8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 12, 2006

HEMACARE CORPORATION

(Exact name of registrant as specified in its charter)

California	000-15223	95-3280412
(State or other jurisdiction	(Commission File Number)	(I.R.S. Employer Identification No.)
of incorporation or organization)

21101 Oxnard Street, Woodland Hills, CA 91367

(Address of principal executive offices)      (Zip Code)

(Registrant’s telephone number, including area code): 818-226-1968

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On May 12, 2006, HemaCare Corporation issued a press release announcing financial results for the first quarter of 2006.  A copy is attached as Exhibit 99.1 to this report and is incorporated herein by reference.

On May 12, 2006, HemaCare Corporation held an investor conference call discussing the financial results for the first quarter of 2006. A transcript, of the conference call is attached to this report as Exhibit 99.2 and is incorporated herein by reference.

The information in this Current Report on Form 8-K, including the exhibits, will not be treated as “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934 (the “Exchange  Act”) or otherwise subject to the liabilities of that section.  This information will not be incorporated by reference into a filing under the Securities Act of 1933, or into another filing under the Exchange Act, unless that filing expressly refers to specific information in this report.  The furnishing of the information in this Current Report is not intended to, and does not, constitute a representation that such furnishing is required by Regulation FD or that the information this Current Report contains is material investor information that is not otherwise publicly available.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit Number	Description
99.1	Press Release dated May 12, 2006
99.2	Transcript of the conference call conducted by HemaCare Corporation on May 12, 2006

SIGNATURES

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 hereunto duly authorized.

Date:	May 18, 2006	HEMACARE CORPORATION
		By:	/s/ Robert S. Chilton
			Robert S. Chilton
			Chief Financial Officer

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EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release dated May 12, 2006
99.2	Transcript of the conference call conducted by HemaCare Corporation on May 12, 2006

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EX-99.1

Exhibit 99.1

N E W S  R E L E A S E

For Immediate Release

Contact:	HemaCare Corporation
	Robert S. Chilton, Executive Vice President and Chief Financial Officer
	877-310-0717
	www.hemacare.com

RELEASE DATE:  May 12, 2006

HEMACARE REPORTS FIRST QUARTER 2006 RESULTS

LOS ANGELES - - - HemaCare Corporation (OTC Bulletin Board: HEMA.OB) today reported first quarter 2006 results, with the highest level of first quarter revenue in the Company’s history and its tenth consecutive profitable quarter.  Revenue for the quarter increased $1,104,000, or 15.6%, to $8,187,000 compared with $7,083,000 reported for the same period in 2005. Before the first quarter adoption of Statement of Financial Accounting Standards No 123R (“SFAS 123R”), pro forma net income was $394,000, compared to $276,000 reported for the same quarter of 2005, representing a $118,000 increase, or 42.8%. On a reported basis, the Company’s net income decreased 69.2% to $85,000, or $0.01 earnings per share basic and diluted, compared to $276,000, or $0.03 earnings per share basic and diluted, reported in the first quarter of 2005.  This decrease is the result of non-cash share-based compensation expense of $309,000 relating to the adoption of SFAS 123R.  It is expected that this expense will represent approximately 75% of the total shared-based compensation expense for all of 2006.

Revenue growth was driven by a $748,000, or 13.3%, increase in blood product sales, primarily in California.  In addition, blood services revenue grew $356,000, or 24.3%, compared to the first quarter of 2005, the highest level since the fourth quarter of 2004.  Higher procedure volumes led to the services revenue growth.

Gross profit for the first quarter of 2006 increased 12.5% to $1,648,000 compared to $1,465,000 for the same period in 2005.  Higher blood services procedure volumes and an increase in the gross profit margin of the Company’s blood services segment drove the growth in gross profit.  Blood products gross profit decreased 1.4% due to lower sales volumes in the Company’s Maine operations, increases in regulatory staffing expenses, and an increase in supply costs.

