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Derma Sciences Reports Second Quarter 2008 Results
Date:8/14/2008

PRINCETON, N.J., Aug. 14 /PRNewswire-FirstCall/ -- Derma Sciences, Inc. (OTC Bulletin Board: DSCI), a provider of advanced wound care products, announced results today for the second quarter and first six months ended June 30, 2008. Sales were up by 75.4%, reflecting the increased volume and distribution capacity provided by the Company's new First Aid Division as well as the increased sales of its new flagship product, MEDIHONEY(R). For the second quarter in 2008, the company reported sales of $13,083,966, up from $7,461,258 during the same period last year, and continuing an overall upward movement from quarter to quarter.

Commenting on the increases, CEO Ed Quilty said, "Now that the integration is almost complete, we are very excited about the sales and distribution channels that we have created for our new line of products. MEDIHONEY sales were $617,000 for the first two quarters and monthly sales are growing steadily. We sold $152,000 just in the month of July, which is an excellent result for a new dressing. We have two new MEDIHONEY products out on the market and several new products ready to be launched in the months ahead. XTRASORB(TM), our new super-absorbent dressing (which complements the MEDIHONEY products) is due out in September, MOBILITY1(TM), our portable intermittent compression device, will be available in October, and we are in the final phase of preparing to launch a novel off-loading device for diabetic foot ulcers."

Sales were also augmented by Derma Science's expanding sales force, which now numbers thirteen direct sales people, as opposed to only two during the same period last year. Expectations are that the sales force will continue to grow as time taken for a new rep to become profitable is identified, and revenue generated by increased sales of MEDIHONEY and the new product lines help to make the sales force more self-sustaining.

Losses for the second quarter of 2008 were in line with the Company's expectations and continued to reflect ongoing expenses related to the First Aid Division acquisition as well as "one-off" transition costs. Also, several growth and marketing initiatives were taken during the quarter to increase the company's presence in the market. The company reported a net loss of $1,270,488, or $(0.03) per share, compared to a net loss of $109,563, or $(0.00) per share, for the second quarter of 2007. These losses represent a $269,000 EBITDA improvement over the first quarter of 2008, and are consistent with the kind of investment that must be made in a direct selling organization ahead of revenue. They also reflect higher production costs incurred in the First Aid Division, which should be significantly reduced in subsequent quarters.

"We are still absorbing some of the costs involved in the transition process: we have been carrying low margins on our First Aid Division products; however, both margins and sales have increased this quarter and efficiencies are likely to improve even more as we integrate our products and move more of our production to more cost efficient locations," Quilty said.

About Derma Sciences

Derma Sciences is a global manufacturer and marketer of advanced wound-care products. Its key product, MEDIHONEY, is sold throughout the world by Derma Sciences and Comvita New Zealand -- the licensor of the patented honey-based technology -- and is the leading brand of honey-based dressings for the management of wounds and burns. The product has been shown to be effective in a variety of wounds and burns, and was recently the focus of a large-scale randomized controlled trial on leg ulcers. Derma has two products in development: the BIOGUARD(TM) line of barrier gauze dressings, and DSC127, the company's novel angiotensin analog for accelerated wound healing and scar reduction. The barrier technology was licensed from Quick-Med in Q1 of 2007 and is pending its initial FDA marketing clearance. DSC127 was licensed from The University of Southern California in Q4 of 2007 and is entering into a Phase II study, with anticipated initial patient enrollment to begin in Q3 of 2008. For more information about Derma Sciences, Inc., visit its home page on the Internet at http://www.dermasciences.com.

Forward-looking Statements

Statements contained in this release that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate" or "continue" are intended to identify forward-looking statements. Readers are cautioned that certain important factors may affect the Company's actual results and could cause such results to differ materially from any forward-looking statements which may be made in this release or which are otherwise made by or on behalf of the Company. Factors which may affect the Company's results include, but are not limited to, product demand, market acceptance, impact of competitive products and prices, product development, completion of an acquisition, commercialization or technological difficulties, the success or failure of negotiations and trade, legal, social and economic risks. Additional factors that could cause or contribute to differences between the Company's actual results and forward-looking statements Include but are not limited to, those discussed in the Company's filings with the Securities and Exchange Commission.

Contact: Derma Sciences, Inc. Allen & Caron Inc

Edward J. Quilty Rudy Barrio (US Investors)

Chairman and CEO r.barrio@allencaron.com

equilty@dermasciences.com

(609) 514-4744 Brian Kennedy (media)

brian@allencaron.com

(212) 691-8087

- FINANCIAL TABLES FOLLOW -

DERMA SCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED

Three months ended Six months ended

June 30, June 30,

2008 2007 2008 2007

Net sales $13,083,966 $7,461,258 $24,808,788 $15,427,055

Cost of sales 9,464,470 4,796,060 17,980,634 9,957,429

Gross Profit 3,619,496 2,665,198 6,828,154 5,469,626

Selling, general

and administrative 4,572,077 2,589,957 8,958,943 5,258,111

Research and

development 106,200 - 154,308 125,000

Total operating

expenses 4,678,277 2,589,957 9,113,251 5,383,111

Operating (loss)

income (1,058,781) 75,241 (2,285,097) 86,515

Other expense, net:

Interest expense 232,572 47,564 497,487 97,810

Other (income)

expense, net (29,092) 23,141 (20,478) 49,698

Total other

expense, net 203,480 70,705 477,009 147,508

(Loss) income before

provision for

income taxes (1,262,261) 4,536 (2,762,106) (60,993)

Provision (benefit)

for income taxes 8,227 114,099 (81,830) 187,523

Net Loss $(1,270,488) $(109,563) $(2,680,276) $(248,516)

Loss per common

share- basic and

diluted $(0.03) $(0.00) $(0.07) $(0.01)

Shares used in

computing loss per

common share - basic

and diluted 40,073,710 25,258,335 37,055,958 25,252,498


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SOURCE Derma Sciences, Inc.
Copyright©2008 PR Newswire.
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