OptiCare Health Systems, Inc. Announces Improved First Quarter Earnings

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.,

[phone]



Web site:  http://www.opticare.com/ 

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