OPT Opticare Health

OptiCare Health Systems, Inc. Announces Improved First Quarter Earnings WATERBURY, Conn., May 16 /PRNewswire-FirstCall/ -- OptiCare Health Systems, Inc. (AMEX:OPT) announced today that first quarter 2005 net income from continuing operations improved to $351,000 from $149,000 in first quarter 2004. Net revenue for the first quarter 2005 declined approximately $0.2 million to $14.4 million from $14.6 million in 2004. The first quarter 2004 results exclude the results of the Company's CC System's Inc. operation, which was sold in September 2004 and the Distribution Segment, which was sold on January 12, 2005. OptiCare attributed its earnings improvement to increased profitability from its Managed Vision sector resulting from revenue growth coupled with lower expenses on a company-wide basis and lower interest expense due to a significant pay down in senior debt of approximately $6.3 million. "We are pleased to report a profitable quarter with improving net income from continuing operations," commented Christopher J. Walls, OptiCare's President and Chief Executive Officer, who also noted "Our core businesses continue to deliver improved results." The Company also stated that on May 3, 2005, Mark S. Hoffman, a member of our Board of Directors, notified the Company of his intention to resign from our Board of Directors as part of a realignment of portfolio company assignments at Palisade Capital Management, L.L.C. Mr. Hoffman's resignation was effective on May 9, 2005. OptiCare also noted that it is continuing its previously announced merger discussions with Refac. About OptiCare Health Systems, Inc. OptiCare Health Systems, Inc. is an integrated eye care services company focused on vision benefits management and consumer vision services, including medical, surgical and optometric services and optical retail. This press release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding OptiCare's 2005 operating or financial performance. OptiCare's actual results could differ materially from those expressed or indicated by any forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the risk that OptiCare may not retain and attract qualified employees, OptiCare may not realize one or more of the expected benefits and efficiencies of the transaction including its debt reduction or equity investment, the impact of current and future governmental regulations, OptiCare's ability to successfully and profitably manage its operations, and growth of the operations, if any, the risks related to managed care contracting, and the ability of OptiCare to successfully raise capital on commercially reasonable terms, if at all. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including those risks and uncertainties detailed in OptiCare's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K/A for the fiscal year ending December 31, 2004. Forward-looking statements speak only as of the date they are made, and OptiCare undertakes no duty or obligation to update any forward-looking statements in light of new information or future events. OPTICARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Amounts in thousands) (Unaudited) March 31, December 31, 2005 2004 ASSETS CURRENT ASSETS: Cash and cash equivalents $2,691 $2,228 Accounts receivable, net 2,002 2,164 Inventory 1,823 1,851 Assets held for sale - 7,894 Other current assets 1,007 681 TOTAL CURRENT ASSETS 7,523 14,818 Property and equipment, net 2,449 2,628 Goodwill, net 16,738 16,663 Intangible assets, net 1,041 1,068 Assets held for sale, non-current - 1,150 Other assets 3,306 3,487 TOTAL ASSETS $31,057 $39,814 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $1,372 $2,727 Accrued expenses 6,322 6,514 Current portion of long-term debt 1,669 332 Current portion of capital lease obligations 54 11 Liabilities of held for sale business - 5,683 Other current liabilities 1,168 1,119 TOTAL CURRENT LIABILITIES 10,585 16,386 Long-term debt, less current portion 2,235 10,024 Capital lease obligations, less current portion 111 19 Other liabilities 1,422 1,476 TOTAL NON-CURRENT LIABILITIES 3,768 11,519 Series B 12.5% mandatorily redeemable, convertible preferred stock-related party 6,533 6,344 STOCKHOLDERS' EQUITY: Series C & D preferred stock-related party 1 1 Common stock 31 31 Additional paid-in-capital 83,447 79,192 Accumulated deficit (73,308) (73,659) TOTAL STOCKHOLDERS' EQUITY 10,171 5,565 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $31,057 $39,814 OPTICARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (Amounts in thousands, except share data) (Unaudited) Three Months Ended March 31, 2005 2004 NET REVENUES: Managed vision $6,380 $6,051 Product sales 2,984 3,007 Other services 4,680 4,964 Other income 318 620 Total net revenues 14,362 14,642 OPERATING EXPENSES: Medical claims expense 4,669 4,644 Cost of product sales 979 1,075 Cost of services 1,718 2,064 Selling, general and administrative 6,144 6,149 Depreciation 242 211 Amortization 27 27 Interest 207 317 Total operating expenses 13,986 14,487 Income from continuing operations before income tax 376 155 Income tax expense 25 6 Income from continuing operations 351 149 Discontinued operations: Loss from discontinued operations - (1,113) Income tax benefit - - Loss from discontinued operations - (1,113) Net income (loss) 351 (964) Preferred stock dividends (189) (174) Net income (loss) available to common stockholders $162 $(1,138) EARNINGS (LOSS) PER SHARE: Earnings Per Share - Basic: Income from continuing operations $0.00 $0.00 Discontinued operations $0.00 $(0.04) Net income (loss) per common share $0.00 $(0.04) Earnings Per Share - Diluted: Income from continuing operations $0.00 $0.00 Discontinued operations $0.00 $(0.04) Net income (loss) per common share $0.00 $(0.04) DATASOURCE: OptiCare Health Systems, Inc. CONTACT: William A. Blaskiewicz, CFO of OptiCare Health Systems, Inc., +1-203-596-2236 Web site: http://www.opticare.com/

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