	4,320	$	3,065		$	2,116		$	8,618		$	6,436

accounted for as a special deduction in accordance with Statement 109.
The deduction on qualified production activities will be available to Meridian beginning in fiscal year 2006.

In addition, during December 2004, the Financial Accounting Standards Board issued Staff Position No. 109-2, “Accounting and Disclosure Guidance for the Foreign Earnings
~~Page 10 of 25~~

Repatriation Provision within the American Jobs Creation Act of 2004”. This staff provision dictates that a practical exception exists to the Statement 109 requirement to reflect in the period of enactment the effect of a new tax law with respect to the special one-time tax deduction of 85 percent of foreign earnings that are repatriated (as defined in the American Jobs Creation Act of 2004). It provides that an enterprise is allowed time after the financial reporting period to evaluate the effect of the American Jobs Creation Act of 2004 on its plan for reinvestment or repatriation of foreign earnings for purposes of applying Statement 109. At this time, Meridian does not expect to repatriate any unremitted earnings from its non-US operations.

During May 2005, the Financial Accounting Standards Board issued Statement No. 154, “Accounting Changes and Error Corrections-a replacement of APB Opinion No. 20 and FASB Statement No. 3”. This statement requires retrospective application to prior periods’ financial statements of voluntary changes in accounting principles and is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005, which for Meridian would be fiscal year 2007.

Meridian does not expect the impact of adoption of these standards to have a significant effect on its results of operations or financial condition.

~~(f)~~f) Reclassifications -—

Certain reclassifications have been made to the prior year financial statements to conform to the current year presentation.

3.Inventories:

Inventories are comprised of the following (amounts in thousands):



	March 31,		September 30,		June 30,		September 30,
	2005		2004		2005		2004

Raw materials	$	4,129	$	4,110	$	4,086	$	4,110
Work-in-process		6,009		4,083		5,677		4,083
Finished goods		7,089		5,914		7,066		5,914

	$	17,227	$	14,107	$	16,829	$	14,107

diagnostics test kits in Europe, Africa, and the Middle East. The Life Science operating segment consists of manufacturing operations in Memphis, ~~Tennessee,~~Tennessee; Saco, ~~Maine,~~Maine; Toms River, New ~~Jersey,~~Jersey; and Boca Raton, ~~Florida, and~~Florida; the sale and distribution of bulk antigens, antibodies, and bioresearch reagents domestically and ~~abroad.~~abroad; and contract research and development and manufacturing services. The Life Science operating segment consists of the Viral Antigens, BIODESIGN, and OEM Concepts subsidiaries, including the protein production laboratory.
~~Page 11 of 25~~

Segment information for the interim periods ended ~~March 31,~~June 30, 2005 and 2004 is as follows ~~(in~~(amounts in thousands):


												US		European		Life
	US		European		Life							Diagnostics		Diagnostics		Science		Eliminations⁽¹⁾			Total
	Diagnostics		Diagnostics		Science		Eliminations⁽¹⁾			Total

Three Months - 2005
Three Months – 2005
Net sales -
Third-party	$	14,517	$	4,671	$	4,498		—		$	23,686	$	13,646	$	4,880	$	6,895		—		$	25,421
Inter-segment		1,775		—		183		(1,958	)		—		1,826		—		222		(2,048	)		—
Operating income		3,613		821		734		30			5,198		3,296		835		1,744		(167	)		5,708
Total assets (March 31, 2005)		71,386		12,750		34,847		(39,080	)		79,903
Three Months - 2004
Total assets (June 30, 2005)													71,127		12,371		36,802		(39,634	)		80,666
Three Months – 2004
Net sales -
Third-party	$	11,735	$	4,266	$	4,939	$	—		$	20,940	$	10,470	$	4,086	$	3,700	$	—		$	18,256
Inter-segment		1,566		—		194		(1,760	)		—		1,352		—		184		(1,536	)		—
Operating income		2,231		539		1,070		141			3,981		1,784		828		751		3			3,366
Total assets (September 30, 2004)		63,981		11,686		25,329		(31,674	)		69,322		63,981		11,686		25,329		(31,674	)		69,322
Six Months - 2005
Nine Months – 2005
Net sales -
Third-party	$	26,389	$	8,925	$	7,214	$	—		$	42,528	$	40,035	$	13,805	$	14,109	$	—		$	67,949
Inter-segment		3,401		—		345		(3,746	)		—		5,227		—		567		(5,794	)		—
Operating income		6,652		1,150		805		58			8,665		9,949		1,985		2,548		(109	)		14,373
Six Months - 2004
Nine Months – 2004
Net sales -
Third-party	$	24,932	$	7,533	$	6,641	$	—		$	39,106	$	35,402	$	11,619	$	10,341	$	—		$	57,362
Inter-segment		3,000		4		363		(3,367	)		—		4,352		4		547		(4,903	)		—
Operating income		5,848		730		651		(55	)		7,174		7,582		1,557		1,407		(51	)		10,495

On June 14, 2005, the Company announced a call for redemption on July 7, 2005, all remaining outstanding 7% convertible subordinated debentures at par plus accrued interest. After conversions, the actual amount of this redemption was $402,000.

These conversion and redemption transactions ~~noted above~~ are expected to reduce annual interest expense by approximately ~~$569,000.~~
~~Page 13 of 25~~
$863,000.

