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Safeguard Scientifics Announces Third Quarter 2012 Financial Results

Safeguard Scientifics, Inc. (NYSE:SFE), a holding company that builds value in growth-stage life sciences and technology companies, today announced that its consolidated net loss for the three months ended September 30, 2012 was $8.8 million, or $0.42 per share, compared with net income of $22.3 million, or $1.07 per share, for the same period in 2011. For the nine months ended September 30, 2012, the consolidated net loss was $28.6 million, or $1.36 per share, versus net income of $135.1 million, or $6.52 per share, for the same period in 2011.

As a result of the continued momentum at Safeguard’s partner companies, 2012 aggregate partner company revenue guidance was increased to a range of $185 million to $190 million. This represents an increase of 33% to 37% as compared to $139.2 million in 2011, and an approximate increase of 15% as compared to initial 2012 revenue guidance of $160 million to $165 million. Results for Safeguard partner companies are reported on a one-quarter lag basis.

“Progress took many forms at Safeguard during the third quarter,” said Peter J. Boni, President and CEO of Safeguard. “Our partner companies continue to grow, mature and achieve financial and strategic milestones. Combined with Safeguard’s value-add support at the holding company level, our partner companies are well positioned and we remain encouraged by our prospects to realize value in the target range consistent with our recent results. In the meantime, the Safeguard team remains nimble and opportunistic. We are focused on enhancing the Company’s financial strength and flexibility, as well as improving shareholder value.”

“In the aggregate, we have deployed $188.3 million of capital into our 16 current partner companies at September 30, 2012,” said Stephen T. Zarrilli, Senior Vice President and CFO at Safeguard. “Our net cash, cash equivalents and marketable securities at September 30, 2012 totaled $183.1 million after subtracting the total carrying value of debt outstanding of $46.2 million. Cash used in operating activities was $3.0 million for the three months ended September 30, 2012, compared to $3.2 million for the comparable period in 2011. We project aggregate annual 2012 use of cash to be between $65 million and $85 million, which is below our original projected range of $100 million to $150 million. Cash used in operating activities for 2012 is projected to be within a range of $17.0 million to $17.5 million.”

LIFE SCIENCES PARTNER COMPANIES HIGHLIGHTS

Alverix, Inc. (San Jose, CA – Initial Revenue Stage) produces next-generation instrument and connectivity platforms for diagnostic Point-of-Care (POC) testing. Alverix’s systems enable laboratory class performance in a mobile, inexpensive format, extending testing beyond high volume sites to physician office labs, retail clinics, emerging markets and the home, where immediate results are critical to patient care. Alverix and Becton, Dickinson (BD) have co-developed and BD is commercializing a proprietary point-of-care system that improves near patient infectious-disease diagnoses. During the third quarter, BD received 510(k) clearance from the U.S. Food and Drug Administration (FDA) for nasopharyngeal wash, aspirate and swab in transport media specimens on the BD Veritor TM System for Rapid Detection Flu A + B and respiratory syncytial virus (RSV). This expands the market opportunity to larger volume sites such as hospitals. Alverix remains focused on growing its point-of-care platform business through co-development of near patient test systems with select partners and through development of its own systems. Safeguard has deployed $8.8 million of capital in Alverix since October 2007 and has a 49% primary ownership position.

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