- more -

21101 Oxnard Street, Woodland Hills, CA  91367     •      Phone 818.226.1968     •      Fax 818.251.5300

“The year has started well for HemaCare,” stated Judi Irving, President and Chief Executive Officer of HemaCare.  “We continue to see improvement in blood services operations, top line growth in blood products and customer interest in research products.  New leadership in Maine, and our renewed focus on donor recruitment there, will address this underperforming operation.  The installation of our document control system is nearing completion, and work to implement our new financial system will begin in the second quarter of 2006.  We look forward to significant operating benefits from both of these systems.”

HemaCare will be holding an interactive investor conference call on Friday, May 12, 2006 at 1:00 PM (Eastern Daylight Time).  Judi Irving, President and CEO, and Robert Chilton, Executive Vice President and CFO, will review the first quarter 2006 financial results. To participate in the call, please call 800-309-8563 and ask to join HemaCare’s first quarter earnings conference call, conference number 8684580.  A recording will be available two hours following the call through midnight, May 19, 2006 that can be replayed by calling 800-642-1687, ID number 8684580.  A webcast of the conference call will also be available via our website (www.hemacare.com) after May 19, 2006.

ABOUT HEMACARE CORPORATION

Founded in 1978, HemaCare is a provider of blood products and services to the healthcare industry in the U. S.  HemaCare is licensed by the FDA and accredited by the American Association of Blood Banks.  The Company focuses on providing cost effective, high quality solutions to organizations with a need for blood-related products and services.

This press release contains “forward-looking statements” under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.)  Statements herein that are not historical facts are forward-looking statements pursuant to the safe harbor provisions referenced above. You may also identify forward-looking statements by use of the words “anticipates,” “expects,” “intends,” “plans” and similar expressions.  Forward-looking statements are inherently subject to risks and uncertainties some of which cannot be predicted or quantified.  Such risks and uncertainties include, without limitation the Company’s ability to continue or maintain the improvement in the revenues and margins of its blood products or blood services segment; its ability to continue to control general and administrative expenses as a percent of sales; the  need to successfully complete its operating plan to improve profits; the potential loss of the Company’s lines of credit; the potential inability of the Company to meet future capital needs; changing demand for blood products could affect profitability; market prices might not rise as costs increase; competition may cause a loss of customers and an increase in costs; operations depend on obtaining the services of qualified medical professionals and competition for their services is strong; declining blood donations; the Company’s dependence on reimbursement rates of third party providers; targeted partner blood drives involve higher collection costs; reliance on relatively few vendors for significant supplies and services could affect the Company’s ability to operate; limited access to insurance; the competitive advantage enjoyed by not-for-profit companies; potential changes in the healthcare industry; future technology for blood collection and blood replacement; the impact of heavy regulation in the Company’s industry; potential liability for undetected blood pathogens and other product safety and liability concerns; environmental risks associated with biohazardous substances; the threat of business interruption due to terrorism and the security measures taken in response to terrorism; the provisions of the Company’s charter documents that might delay or prevent an acquisition or sale of the Company; lack of liquidity and market risk associated with OTC Bulletin Board stocks; volatility in stock price; potential dilution that could result from future sales of the Company’s common stock; and the other risks and uncertainties discussed from time to time in the documents HemaCare files with the Securities and Exchange Commission. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.  Consequently, future events and actual results could differ materially from those set forth in, contemplated by, or underlined in the forward-looking statements contained herein.  The Company undertakes no obligation to update any of these forward-looking statements to reflect actual results or events or circumstances after the date hereof.