7. ~~Commitments and Contingencies:~~

7.Commitments and Contingencies:

~~(a)~~a) Forward Contracts -—

Meridian uses forward contracts from time to time to address foreign currency risk related to certain transactions denominated in the Euro currency. These contracts are used to fix the exchange rate in converting Euros to U.S. Dollars. Gains and losses on such contracts are recorded in other income and expense in the accompanying consolidated statements of operations. As of ~~March 31,~~June 30, 2005, Meridian had two such contracts outstanding with an aggregate notional amount of 600,000 Euros and maturities ranging to ~~May 31,~~September 12, 2005.

~~(b)~~b) OEM Concepts -—

On January 19, 2005, Meridian executed a definitive stock purchase agreement to acquire all of the outstanding capital stock of OEM Concepts, Inc., for $6,000,000 in cash and a performance based earn-out opportunity over four years of up to $2,270,000. OEM Concepts is a large-volume producer of monoclonal antibodies that are critical components of commercial diagnostic products used in the diagnosis of infectious diseases and in the monitoring of human protein levels in metabolic disorders, pregnancy, and cardiac disease. This acquisition was completed on January 31, 2005. The purchase price was funded with available cash on hand and proceeds from Meridian’s revolving credit facility. OEM Concepts is included in the Life Science operating segment.
~~(c) Bond Redemption -~~
On May 9, 2005, the Company announced a call for redemption on June 3, 2005, $2,500,000 in principal amount of its outstanding 7% convertible subordinated debentures, due September 1, 2006, at par plus accrued interest. After completion of this redemption, there will be approximately $2,300,000 principal amount of 7% convertible debentures outstanding.
This redemption transaction is expected to reduce annual interest expense by approximately $175,000. The carrying value of unamortized debt issuance costs related to the 7% convertible debentures that will be redeemed, $7,000 at March 31, 2005, will be charged to expense during the third quarter of fiscal 2005.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Refer to “Forward Looking Statements” following the Index in front of this Form 10-Q.

Operating Segments:

Meridian’s reportable operating segments are US Diagnostics, European Diagnostics, and Life Science. Meridian’s corporate headquarters are located in Cincinnati, Ohio. The US Diagnostics operating segment consists of manufacturing operations in Cincinnati, Ohio, and the sale and distribution of diagnostic test kits in the US and countries outside of Europe, Africa and the Middle East. The European Diagnostics operating segment consists of
~~Page 14 of 25~~

the sale and distribution of diagnostic test kits in Europe, Africa and the Middle East. The Life Science operating segment consists of manufacturing operations in Memphis, ~~Tennessee,~~Tennessee; Saco, ~~Maine,~~Maine; Toms River, New ~~Jersey,~~Jersey; and Boca Raton, ~~Florida, as well as~~Florida; the sale and distribution of bulk antigens, antibodies and bioresearch reagents domestically and ~~abroad.~~abroad; and contract research and development and manufacturing services. The Life Science operating segment consists of the Viral Antigens,

Page 14 of 24

BIODESIGN, and OEM Concepts subsidiaries, including the protein production laboratory.

Current Developments:

US Diagnostics

Sales for Meridian’s US Diagnostics operating segment increased ~~24%~~30% during the ~~second~~third quarter of fiscal 2005. This increase was driven by the ~~emergence of the influenza season in the second quarter and the~~ first quarter launch of the ImmunoCard®C.difficileToxins A & B rapid diagnostic test in domestic markets. This rapid diagnostic test expanded Meridian’s product offerings and contributed to volume growth for C.difficileproducts.
The timing of the influenza season in fiscal 2005 also contributed to the overall increase, as it continued into the early part of the third quarter.

European Diagnostics

Sales for Meridian’s European Diagnostics operating segment during the ~~second~~third quarter of fiscal 2005 increased 9%19% compared to the ~~second~~third quarter of fiscal 2004, driven in part by currency translation gains related to the strengthening of the Euro. Sales in local currency increased 5%15% for the ~~second~~third quarter of fiscal 2005. The increase in local currency was primarily driven by volume growth in C.difficileproducts, including of Immuno~~Card®~~ Card®C. difficileToxins A & B rapid diagnostic test, which was launched in European markets in fiscal 2004.

Life Science

During the first quarter of fiscal 2005, the Life Science operating segment began process development and manufacturing of biologicals and biopharmaceuticals that will be used by scientists in the research and development of new and improved diagnostic tests, vaccines, and therapies against potential agents of bioterrorism and emerging infectious diseases. Revenues from these projects are expected to be approximately ~~$2,500,000, $400,000~~$3,587,000 for fiscal 2005, $2,387,000 of which was recognized in the ~~second quarter~~first three quarters of fiscal 2005. ~~The remainder is expected to be recognized in the third and fourth quarters.~~

On January ~~19,~~31, 2005, Meridian acquired all of the outstanding capital stock of OEM Concepts, Inc., for $6,000,000 in cash and a performance based earn-out opportunity over four years of up to $2,270,000. OEM Concepts is a large-volume producer of monoclonal antibodies that are critical components of commercial diagnostic products used in the diagnosis of infectious diseases and in the monitoring of human protein levels in metabolic disorders, pregnancy, and cardiac disease. The accompanying financial statements include the results of OEM Concepts for the ~~two-month~~five-month period ended ~~March 31,~~June 30, 2005. The purchase price was funded with available cash on hand and proceeds from Meridian’s revolving credit facility. Revenues for the eight-month period in fiscal 2005 for this acquisition are expected to be approximately ~~$3,300,000;~~$3,000,000 and earnings ~~per share accretion, after giving effect to purchase accounting adjustments,~~contribution is expected to be ~~between $0.01 and $0.02 per diluted share.~~breakeven. Management expects diluted earnings per share accretion to be between $0.04 and $0.06 for fiscal 2006.
~~Page 15 of 25~~

Research and Development

Meridian believes that internally-developed products will continue to be a critical source of sales and sales growth. Research and development efforts are expected to focus on the development of

Page 15 of 24

new products and product improvements where Meridian has a dominant market position, or its intellectual property is protected by patents or licenses.

