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Nutrition 21 Reports Fiscal Second Quarter 2008 Financial Results
Date:2/11/2008

PURCHASE, N.Y., Feb. 11 /PRNewswire-FirstCall/ -- Nutrition 21, Inc. (Nasdaq: NXXI), the developer and marketer of nutritional supplements under the Chromax(R), Diabetes Essentials(TM) and Iceland Health(R) brands that help consumers manage blood sugar levels, improve cardiovascular health, enhance memory and reduce chronic joint pain, today announced financial results for the second quarter of fiscal year 2008 ended December 31, 2007.

The Company reported a 43% increase in total revenues to $13.0 million compared to $9.1 million in the comparable quarter a year ago. For the quarter, the Company's operating loss of $2.8 million represents a $1.6 million improvement over the year-ago period. Financial results for the quarter were impacted by a $2.4 million increase in advertising and promotion to support the launch of new products and a $0.7 million increase in net interest expense. Net loss for the quarter was $3.8 million, or $(0.06) per fully diluted share, compared to the net loss of $4.7 million, or $(0.08) per fully diluted share in the second quarter of fiscal year 2007.

Total revenues for the six months ended December 31, 2007 increased 83% to $25.2 million compared to $13.8 million in the same period a year ago. The Company's six-month operating loss was $6.5 million which is a $1.5 million improvement over the prior year. Net loss for the six months ended December 31, 2007 was $7.9 million, or $(0.13) per fully diluted share, compared to $8.8 million, or $(0.16) per fully diluted share, in the comparable period a year ago.

Paul Intlekofer, president and chief executive officer of Nutrition 21, Inc., said, "We are pleased with the progress that was achieved during the quarter in terms of growing revenues strongly while meaningfully reducing our operating loss. Going forward, we look to make consistent progress on top-line revenues, while we place continued emphasis on achieving profitability in an optimal timeframe."

"We are particularly pleased that during the quarter our Core4Life(TM) Advanced Memory Formula(TM) product is the fastest growing product in its segment at one of the nation's leading drugstore chains. In January we increased our distribution of Advanced Memory Formula by an additional 6,500 retail store locations, bringing the total number of retail stores locations to 20,500. As the median age of the U.S. population continues to increase, our focus group studies with middle-aged participants indicate that there is a strong desire to maintain the highest level of cognitive function and memory. Our Core4Life Advanced Memory Formula is aimed directly at this large and growing market and has been effective in clinical studies.

"Additionally, our new Diabetes Essentials brand continues to grow as awareness of the product line and its benefits begin to take hold. We are also working to develop an additional distribution channel for this product line in order to embed these products within the diabetes community nationwide. We believe that the Diabetes Essentials suite of products offers those suffering with diabetes a unique and pleasant approach to managing their nutritional requirements and improving the quality of their lives on an on-going basis."

Mr. Intlekofer concluded, "We continue to be pleased with the retail acceptance of the Iceland Health products. We also look forward to having our Iceland Health Joint Relief and Iceland Health Omega-3 products featured in displays and/or end-caps at a major national drugstore retailer in the month of March and at another large national drugstore retail chain in the month of April. In January, we increased our distribution channel for Iceland Health Joint Relief products by an additional 7,000 retail store locations, bringing to 23,000 stores offering the product. As focus group studies indicate, maintaining healthy and functional joints is a major concern, particularly within the "Baby Boom" generation, in order to remain as active and independent as possible for as long as possible. As clinical studies indicate, our Iceland Health Joint Relief product delivers the benefits that this active group is looking for. We are dedicated to developing this large and growing market in the years to come."

Conference Call

The Company has scheduled a conference call to discuss the results of the quarter on Tuesday, February 12, 2008, at 8:30AM ET. Interested parties can access the call by dialing (866) 562-9910 or (706) 679-5064, or they can listen via a live Internet web cast, which can be found at http://www.nutrition21.com. A replay of the call is available by visiting http://www.nutrition21.com for the next 30 days or by calling (800) 642-1687 or (706) 645-9291, access code 32156566, through February 15, 2008.

