MTS Announces Status of OnDemand(R) Machine Contract, Revises Fiscal Year 2008 Financial Performance Expectations and Provides F

  
    
  
  
    
      MTS Medication Technologies, Inc. (“MTS”) 
      (AMEX:MPP) today announced that shipments of OnDemand machines to its 
      largest customer, pursuant to an agreement entered into in May 2007, had 
      resumed in March 2008, and there are currently 13 machines that have 
      been delivered to various locations throughout the country. The customer 
      recently acknowledged the acceptance of the first OnDemand Express II™ 
      upon the equipment meeting its performance specifications.
    
    
      In December, the Company suspended deliveries of OnDemand machines under 
      the agreement so that resources could be dedicated to development and 
      training in order to demonstrate production performance of both the 
      Express II and AccuFlex™ machines previously 
      installed.
    
    
      Todd E. Siegel, MTS President and C.E.O., says, “We 
      are very encouraged by the fact that Omnicare has now accepted the first 
      machine. Although the process of installing, debugging, training and 
      working with our customer to achieve mutually agreeable performance 
      criteria for our OnDemand machines has taken longer than we had 
      anticipated, we believe that the acceptance of the first machine will 
      lead to acceptance of the others at a more rapid pace. We are continuing 
      to deliver machines, dedicate significant resources and work 
      cooperatively with our customer to achieve the results we expected when 
      we initiated our agreement for the sale of 24 OnDemand systems.
    
    
      “We believe Omnicare is committed to this 
      project, and their actions and comments reinforce this belief. We have 
      made great progress with our technology and demonstrated that the system 
      can meet, and at times exceed, the performance specifications in the 
      agreement. The first system installed required significant software 
      enhancements and an extended hardware debug period. We identified and 
      implemented certain improvements and are now delivering these 
      improvements to all machines in the field.”
    
    
      In February 2008, the Company also announced that its financial results 
      for the fiscal year that ended on March 31, 2008 would be affected by, 
      among other things, the revenue and gross profit associated with 
      OnDemand machines delivered to its largest customer. As a result of the 
      fact that no revenue or gross profit associated with these machines will 
      be recorded for the fiscal year ended on March 31, 2008, as well as 
      other factors, the financial results that the Company previously 
      anticipated will not be achieved. Revenue and earnings per diluted 
      common share for the fiscal year ended March 31, 2008 are now expected 
      to be approximately $57.8 million and $0.30 - $0.32, respectively. Some 
      of the other factors that have contributed to these revised expectations 
      involve lower than anticipated revenue and gross profit associated with 
      other OnDemand machine sales, the timing of orders for consumable 
      products from wholesalers and certain unusual product quality issues 
      related to consumable products sold in Europe.
    
    
      Looking forward to fiscal year 2009, the core business serving the 
      long-term care market in the U.S. is estimated to grow approximately 9 
      percent. This growth is primarily the result of the demographics in the 
      U.S., with an aging population and resultant increase in the amount of 
      medication dispensed to residents of skilled nursing and assisted living 
      facilities.
    
    
      Continued double digit growth in Europe, primarily fueled by more 
      penetration of the long-term care and community pharmacy markets in the 
      U.K., Germany and France is expected, and overall European revenue is 
      anticipated to increase by 25 - 35 percent as that penetration continues 
      and automation products are introduced. In addition, the top line should 
      benefit from approximately $14 million of revenue associated with the 
      Omnicare OnDemand contract.
    
    
      Overall gross profit margins are expected to decline in fiscal year 2009 
      because of the effect that the Omnicare OnDemand contract will have, 
      although gross margins on consumable products are expected to remain 
      stable in fiscal year 2009 versus fiscal year 2008. As investment in 
      automation products, retail pharmacy and nutritional supplements markets 
      continue, SG&A costs will rise.
    
    
      As a result of the above, earnings per diluted common share are 
      anticipated to increase in fiscal year 2009 by approximately 25 - 35 
      percent. However, new initiatives in the retail pharmacy market, as well 
      as the launch of the MedTimes system, may begin to provide a benefit 
      toward the end of this fiscal year and potentially provide additional 
      incremental revenue and net income.
    
    
      Siegel concludes, “Although our financial 
      results for the fourth quarter were impacted by delays in acceptance of 
      OnDemand machines and certain other events, we want to reassure 
      stockholders that our business is healthy and fundamentally sound. The 
      timing of the recognition of revenue and gross profit from the Omnicare 
      contract has been delayed, but we anticipate completing all the 
      installations by the end of our third quarter. In addition, consumable 
      products continue to contribute very stable product margins.”
    
    
      The Company expects to release the results of operations for the fourth 
      quarter and fiscal year that ended on March 31, 2008 during the week 
      ending June 27, 2008.
    
    
      About MTS
    
    
      Founded in 1984, MTS Medication Technologies (www.mts-mt.com) 
      is an international provider of medication compliance packaging systems 
      designed to improve medication dispensing and administration. MTS 
      manufactures automated packaging machines and related consumables for 
      prescription medications and nutritional supplements. The Company serves 
      approximately 8,000 pharmacies worldwide.
    
    
      This press release contains forward-looking statements within the 
      meaning of that term in Section 27A of the Securities Act of 1933 and 
      Section 21E of the Securities Exchange Act of 1934. Additional 
      written or oral forward-looking statements may be made by the Company 
      from time to time, in filings with the Securities and Exchange 
      Commission or otherwise. Statements contained herein that are not 
      historical facts are forward-looking statements made pursuant to the 
      safe harbor provisions described above. Forward-looking 
      statements may include, but are not limited to, projections of revenue, 
      income or losses, the value of contracts, capital expenditures, plans 
      for future operations, the elimination of losses under certain programs, 
      financing needs or plans, compliance with financial covenants in loan 
      agreements, plans for sale of assets or businesses, plans relating to 
      products or services of the Company, assessments of materiality, 
      predictions of future events and the effects of pending and possible 
      litigation, as well as assumptions relating to the foregoing. In 
      addition, when used in this discussion, the words “anticipates”, 
      “estimates”, “expects”, 
      “intends”, “plans” 
      and variations thereof and similar expressions are intended to identify 
      forward-looking statements. In particular, all statements 
      regarding the future acceptance of OnDemand machines are forward-looking 
      statements.
    
    
      Forward-looking statements are inherently subject to risks and 
      uncertainties, some of which cannot be predicted or quantified based on 
      current expectations. Consequently, future events and actual 
      results could differ materially from those set forth in, contemplated 
      by, or underlying the forward-looking statements contained herein. Statements 
      in the Press Release describe factors, among others, that could 
      contribute to or cause such differences. Other factors that could 
      contribute to or cause such differences include, but are not limited to, 
      unanticipated increases in operating costs, 
      labor disputes, customer rejection of any installed OnDemand 
      machine, capital requirements, increases in borrowing costs, product 
      demand, pricing, market acceptance, hurricanes and other natural 
      disasters, intellectual property rights and litigation, risks in product 
      and technology development and other risk factors detailed in the Company’s 
      Securities and Exchange Commission filings.
    
    
      Readers are cautioned not to place undue reliance on any 
      forward-looking statements contained herein, which speak only as of the 
      date hereof. The Company undertakes no obligation to publicly 
      release the result of any revisions of these forward-looking statements 
      that may be made to reflect events or circumstances after the date 
      hereof or to reflect the occurrence of unexpected events.