Meridian expects its Life Science operating segment will serve as a key platform for sourcing biologicals and technologies, by acquisition or license, for development of new products for all of Meridian’s operating segments. One of Meridian’s strategies in this area is to target biologicals that have commercial product applications across multiple markets, such as human diagnostics, veterinary diagnostics, and therapeutics. This strategy is expected to leverage research and development resources as products can be developed with all three markets in mind, rather than on a market-by-market basis.

Results of Operations:

Three Months Ended ~~March 31,~~June 30, 2005 Compared to Three Months Ended ~~March 31,~~June 30, 2004

Net ~~sales~~Sales

Overall, net sales increased ~~13%~~39% to ~~$23,686,000~~$25,421,000 for the ~~second~~third quarter of fiscal 2005 compared to the ~~second~~third quarter of fiscal 2004. Net sales for the US Diagnostics operating segment increased ~~$2,782,000,~~$3,176,000, or ~~24%~~30%, for the European Diagnostics operating segment increased ~~$405,000,~~$794,000, or 9%19%, and for the Life Science operating segment ~~decreased $441,000,~~increased $3,195,000, or 9%86%.

For the US Diagnostics operating segment, the sales increase was primarily related to C.difficile products (increased $1,484,000), respiratory products (increased ~~$2,748,000)~~$604,000), C.~~difficile~~and rotavirus products (increased ~~$507,000), and H.~~~~pylori~~~~products (increased $382,000), partially offset by sales decreases for proficiency products (decreased $454,000)~~$411,000). The increase in sales of respiratory products was driven by timing of the influenza season. The influenza season fully emerged during the second quarter ~~of fiscal 2005, whereas it emerged during~~and continued into the ~~first~~early third quarter of fiscal ~~2004.~~2005. Meridian’s respiratory products include diagnostic tests for influenza, RSV, and mycoplasma. ~~Volume increases in H.~~~~pylori~~~~products and~~The increase for C.difficileproducts ~~also contributed to increases in sales. The decrease in sales~~reflects the first quarter launch of ~~proficiency products resulted from timing of shipments.~~
ImmunoCard® C.difficileToxins A&B rapid diagnostic test.

For the European Diagnostics operating segment, the sales increase includes currency translation gains in the amount of ~~$248,000.~~$204,000. Sales in local currency increased 5%15% for the ~~second quarter of fiscal 2005, following a 21% increase during the first~~third quarter of fiscal 2005. The increase in local currency was primarily driven by sales of C.difficileproducts (increased $482,000), including Immuno~~Card®~~ Card®C. difficileToxins A & B rapid diagnostic test, which was launched in European markets in the fourth quarter of fiscal 2004.

For the Life Science operating segment, the sales ~~decrease~~increase for the ~~second~~third quarter of fiscal 2005 was primarily attributable to ~~volume reductions in make-to-order bulk antigens and antibodies ($1,417,000), partially offset by~~ the acquisition of OEM Concepts, which contributed sales of ~~$643,000~~$1,081,000 for the quarter, and revenues from contract research and development ~~work~~and contract manufacturing services at the Viral Antigens subsidiary ($~~400,000)~~1,793,000).
~~Page 16 of 25~~

Sales to one customer for bulk antigen products accounted for ~~21%~~18% and ~~50%~~37% of total sales for the Life Science operating segment for the ~~second~~third quarters of fiscal 2005 and fiscal 2004, respectively. ~~This~~Sales to one customer ~~experienced delays in taking delivery~~for contract research and development and contract manufacturing services accounted for 29% of total sales for the ~~product~~Life Science operating segment in the ~~latter part of fiscal 2003 and first~~third quarter of fiscal ~~2004. Product deliveries resumed in the second quarter of fiscal 2004.~~

2005.

For all operating segments combined, international sales were ~~$7,640,000,~~$8,308,000, or ~~32%~~33% of total sales, for the ~~second~~third quarter of fiscal 2005, compared to ~~$7,275,000,~~$6,444,000, or 35% of total sales, for the ~~second~~third quarter

Page 16 of 24

of fiscal 2004. Combined domestic exports for the US Diagnostics and Life Science operating segments were ~~$2,969,000~~$3,428,000 for the ~~second~~third quarter of fiscal 2005, compared to ~~$3,009,000~~$2,358,000 for the ~~second~~third quarter of fiscal 2004. The remaining international sales were generated by the European Diagnostics operating segment.

Gross Profit

Gross profit increased ~~13%~~44% to ~~$13,577,000~~$15,686,000 for the ~~second~~third quarter of fiscal 2005 compared to the ~~second~~third quarter of fiscal 2004. Gross profit margins were ~~57%~~62% for the ~~second quarters~~third quarter of fiscal 2005 ~~and~~compared to 60% for the third quarter of fiscal 2004.

Meridian’s overall operations consist of the sale of diagnostic test kits for various disease states and in alternative test formats, as well as bioresearch reagents, bulk antigens and antibodies, proficiency tests, and contract research and development and contract manufacturing ~~activities.~~services. Product sales mix shifts, in the normal course of business, can cause the consolidated gross profit margin to fluctuate by several points.