(Financial Table Follows)

HemaCare Corporation

Condensed Consolidated Data

(Unaudited)

	Three Months Ended March 31,
	2006		2005
Statements of Income
Revenues	$	8,187,000	$	7,083,000
Gross Profit	$	1,648,000	$	1,465,000
General and administrative expenses	$	1,547,000	$	1,189,000
Income before income taxes	$	101,000	$	276,000
Provision for income taxes	$	16,000	$	—
Net income(1)	$	85,000	$	276,000
Basic earnings per share	$	0.01	$	0.03
Diluted earnings per share	$	0.01	$	0.03
Weighted average shares outstanding – basic	8,196,000		8,075,000
Weighted average shares outstanding – diluted	9,128,000		8,805,000

(1) Includes impact of Company’s adoption of SFAS 123R in the three month period ended March 31, 2006 of $309,000 in non-cash compensation expense, and the Company expects this amount will represent 75% of the total option expense for 2006.

	March 31, 2006		December 31, 2005
Balance Sheets
Assets
Cash and cash equivalents	$	2,232,000	$	2,612,000
Other current assets	5,278,000		5,097,000
Non-current assets	3,021,000		2,837,000
Total assets	$	10,531,000	$	10,546,000
Liabilities and Shareholders’ Equity
Current liabilities	$	3,149,000	$	3,551,000
Long-term liabilities	—		7,000
Shareholders’ equity	7,382,000		6,988,000
Total liabilities and shareholders’ equity	$	10,531,000	$	10,546,000

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EX-99.2

Exhibit 99.2

1st Quarter 2006 Earnings Conference Call

Bob Chilton:

Thank you, operator.  With me today is Judi Irving, HemaCare’s President and Chief Executive Officer.  We would like to welcome you to HemaCare’s first quarter 2006 earnings conference call.

Before we begin our presentation, I would like to remind you that during this call there may be forward-looking statements on a number of topics that are based on the Company’s current expectations that are subject to various risks and uncertainties.  Actual results and outcomes could differ materially.  Our press releases and our first quarter 2006 quarterly report on Form 10-Q, as well as our other SEC filings, identify factors that could affect future results.  We encourage you to review these documents for additional information.

And now, I would like to introduce Judi Irving, who will begin with our opening remarks.

Judi Irving:

Thank you, Bob.

Welcome everyone.

Today we announced our results for the first quarter of 2006.  We are pleased to report our tenth consecutive profitable quarter and the highest first quarter revenue in the Company’s 28-year history.

Revenue growth was driven by our California blood product sales and strong results from increased blood services procedures in our major regional locations.  We also are making

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progress in growing our sales to research customers, which remains an important strategic initiative of the Company.

Our results this quarter reflect the first-time adoption of the Statement of Financial Account Standards No. 123R, which we will refer to as 123R on this call.  The bottom line impact of 123R is the recognition of non-cash share-based compensation expense for stock options of $309,000 in the first quarter.  Excluding this charge, our net income was $394,000, an increase of nearly 43% over the first quarter of 2005.  We anticipate that the charge in the first quarter of 2006 for non-cash share-based compensation expense will represent approximately 75% of the total option expense in 2006.  This first quarter weighting of stock option expense is due to the vesting of grants that historically has occurred in the first quarter.

As we have reported previously, we are investing the resources generated by our operations into various infrastructure projects.  We are close to completing the roll out of a document control system, and are beginning the implementation of our new accounting and financial reporting system in the second quarter.  We are also continuing our investments in new facilities and equipment to support the Company’s growth and commitment to quality.

I am proud of the Company’s progress and especially of our employees who have worked so hard for our success.

Bob Chilton will now review the operating results in greater detail.

Bob Chilton:

Thank you, Judi.

HemaCare’s first quarter results produced net income of $85,000, or $.01 basic and fully diluted earnings per share, compared with $276,000 for the same quarter of 2005, or $.03

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basic and fully diluted earnings per share, representing a 69.2% decrease in earnings.  This drop in earnings was the result of the adoption of 123R in the first quarter of 2006.  Prior year earnings were not restated under 123R.  Because this non-cash share-based compensation is not deductible for taxes, proper accounting treatment requires the recognition of a deferred tax asset until optionees exercise their option rights and the Company is able to take the applicable tax deduction.   Since the Company continues to maintain a 100% valuation reserve on its deferred tax assets, none of the tax benefit associated with 123R is reflected in the income statement for the first quarter.  Eliminating the impact of the adoption of 123R from reported net income results in net income of $394,000 in the first quarter of 2006, compared with $276,000 for the same period of 2005, representing an improvement of 42.8%.