About Nutrition 21

Nutrition 21, Inc. (NASDAQ: NXXI), headquartered in Purchase, NY, is a nutritional bioscience company and the maker of chromium picolinate-based and omega-3 fish oil-based supplements with health benefits substantiated by clinical research. Nutrition 21 holds more than 30 patents for nutrition products and uses. Nutrition 21's portfolio of health and wellness brands include: Chromax(R), Core4Life(TM) Advanced Memory Formula(TM), Diabetes Essentials(TM), Iceland Health(R) Maximum Strength Omega-3 and Iceland Health(R) Joint Relief. The company also manufactures private label supplements and ingredients for third parties. Nutrition 21 distributes its products nationally through more than 29,000 major food, drug and super center retailers as well as internationally. For more information please visit http://www.nutrition21.com.

Safe Harbor Provision

This press release may contain certain forward-looking statements. The words "believe," "expect," "anticipate" and other similar expressions generally identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. These forward-looking statements are based largely on the Company's current expectations and are subject to a number of risks and uncertainties, including without limitation: the effect of the expiration of patents; regulatory issues; uncertainty in the outcomes of clinical trials; changes in external market factors; changes in the Company's business or growth strategy or an inability to execute its strategy due to changes in its industry or the economy generally; the emergence of new or growing competitors; various other competitive factors; and other risks and uncertainties indicated from time to time in the Company's filings with the Securities and Exchange Commission, including its Form 10-K/A for the year ended June 30, 2007. Actual results could differ materially from the results referred to in the forward-looking statements. In light of these risks and uncertainties, there can be no assurance that the results referred to in the forward-looking statements contained in this press release will in fact occur. Additionally, the Company makes no commitment to disclose any revisions to forward-looking statements, or any facts, events or circumstances after the date hereof that may bear upon forward-looking statements.

Financial Table on following pages

NUTRITION 21, INC.

Consolidated Balance Sheets

(in thousands)

(unaudited)

December 31, June 30,

2007 2007

ASSETS (unaudited)

Current assets:

Cash, cash equivalents and

short term investments $9,496 $3,417

Accounts receivable, net 5,476 1,918

Other receivables, net 449 344

Inventories, net 4,153 3,945

Other current assets 1,684 1,369

Total current assets 21,258 10,993

Property and equipment, net 88 64

Patents, trademarks, and other

intangibles, net 2,370 3,271

Goodwill 14,827 14,715

Other intangibles with indefinite lives 5,379 5,379

Other assets 1,402 272

Total Assets $45,324 $34,694

LIABILITIES, AND STOCKHOLDERS' EQUITY

Short-term borrowings $1,747 $---

Accounts payable 4,752 7,085

Accrued expenses 1,528 1,411

Deferred income 2,945 2,929

Total Current Liabilities 10,972 11,425

Long-term debt 2,378 2,342

Deferred income tax liability 2,152 2,152

6% Series I Convertible preferred

stock subject to mandatory redemption 3,054 2,838

8% Series J Convertible preferred stock

subject to mandatory redemption 10,859 ---

Total Liabilities 29,415 18,757

Stockholders' Equity 15,909 15,937

Total Liabilities and Stockholders' Equity $45,324 $34,694

NUTRITION 21, INC.

Consolidated Statements of Operations

(In thousands, except share and per share data)

(unaudited)

Three Months Ended Six Months Ended

December 31, December 31,

2007 2006 2007 2006

Net sales $12,734 $8,968 $24,566 $13,514

Other revenues 275 137 640 273

Total Revenues 13,009 9,105 25,206 13,787

Costs and Expenses

Cost of revenues 3,977 2,858 7,992 4,404

Advertising and

promotion expense 9,705 7,316 19,709 11,684

General and

administrative expense 1,324 2,010 2,409 3,416

Research and development

expense 205 302 514 690

Depreciation and

amortization expense 563 950 1,104 1,631

Total Costs and Expenses 15,774 13,436 31,728 21,825

Operating loss (2,765) (4,331) (6,522) (8,038)

Interest (expense), net (1,051) (345) (1,344) (747)

Loss before income taxes (3,816) (4,676) (7,866) (8,785)

Income taxes 1 3 6 6

Net loss $(3,817) $(4,679) $(7,872) $(8,791)

Basic and diluted

loss per share $(0.06) $(0.08) $(0.13) $(0.16)

Weighted average number

of common shares

outstanding - basic and

diluted 62,061,943 58,037,158 61,758,216 55,194,895

Contacts:

Maryrose Lombardo Lytham Partners, LLC

Nutrition 21, Inc. Joe Diaz, Joe Dorame, Robert Blum

914-701-4525 (602) 889-9700


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SOURCE Nutrition 21, Inc.
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