Operating Expenses

Operating expenses increased 4%32% to ~~$8,379,000,~~$9,978,000, for the ~~second~~third quarter of fiscal 2005 compared to the ~~second~~third quarter of fiscal 2004. Approximately ~~80%~~19% of this increase related to the acquisition of OEM Concepts. The overall increase in operating expenses for the ~~second~~third quarter of fiscal 2005 is discussed below.

Research and development expenses ~~decreased 28%~~increased 13% to ~~$861,000~~$1,190,000 for the ~~second~~third quarter of fiscal 2005 compared to the ~~second~~third quarter of fiscal 2004, and as a percentage of sales, decreased from 6% for the ~~second~~third quarter of fiscal 2004, to 4%5% for the ~~second~~third quarter of fiscal 2005. Of this ~~decrease, $146,000~~increase, $164,000 related to the US Diagnostics operating segment, ~~and $188,000~~partially offset by a decrease of $24,000 related to the Life Science operating segment. Increases for the US Diagnostics operating segment related primarily to increases in corporate incentive plan accruals related to higher profit levels in fiscal 2005. For the Life Science operating segment, during the ~~decrease reflects the classification of such costs. During the second~~third quarter of fiscal 2005, research and development scientists were performing contract work for third-party customers, and thus, their related costs are classified in cost of sales. During fiscal 2004, their efforts and activities were primarily focused on internal research and development work.
The decrease for the Life Science operating segment reflects the classification of such costs.

Selling and marketing expenses increased ~~24%~~19% to ~~$4,056,000~~$3,647,000 for the ~~second~~third quarter of fiscal 2005 compared to the ~~second~~third quarter of fiscal 2004, and as a percentage of sales, ~~increased~~decreased from ~~16%~~17% for the ~~second~~third quarter of fiscal 2004 to ~~17%~~14% for the ~~second~~third quarter of fiscal 2005. Of this increase, ~~$598,000~~$185,000 related to the US Diagnostics operating segment, ~~$71,000~~$253,000 related to the European Diagnostics operating segment and ~~$119,000~~$132,000 related to the Life Science operating segment. The increase for the US Diagnostics operating segment was primarily attributable to ~~higher salaries and benefits costs ($106,000), including the hiring of a Vice President of Sales and Marketing~~increases in
~~Page 17 of 25~~

~~January 2004, higher sales commissions~~ corporate incentive plan accruals related to higher ~~respiratory product sales~~profit levels in 2005 ($~~302,000)~~71,000), ~~and costs of~~ promotional materials ($~~138,000)~~36,000), and travel ($36,000). The increase for the European Diagnostics operating segment was primarily due to increased salaries and benefits costs ($155,000), including incentive compensation related to higher sales levels, and currency ~~translation.~~translation ($36,000). The increase for the Life Science operating segment was primarily attributable to planned additions to human resources, business development costs, and the OEM Concepts ~~acquisition.~~acquisition ($75,000).

Page 17 of 24

General and administrative expenses ~~decreased 4%~~increased 51% to ~~$3,462,000~~$5,141,000 for the ~~second~~third quarter of fiscal 2005 compared to the ~~second~~third quarter of fiscal 2004, and as a percentage of sales, ~~decreased~~increased from ~~17%~~19% for the ~~second~~third quarter of fiscal 2004, to ~~15%~~20% for the ~~second~~third quarter of fiscal 2005. Of this ~~decrease, $165,000~~increase, $1,295,000 related to the US Diagnostics operating segment, ~~and $109,000~~$58,000 related to the European Diagnostics operating segment, ~~partially offset by an increase of $147,000~~and $380,000 related to the Life Science operating segment. The ~~decrease~~increase for the US Diagnostics operating segment was primarily attributable to ~~lower accruals for the Company’s~~increases in corporate incentive plan accruals related to higher profit levels in 2005 ($~~110,000)~~831,000), ~~and lower costs for recruiting and relocation ($79,000), offset by increased~~ legal and professional fees, primarily related to the audit of the Company’s financial statements and compliance with the Sarbanes-Oxley Act ($~~104,000)~~200,000), and increased salary and benefit costs ($190,000). The increase for the Life Science operating segment was primarily attributable to the acquisition of OEM Concepts, including amortization of acquired ~~intangibles.~~
intangibles ($347,000).

Operating Income

Operating income increased ~~31%~~70% to ~~$5,198,000~~$5,708,000 for the ~~second~~third quarter of fiscal 2005, as a result of the factors discussed above.

Other Income and Expense

Interest expense declined ~~53%~~56% to ~~$225,000~~$176,000 for the ~~second~~third quarter of fiscal 2005 compared to the ~~second~~third quarter of fiscal 2004. This decrease was primarily attributable to the positive effects of the fiscal 2004 debenture exchange and redemption transactions and the fiscal 2005 debenture conversion and redemption transactions.

Income Taxes

The effective rate for income taxes was 37% for the ~~second~~third quarter of fiscal 2005 compared to ~~35%~~27% for the ~~second~~third quarter of fiscal 2004. The ~~increase in the~~ effective tax rate ~~was primarily attributable to~~in the ~~levels~~third quarter of ~~Federal research and development tax credits and benefits~~fiscal 2004 reflected favorable book-to-return adjustments related to non-US sales activities. Similar adjustments were not significant for the third quarter of fiscal 2005. For the fiscal year ending September 30, 2005, Meridian expects the effective tax rate to approximate 36% to 37%.

