Waverly Inc., which went through a wrenching transformation 18 months ago when it jettisoned its printing operations to concentrate on providing medical information, said yesterday that the costly restructuring finally is paying off.

At its annual meeting yesterday, officials of the Baltimore-based medical publisher had an assortment of good news for stockholders: Profits rose sharply in the first quarter of 1995, the company will raise its dividend, and it is developing the first Western-style medical journal in China.

"This is the new Waverly," said William M. Passano Jr., the company's chairman and head of the family that controls most of Waverly's stock.

Earnings for the three months that ended March 31 rose 85 percent over last year's first-quarter profits, to $962,000.

Sales grew 21 percent, to $34.7 million, partly because of the publication of the 26th edition of Stedman's medical dictionary. The journal has racked up $1 million in sales since it was released in March.

As a result of the higher profits, Mr. Passano said, the company will raise its quarterly dividend 1 cent, to 12 cents a share. The new dividend is payable June 12 to shareholders of record May 26.

Waverly, which continued to refocus its operations late last year as it sold its share in a publisher of 20 German medical journals, doesn't plan to sell off any more divisions. Instead, it has budgeted about $4 million for acquisitions this year, company officials said.

The improvements at Waverly haven't gone unnoticed on Wall Street. Waverly's stock price, which closed unchanged yesterday at $34.50, has doubled in the last year.

Among Waverly's largest outside shareholders is Times Mirror Co., which publishes The Sun and The Evening Sun. The Los Angeles-based media company owns 4.9 percent of Waverly's stock.

Joan Caldwell, who heads up development of new products associated with the Stedman's dictionary, drew laughs when she said her goal was "world domination by the year 2000."

In the last two years, she said, Waverly has published 18 different books derived from the complete Stedman's dictionary to help people in various specialties.

Waverly has sold $1 million worth of Stedman's electronic spell-checking programs, and expects sales of its electronic version of the dictionary to reach six figures by 1997.

Company President Edward B. "Ted" Hutton said the company is also excited by its plan to publish a medical journal in China. The first issue should come out this fall, Mr. Hutton said.

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