Revenue for the quarter increased 15%, to $8.2 million from $7.1 million in the first quarter of 2005.  The improvement in revenue was attributable to an increase in blood products revenue of 13% for the first quarter of 2006 to $6.4 million, and was primarily the result of higher sales volume in California.  In addition, blood services revenue rose 24% to $1.8 million to the highest level since the fourth quarter of 2004.  The increase was primarily attributable to an increase in procedure volumes.  Gross profit reported during the first quarter of 2006 improved 13% to $1.6 million, compared to the same quarter of 2005.  The improvement was attributable to a 75% increase in blood services gross profit compared to the same quarter of 2005, driven by increases in procedure volume.  Blood products gross profit was flat compared to the same quarter of 2005.  This was the result of reduced operational efficiency due to lower sales volumes in the Company’s Maine operations, increases in regulatory staffing expenses, and an increase in supply costs.

General and administrative expenses for the first quarter of 2006 increased 30%, to $1.5 million.  This was primarily the result of the Company’s adoption of 123R that I discussed earlier.  Of the total non-cash share-based compensation recognized by the Company, $300,000 was recorded to general and administrative expenses.  Excluding share-based compensation, general and administrative expenses increased $58,000, or

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4.9%, compared to the first quarter of 2005.  This increase was due to higher non-share-based compensation, liability insurance and bad debt expense.  Excluding share-based compensation, general and administrative expenses represented 15.2% of revenue for the first quarter of 2006, compared to 16.8% of revenue for the first quarter of 2005.

The Company’s balance sheet shows cash and cash equivalents of $2.2 million as of March 31, 2006, compared to $2.6 million as of the end of 2005. Working capital increased approximately $200,000 in the first quarter to $4.4 million, from $4.2 million as of the end of 2005.  The Company reduced debt by $20,000 during the first quarter, with only $68,000 remaining as of March 31, 2006, and no long-term debt outstanding.  We did not utilize any portion of our $2 million available credit facility as of March 31, 2006.

This concludes our opening remarks.  We will now open the line for your questions.  Operator, would you please provide the callers with the necessary instructions.

Operator:	Thank you, sir.
	At this time I would like to remind everyone if you would like to ask a question, press star then the number 1 on your telephone keypad.
	We’ll pause for just a moment to compile the Q&A roster
	Again to ask a question, press star-1
	Your first question comes from the line of Richard Vance.
Richard Vance:	Hi, good quarter. I have a question. Why are you – doing this FSAS 123R? Can you explain that to us?

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Robert Chilton:	Well, we’re required by accounting regulations. The implementation was required for all public companies that have a calendar year-end, which HemaCare does, as of the first quarter of 2006. So it is a regulatory requirement that we record this share-based compensation in this quarter.
Richard Vance:	And how is it going to affect you for the whole year? And then any following years?
Robert Chilton:	Well, we’ll be required to continue to report this kind of share-based compensation for future years. And we expect that the first quarter charge as we mentioned will represent approximately 75% of the total share-based compensation that we’re likely to record for all of 2006.
Richard Vance:	So in other words, that’s going to – you only have 25% of that figure for the rest of the year. Is that it?
Robert Chilton:	That’s our estimate, yes.
Richard Vance:	Okay.
	A second question – you’ve got some leases back in Maine and New York that I saw in the 10-K. And I’m just wondering what kind of revenues do you get out of that area that justifies having those locations that far away from your home base? I mean, does it really make any sense to you? Or — and I see that some of the leases are actually expiring this year.
Judi Irving:	Yes, right. Yes, we keep a close eye on each one of our operating units. And our goal is to make sure that they’re all contributing to our bottom line. Those operations have done well. And we continue to