~~Six~~Nine Months Ended ~~March 31,~~June 30, 2005 Compared to ~~Six~~Nine Months Ended ~~March 31,~~June 30, 2004

Net ~~sales~~Sales

Overall, net sales increased 9%18% for the first ~~six~~nine months of fiscal 2005 compared to the first ~~six~~nine months of fiscal 2004. Net sales for the US Diagnostics operating segment increased ~~$1,457,000,~~$4,633,000, or 6%13%, for the European Diagnostics operating segment increased ~~$1,392,000,~~$2,186,000, or ~~18%~~19%, and for the Life Science operating segment increased ~~$573,000,~~$3,768,000, or 9%36%.

For the US Diagnostics operating segment, the sales increase was primarily related to ~~respiratory~~
~~Page 18 of 25~~

C.difficileproducts (increased ~~$1,405,000) and C. difficile~~$2,277,000), respiratory products (increased ~~$792,000)~~$2,010,000), rotavirus products (increased $508,000), and volume increases in specimen transport products (increased $341,000) and H. pylori products (increased $415,000), partially offset by ~~sales~~ decreases for proficiency products (decreased ~~$802,000)~~$901,000). The ~~increases for respiratory and C. difficile were primarily due to volume. The volume~~ increase for respiratory products was primarily due to volume, driven by a larger customer base in fiscal 2005.

Page 18 of 24

The ~~volume~~ increase for C.difficile products was driven by the first quarter launch of ~~Immunocard®~~ImmunoCard® C.difficileToxins A & B rapid diagnostic ~~test.~~test, as well as growth in Premier C.difficile Toxins A & B. The decrease in sales of proficiency products resulted from timing of ~~shipments.~~
shipments and customer order patterns.

For the European Diagnostics operating segment, the sales increase includes currency translation gains in the amount of ~~$539,000.~~$743,000. Sales in local currency, the Euro, increased ~~11%~~12% primarily due to sales of C.difficileproducts (increased $1,331,000), including Immuno~~Card®~~ Card®C. difficileToxins A & B rapid diagnostic test, which was launched in European markets in fiscal 2004.

For the Life Science operating segment, the sales increase was primarily attributable to the acquisition of OEM ~~Concepts.~~Concepts and revenues from contract research and development work and the protein production facility. Sales to one customer for bulk antigen products accounted for 17% and ~~38%~~36% of total sales for the Life Science operating segment for the first ~~six~~nine months of fiscal 2005 and fiscal 2004, respectively.
Sales to one customer for contract research and development and contract manufacturing services accounted for 12% of total sales for the Life Science operating segment in the first nine months of fiscal 2005.

For all operating segments combined, international sales were ~~$14,101,000,~~$22,409,000, or 33% of total sales, for the first ~~six~~nine months of fiscal 2005, compared to ~~$11,749,000,~~$18,193,000, or ~~30%~~32% of total sales, for the first ~~six~~nine months of fiscal 2004. Combined domestic exports for the US Diagnostics and Life Science operating segments were ~~$5,176,000~~$8,604,000 for the first ~~six~~nine months of fiscal 2005, compared to ~~$4,216,000~~$6,574,000 for the first ~~six~~nine months of fiscal 2004. The remaining international sales were generated by the European Diagnostics operating segment.

Gross Profit

Gross profit increased ~~11%~~22% for the first ~~six~~nine months of fiscal 2005 compared to the first ~~six~~nine months of fiscal 2004. Gross profit margins were ~~58%~~59% for the first ~~six~~nine months of fiscal 2005 compared to ~~57%~~58% for the first ~~six~~nine months of fiscal 2004.

Meridian’s overall operations consist of the sale of diagnostic test kits for various disease states and in alternative test formats, as well as bioresearch reagents, bulk antigens and antibodies, proficiency tests, contract research and development, and contract manufacturing ~~activities.~~services. Product sales mix shifts, in the normal course of business, can cause the consolidated gross profit margin to fluctuate by several points.

Operating Expenses

Operating expenses increased 6%15% for the first ~~six~~nine months of fiscal 2005 compared to the first ~~six~~nine months of fiscal 2004. The overall increase in operating expenses for the first ~~six~~nine months of fiscal 2005 is discussed below.

Research and development expenses decreased ~~22%~~10% for the first ~~six~~nine months of fiscal 2005 compared to the first ~~six~~nine months of fiscal 2004, and as a percentage of sales, were 4% for the first ~~six~~nine months of fiscal 2005 and 6% for the first ~~six~~nine months of fiscal 2004. Of this decrease, ~~$189,000~~$25,000 related to the US Diagnostics operating segment and ~~$284,000~~$308,000 related to the Life Science operating segment. The decrease for the US Diagnostics operating segment was primarily

Page 19 of 24

attributable to the level of materials needed for new product development activities in each ~~period.~~period, offset by increases in corporate incentive plan accruals related to higher profit levels in 2005 ($184,000). The 2004
~~Page 19 of 25~~

investment in research and development ~~has~~ resulted in one new product launch in fiscal 2004, the ImmunoCard STAT!® HpSA rapid test, and one new product launch in fiscal 2005, the ImmunoCard® C.difficileToxins A & B rapid test. For the Life Science operating segment, ~~the decrease reflects the classification of such costs. During~~during the second ~~quarter~~and third quarters of fiscal 2005, research and development scientists were performing contract work for third-party ~~customer,~~customers, and thus, their costs are classified in cost of sales. During fiscal 2004, their efforts and activities were primarily focused on internal research and development work.

