Medical Action Industries (MDCI) 8-K Medical Action Industries Reports

Exhibit 99.1

500 Expressway Drive South, Brentwood, NY 11717

Phone: 631.231.4600

www.medical-action.com

CONTACT:	Charles L. Kelly – Chief Financial Officer
	MEDICAL ACTION INDUSTRIES INC.
	(631) 231-4600

FOR IMMEDIATE RELEASE

MEDICAL ACTION INDUSTRIES REPORTS

FIRST QUARTER 2010 FISCAL RESULTS

Company Reports a 43% Increase in Quarterly Net Income;

Gross Margin Improvement Continues

BRENTWOOD, N.Y., August 6, 2009 – Medical Action Industries Inc. (NASDAQ/MDCI), a leading supplier of medical and surgical disposable products, today reported first quarter 2010 results highlighted by stronger net income and gross margin versus the prior year period.

Net sales for the three months ended June 30, 2009 totaled $70,687,000 a decrease of $6,708,000, from the $77,395,000, in net sales reported for the three months ended June 30, 2008. Net income for the first quarter of fiscal 2010 was $3,650,000 or $.23 per basic and diluted share, up 43% versus $2,546,000 or $.16 per basic and diluted share, reported for the comparable three months of fiscal 2009.

Medical Action continued to achieve gains in gross profit, with gross margin for the first quarter of 2010 reaching 23.9% versus 19.9% and 14.0%, respectively, for the previous two quarters, and 19.4% reported in the first quarter of 2009.

“Medical Action is continuing to benefit from the fiscal 2010 opportunities that we outlined last quarter,” said Chief Executive Officer and President Paul D. Meringolo.

“With relative price stability in raw materials and products sourced from China-based vendors, we are currently focused on accelerating our revenue growth and expanding relationships with existing customers. We’re managing competitive changes in the marketplace, including declining hospital admissions, maximizing our sales and marketing teams and continuing to make progress at our Tennessee plant, with new leadership, additional new equipment, and even higher quality and productivity. Given these factors, we remain cautiously optimistic about this fiscal year and our ability to take Medical Action to the next level of growth.”

Medical Action invites its shareholders and other interested parties to attend its conference call at 10:00 a.m. (ET) on August 6, 2009. You may participate in the conference call by calling(888) 868-9080 (domestic) or (973) 935-8511 (international); conference ID #20508783. The conference call will be simultaneously web cast on our website:www.medical-action.com. The complete call and discussion will be available for replay on our website beginning at 1:00 p.m. (ET) on August 6, 2009.

Medical Action is a diversified manufacturer and distributor of disposable medical devices and a leader in many of the markets where it competes. Its products are marketed primarily to acute care facilities in domestic and certain international markets. The Company has expanded its target market to include physician, dental and veterinary office, out-patient surgery centers, long-term care facilities and laboratories. Medical Action’s products are marketed nationally by its direct sales personnel and extensive network of healthcare distributors. The Company has preferred vendor agreements with national and regional distributors, as well as sole and multi-source agreements with group purchasing organizations. Medical Action’s common stock trades on the NASDAQ Global Select Market under the symbol MDCI and is included in the Russell 2000 Index.

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This news release contains forward-looking statements that involve risks and uncertainties regarding Medical Action’s operations and future results. Please see the Company’s filings with the Securities and Exchange Commission, including, without limitation, the Company’s Form 10-K and Form 10-Qs, which identify specific factors that would cause actual results or events to differ materially from those described in the forward-looking statements.

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MEDICAL ACTION INDUSTRIES INC.

Financial Highlights

(dollars in thousands, except per share data)

	For the Three Months Ended
	June 30, 2009		June 30, 2008
	(Unaudited)
Statements of Operations:
Net sales	$	70,687	$	77,395
Cost of sales		53,765		62,345
Gross profit		16,922		15,050
Selling, general and administrative expenses		10,389		10,461
Interest expense, net		470		484
Income before income taxes		6,063		4,105
Income tax expense		2,413		1,559
Net income	$	3,650	$	2,546
Net income per share basic:	$	0.23	$	0.16
Net income per share diluted:	$	0.23	$	0.16

Balance Sheets as of June 30, 2009 and

March 31, 2009 (dollars in thousands)

	June 30, 2009		March 31, 2009
	(Unaudited)
Current Assets:
Cash and cash equivalents	$	2,592	$	3,459
Accounts receivable, net		19,004		21,459
Inventories, net		37,932		43,221
Prepaid expenses and other current assets		4,629		6,404
Total Current Assets		64,157		74,543
Property, plant and equipment, net		40,744		40,313
Goodwill		80,699		80,699
Other intangible assets, net		15,523		15,886
Other assets, net		3,677		3,725
Total Assets	$	204,800	$	215,166
Liabilities and Shareholders’ Equity:
Accounts payable	$	10,258	$	8,190
Accrued expenses		11,371		10,643
Deferred income taxes		14,282		14,282
Total debt		42,842		60,046
Shareholders’ equity		126,047		122,005
Total Liabilities and Shareholders’ Equity	$	204,800	$	215,166
Key Financial Statistics
Current ratio		2.1		2.9
Debt to equity ratio		.34		.49
Book value per share	$	7.86	$	7.61

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