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	focus on them and we do see that there is some growth opportunities in those areas.
	There are some leases that are coming up. In fact, we’re looking at the New York lease right now. And, you know, so we’re renewing that actually at a rate that’s better than the rate that we have now.
Richard Vance:	And the profitability of these units that are back in Maine and New York, I mean, are they substantial to — enough to justify that those investments?
Judi Irving:	We believe that they are, yes.
Richard Vance:	Okay.
	Maybe somebody else will ask some questions. I’ve got some other questions I’d like to ask later.
Judi Irving:	Okay, thank you.
Operator:	Your next question comes from the line of Terry Dooher.
Terry Dooher:	Yeah, I had a question on – in the news release, you mentioned customer interest in research products. Could you give a little more information or color as to what that is.
Judi Irving:	Yes. Thank you, Terry, for the question.
	We don’t do research as an organization. However, we do supply either biological products to researchers or help them with services.

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	Again, these are services that we are currently offering and products that we currently offer.
	But now instead of our usual base of hospital customers, we would be offering them to research-type customers. These could include educational institutions or pharmaceutical companies, biotech companies.
Terry Dooher:	Okay, thanks.
Operator:	Again if you would like to ask a question, press star-1
	You have a question from Richard Vance.
Richard Vance:	Again, in the proxy statement where your principal shareholders and management, I see these guys, Carnegie and Praetorian and John Egan. Have you heard any more from them or what their intentions are? Are they just straight investors? I’m just wondering what kind of contact you’ve had with them.
Robert Chilton:	We’ve had no recent contacts with them. They have not specifically shared with us what their long-term investment strategies are, but we certainly welcome them as investors to HemaCare and look forward to continuing a long-term relationship with them. But that’s about all I know at this point.
Richard Vance:	Now have there been any other inquiries from any brokerage firms or any other companies with regard to what you’re up to?

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Judi Irving:	We get a number of calls, especially lately because of the movement that we’ve seen in the value of our stock. So we are probably getting more calls I’d say these days than we have in the past.
Richard Vance:	Okay. That’s a very nice way of hedging that, Judi.
	Okay, well that’s about all I have. I think you guys had a good quarter, and can you tell the prospects for the rest of the year? I mean, and I know you don’t project ahead, but with the new facilities that — when are you moving into them? And what’s the outlook?
Judi Irving:	Our new facility should be ready for us to move into towards the end of the year, and think November/December time period.
	And, you know, in terms of projections, you know we don’t do that. But, you know, we keep our eye on the ball and we want to continue to grow the company and focus on improving our profitability.
Richard Vance:	Keep it up. You’re doing a good job. Thank you very much.
Judi Irving:	Thanks Richard.
Robert Chilton:	Thank you.
Operator:	Your next question comes from Al Cooperstone.
Al Cooperstone:	Good afternoon, good quarter.
	What caused the decrease in net income this quarter over the previous quarter?

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Judi Irving:	As we explained, it’s the adoption of this 123R, which is the non-cash compensation expense related to stock options. And as we described, it is weighted to the first quarter where we anticipate that 75% of the expense that we see from that is occurring in the first quarter. And that amount is $309,000 for this quarter.
Al Cooperstone:	Yeah, but last quarter you earned $645,000.
Judi Irving:	Right.
	If you look at our historical trends in terms of quarters, the first quarter is not typically our strongest quarter.
Al Cooperstone:	I see.
Judi Irving:	And you can look at ‘04 and ‘05.
Al Cooperstone:	Okay. Thank you.
Judi Irving:	Thanks.
Robert Chilton:	Thank you.
Operator:	At this time there are no further questions.
Judi Irving:	All right.
	Well, we thank everyone for participating in the call today. Thank you.
Operator:	This concludes today’s HemaCare Corporation conference call. You may now disconnect.

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