The decrease for the Life Science operating segment reflects the classification of such costs.

Selling and marketing expenses increased 17% for the first ~~six~~nine months of fiscal 2005 compared to the first ~~six~~nine months of fiscal 2004, and as a percentage of sales ~~increased from~~were 16% in fiscal ~~2004, to 17% in~~2005 and fiscal ~~2005.~~2004. Of this increase, ~~$691,000~~$868,000 related to the US Diagnostics operating segment, ~~$184,000~~$437,000 related to the European Diagnostics operating segment and ~~$193,000~~$325,000 related to the Life Science operating segment. The increase for the US Diagnostics operating segment was primarily attributable to costs of physician education and business development ($323,000), higher salaries and benefits costs ($~~207,000)~~216,000), including the hiring of a Vice President of Sales and Marketing in January 2004, and higher sales commissions related to higher ~~respiratory product~~ sales levels ($~~82,000), and costs of promotional materials ($286,000)~~163,000). The increase for the European Diagnostics operating segment was primarily due to increased salaries and benefits costs ($285,000), including incentive compensation related to higher sales levels, and currency ~~translation.~~translation ($139,000). The increase for the Life Science operating segment was primarily due to the acquisition of OEM Concepts ($141,000) and additional marketing and business development resources.

General and administrative expenses increased 5%21% for the first ~~six~~nine months of fiscal 2005 compared to the first ~~six~~nine months of fiscal 2004, and as a percentage of sales, ~~decreased~~increased from 17% for the first ~~six~~nine months of fiscal 2004 to ~~16%~~18% for the first ~~six~~nine months of fiscal 2005. Of this increase, ~~$217,000~~$1,470,000 related to the US Diagnostics operating segment, $2,000 related to the European Diagnostics operating segment and ~~$193,000~~$578,000 related to the Life Science ~~operating segment, partially offset by a decrease of $56,000 related to the European Diagnostics~~ operating segment. The increase for the US Diagnostics operating segment was primarily attributable to increases in corporate incentive plan accruals related to higher profit levels in 2005 ($757,000), legal and professional fees, primarily related to the audit of the Company’s financial statements and compliance with the Sarbanes-Oxley ~~Act.~~Act ($397,000), and increased salary and benefit costs ($252,000) . The increase for the Life Science operating segment was primarily attributable to the OEM Concepts ~~acquisition.~~
acquisition ($521,000).

Operating Income

Operating income increased ~~21%~~37% for the first ~~six~~nine months of fiscal 2005, as a result of the factors discussed above.

Other Income and Expense

Interest expense declined ~~39%~~44%, or ~~$325,000,~~$548,000, for the first ~~six~~nine months of fiscal 2005 compared to the first ~~six~~nine months of fiscal 2004. This decrease was primarily attributable to the positive effects of the fiscal 2004 debenture exchange and redemption transactions and the fiscal 2005 debenture conversion and redemption transactions.

Page 20 of 24

Income Taxes

The effective rate for income taxes was 36% for the first ~~six~~nine months of fiscal 2005 ~~and~~compared to 33% for the first nine months of fiscal 2004. For the fiscal year ending September 30, ~~2004,~~2005, Meridian expects the effective tax rate to approximate 36% to 37%.
~~Page 20 of 25~~

Liquidity and Capital Resources:

Comparative Cash Flow Analysis

Meridian’s operating cash flow and financing requirements are determined by analyses of operating and capital spending budgets and consideration of acquisition plans. Meridian has historically maintained ~~line of~~ credit facility availability that Meridian believes provides flexibility to respond to acquisition opportunities quickly.

Net cash provided by operating activities increased ~~100%~~39% for the first ~~six~~nine months of fiscal 2005 compared to the first ~~six~~nine months of fiscal 2004. The net earnings increase of ~~30%~~41% for the first ~~lix~~nine months of fiscal 2005 and ~~changes in investments in receivables~~timing of income tax payments led to the overall increase in net cash provided by operating activities.

Net cash used for investing activities increased to ~~$8,388,000~~$9,795,000 for the first ~~six~~nine months of fiscal 2005 compared to ~~$1,578,000~~$2,508,000 for the first ~~six~~nine months of fiscal 2004. This increase was primarily attributable to the acquisition of OEM Concepts. ($~~6,226,000)~~6,391,000), a higher earnout payment for fiscal 2005 compared to fiscal 2004 for the Viral Antigens acquisition (see discussion below), and increased investment in capital ~~assets.~~
~~Net~~assets for manufacturing operations. Capital asset expenditures for nine months were primarily funded by operating cash ~~provided by financing activities was $3,335,000 for the first six months of 2005, compared to net~~flows.

Net cash used for financing activities was $543,000 for the first ~~six~~nine months of fiscal ~~2004~~2005, compared to $6,545,000 for the first nine months of ~~$2,783,000.~~fiscal 2004. Repayments of debt obligations were ~~$1,141,000~~$2,277,000 for the first ~~six~~nine months of fiscal 2005, including ~~$603,000~~redemptions of $1,410,000 of 7% subordinated convertible debentures ~~that were redeemed on January 14, 2005~~ (see discussion below). Repayments of debt obligations were ~~$5,299,000~~$5,435,000 for the first ~~six~~nine months of fiscal 2004, including redemptions of $4,000,000 of 7% subordinated convertible ~~debentures that were redeemed on March 31, 2004.~~debentures. A substantial portion of the net increase in cash provided by financing activities is attributable to proceeds from the exercise of stock options. Meridian has issued approximately ~~288,000~~322,000 shares of common stock upon exercise of stock options during the first ~~six~~nine months of fiscal 2005, compared to approximately ~~165,000~~169,000 shares during the first ~~six~~nine months of fiscal 2004.

Net cash flows from operating activities are anticipated to fund working capital requirements, debt service, and dividends during fiscal ~~2005.~~
2005 and fiscal 2006.

Capital Resources

Meridian has a $25,000,000 credit facility with a commercial bank. This facility includes $2,500,000 of term debt and capital lease capacity and a $22,500,000 revolving line of credit that expires in September 2007. As of ~~April 30,~~July 31, 2005, there were ~~$2,345,000~~$1,269,000 of borrowings outstanding on the line of credit portion of this facility. These borrowings were used to fund a portion of the purchase price for the OEM Concepts acquisition.

Page 21 of 24

As of September 30, 2004, Meridian had outstanding a total of $16,000,000 principal amount of two series of convertible subordinated debentures. These debentures are convertible, at the option of the holder, into common stock at prices of $16.09 and $14.50 for the 7% and 5% debentures, respectively. ~~These bonds~~Holders began converting debentures during the first quarter of fiscal ~~2005.~~2005, and such conversions continued during the second and third quarters. During December 2004, Meridian also called for redemption $4,000,000 of its 7% debentures. This redemption was completed on January 14, 2005.
~~Page 21 of 25~~

After ~~conversion,~~conversions, the ~~total~~actual amount of this redemption was $603,000. Subsequently, during May 2005, Meridian called for redemption $2,500,000 of its 7% debentures. This redemption was completed on June 3, 2005. After conversions, the actual amount of this redemption was $807,000. The following table summarizes the conversion and redemption activity to date ~~(in~~(amounts in thousands, except share amounts):



	7% Series			5% Series			Total			7% Series			5% Series			Total

Outstanding at September 30, 2004	$	12,111		$	3,889		$	16,000		$	12,111		$	3,889		$	16,000

Converted to 437,160 shares of common stock		(6,729	)		(277	)		(7,006	)
Converted to 601,813 shares of common stock											(9,364	)		(291	)		(9,655	)
Redeemed		(603	)		—			(603	)		(1,410	)		—			(1,410	)

Outstanding at March 31, 2005	$	4,779		$	3,612		$	8,391
Outstanding at June 30, 2005										$	1,337		$	3,598		$	4,935

Meridian has market risk exposure related to interest rate sensitive debt and foreign currency transactions.
~~Page 22 of 25~~

Excluding its revolving line of credit, Meridian has debt obligations in the aggregate amount of ~~$9,978,000~~$6,103,000 outstanding at ~~March 31,~~June 30, 2005, of which ~~$1,587,000~~$1,168,000 bears interest at variable rates. To date, Meridian has not employed a hedging strategy with respect to interest rate risk.

Meridian is exposed to foreign currency risk related to its European distribution operations, including foreign currency denominated intercompany receivables, as well as Euro denominated term debt. The Euro denominated term debt serves as a natural hedge against a portion of the Euro denominated intercompany receivables.

ITEM 4. CONTROLS AND PROCEDURES

As of ~~March 31,~~June 30, 2005, an evaluation was completed under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15(b) and 15d-15(b) promulgated under the Securities Exchange Act of 1934, as amended. Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of ~~March 31,~~June 30, 2005. There has been no change in the Company’s internal control over financial reporting identified in connection with the evaluation of internal control that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
~~Page 23 of 25~~

PART II. OTHER INFORMATION

~~ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS~~

~~Meridian’s Annual Meeting of Shareholders was held on January 20, 2005. Each of the following matters was voted upon and approved by Meridian’s shareholders as indicated below:~~

~~(1) Election of the following six directors:~~

     ~~James A. Buzard, 13,528,377 votes for, zero votes against, and 498,069 abstentions.~~
     ~~John A. Kraeutler, 12,755,947 votes for, zero votes against, and 1,270,499 abstentions.~~
     ~~Gary P. Kreider, 12,567,526 votes for, zero votes against, and 1,458,920 abstentions.~~
     ~~William J. Motto, 12,750,116 votes for, zero votes against, and 1,276,330 abstentions.~~
     ~~David C. Phillips, 13,642,024 votes for, zero votes against, and 384,422 abstentions.~~
     ~~Robert J. Ready, 13,529,524 votes for, zero votes against, and 496,922 abstentions.~~

~~(2) Approval of 2004 Equity Compensation Plan: 8,376,838 votes for, 751,363 votes against,~~
~~4,818,871 broker non-votes and 79,374 abstentions.~~

~~(3) Ratification of appointment of Grant Thornton LLP as Meridian’s independent public~~
~~accountants for fiscal year 2005: 13,925,483 votes for, 78,781 votes against, and 22,182~~
~~abstentions.~~

ITEM 6. EXHIBITS

31.1 — Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a)

31.2 — Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a)

32 — Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Page 2423 of 2524

Signature:

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned there-unto duly authorized.

MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES



Date: ~~May 10,~~August 9, 2005	/S/s/ Melissa Lueke
	Melissa Lueke
	Vice President and Chief Financial Officer

Page 24 of 24

~~Page 25 of 25~~



	Three Months						Six Months						Three Months						Nine Months
	Ended March 31,						Ended March 31,						Ended June 30,						Ended June 30,
	2005			2004			2005			2004			2005			2004			2005			2004

NET SALES	$	23,686		$	20,940		$	42,528		$	39,106		$	25,421		$	18,256		$	67,949		$	57,362

COST OF SALES		10,109			8,907			17,938			16,956			9,735			7,355			27,673			24,311

Gross profit		13,577			12,033			24,590			22,150			15,686			10,901			40,276			33,051


OPERATING EXPENSES:
Research and development		861			1,195			1,694			2,167			1,190			1,050			2,884			3,217
Sales and marketing		4,056			3,268			7,372			6,304			3,647			3,077			11,019			9,389
General and administrative		3,462			3,589			6,859			6,505			5,141			3,408			12,000			9,950

Total operating expenses		8,379			8,052			15,925			14,976			9,978			7,535			25,903			22,556


Operating income		5,198			3,981			8,665			7,174			5,708			3,366			14,373			10,495

OTHER INCOME (EXPENSE):
Interest income		8			—			14			7			2			4			16			11
Interest expense		(225	)		(474	)		(515	)		(840	)		(176	)		(399	)		(691	)		(1,239	)
Other, net		125			25			149			15			(19	)		(4	)		130			56

Total other income (expense)		(92	)		(449	)		(352	)		(818	)		(193	)		(399	)		(545	)		(1,172	)


Earnings before income taxes		5,106			3,532			8,313			6,356			5,515			2,967			13,828			9,323

INCOME TAX PROVISION		1,910			1,243			3,007			2,272			2,017			810			5,024			3,082


NET EARNINGS	$	3,196		$	2,289		$	5,306		$	4,084		$	3,498		$	2,157		$	8,804		$	6,241


BASIC EARNINGS PER COMMON SHARE	$	0.20		$	0.15		$	0.35		$	0.28		$	0.22		$	0.14		$	0.57		$	0.42

DILUTED EARNINGS PER COMMON SHARE	$	0.20		$	0.15		$	0.34		$	0.27		$	0.22		$	0.14		$	0.55		$	0.41

AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — BASIC		15,646			14,869			15,346			14,821			15,768			14,899			15,478			14,846

DILUTIVE COMMON STOCK OPTIONS		462			415			482			404
DILUTIVE EFFECT COMMON STOCK OPTIONS														433			361			450			390


AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — DILUTED		16,108			15,284			15,828			15,225			16,201			15,260			15,928			15,236


ANTI-DILUTIVE SECURITIES:
Common stock options		1			138			73			187			—			198			1			190
Shares from convertible debentures		546			1,021			546			1,021			331			1,021			331			1,021

DIVIDENDS DECLARED PER COMMON SHARE	$	0.12		$	0.10		$	0.22		$	0.19		$	0.12		$	0.10		$	0.34		$	0.29


													Three Months						Nine Months
	Three Months						Six Months						Ended June 30,						Ended June 30,
	Ended March 31,						Ended March 31,						2005			2004			2005			2004
	2005			2004			2005			2004

Net income as reported	$	3,196		$	2,289		$	5,306		$	4,084
Net earnings as reported													$	3,498		$	2,157		$	8,804		$	6,241
Stock-based compensation included in net income as reported, after tax		37			—			39			2			69			16			108			19
Pro forma fair value of stock options, after tax		(131	)		(85	)		(188	)		(221	)		(150	)		(70	)		(319	)		(285	)

Pro forma net income	$	3,102		$	2,204		$	5,157		$	3,865		$	3,417		$	2,103		$	8,593		$	5,975


Basic EPS as reported	$	0.20		$	0.15		$	0.35		$	0.28		$	0.22		$	0.14		$	0.57		$	0.42
Stock-based compensation included in net income as reported, after tax		—			—			—			—			—			—			—			—
Pro forma fair value of stock options, after tax		—			—			(0.01	)		(0.02	)		—			—			(0.01	)		(0.02	)

Pro forma basic EPS	$	0.20		$	0.15		$	0.34		$	0.26		$	0.22		$	0.14		$	0.56		$	0.40


Diluted EPS as reported	$	0.20		$	0.15		$	0.34		$	0.27		$	0.22		$	0.14		$	0.55		$	0.41
Stock-based compensation included in net income as reported, after tax		—			—			—			—			—			—			—			—
Pro forma fair value of stock options, after tax		(0.01	)		(0.01	)		(0.01	)		(0.02	)		(0.01	)		—			(0.01	)		(0.02	)

Pro forma diluted EPS	$	0.19		$	0.14		$	0.33		$	0.25		$	0.21		$	0.14		$	0.54		$	0.39



	March 31, 2005				September 30, 2004				June 30, 2005				September 30, 2004
	Gross				Gross				Gross				Gross
	Carrying		Accumulated		Carrying		Accumulated		Carrying		Accumulated		Carrying		Accumulated
	Value		Amortization		Value		Amortization		Value		Amortization		Value		Amortization

Covenants not to compete	$	800	$	800	$	800	$	800	$	800	$	800	$	800	$	800
Core products		3,199		1,571		3,199		1,477		3,199		1,619		3,199		1,477
Manufacturing technologies		5,907		3,194		5,907		3,016		5,907		3,284		5,907		3,016
Trademarks, licenses and patents		1,931		1,385		1,931		1,303		1,931		1,422		1,931		1,303
Customer lists and supply agreements		7,388		3,578		7,368		3,334		7,388		3,693		7,368		3,334
OEM Concepts acquisition*		5,262		88		—		—		5,262		220		—		—

									$	24,487	$	11,038	$	19,205	$	9,930

	$	24,487	$	10,616	$	19,205	$	9,930