OptiCare Health Systems, Inc. Announces Second Quarter Earnings

WATERBURY, Conn., Aug. 15  /PRNewswire-FirstCall/ -- OptiCare Health Systems, Inc. (AMEX:OPT) announced today that second quarter 2005 net income from continuing operations declined slightly to $377,000 from $453,000 in the second quarter 2004. For the first six months of 2005, net income from continuing operations increased to $728,000 from $602,000 in the comparable 2004 period. Net revenue for the second quarter 2005 declined approximately $0.8 million to $14.9 million from $15.7 million in the second quarter 2004. For the first six months of 2005, net revenues declined approximately $1.0 million to $29.3 million from $30.3 million in the comparable 2004 period. The second quarter and six month results of 2004 reflect results from continuing operations and 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 year-over-year 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 $6.7 million.

"We are pleased to report another profitable quarter 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."

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.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This News Release includes certain statements of the Company that may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and which are made pursuant to the Private Securities Litigation Reform Act of 1995.  Forward-looking statements include statements concerning the financial performance of the Company, as well as plans, objectives, goals, strategies, future events, or performance, and any underlying assumptions and statements that are not statements of historical fact. When used in this News Release, the words "expects," "anticipates," "estimates," "plans," "intends," "projects," "predicts," "believes," "may" or "should," and similar expressions, are intended to identify forward-looking statements.  These forward-looking statements based upon the beliefs of management and assumptions made by and information currently available to the Company.  These statements reflect the current view of the Company's management with respect to future events.  Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements.  Investors are cautioned that all forward-looking statements involve those risks and uncertainties detailed in the Company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 2004.  Forward-looking statements speak only as of the date they are made and the Company 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)

                                  June 30,   December 31,
                                     2005           2004
  ASSETS
  CURRENT ASSETS:
    Cash and cash equivalents      $2,017         $2,228
    Accounts receivable, net        1,994          2,164
    Inventory                       1,717          1,851
    Assets held for sale                -          7,894
    Other current assets              968            681
      TOTAL CURRENT ASSETS          6,696         14,818
   Property and equipment, net      2,291          2,628
   Goodwill                        16,813         16,663
   Intangible assets, net           1,013          1,068
   Assets held for sale,
    non-current                         -          1,150
   Other assets                     3,545          3,487

   TOTAL ASSETS                  $ 30,358       $ 39,814

   LIABILITIES AND STOCKHOLDERS'
    EQUITY CURRENT LIABILITIES:
     Accounts payable              $1,072         $2,727
     Accrued expenses               6,075          6,514
     Current portion of long-term
      debt                          1,594            332
     Current portion of capital
      lease obligations                54             11
     Liabilities of held for sale
      business                          -          5,683
     Other current liabilities      1,058          1,119
       TOTAL CURRENT LIABILITIES    9,853         16,386

  Long-term debt, less current
   portion                          1,949         10,024
  Capital lease obligations, less
   current portion                    133             19
  Other liabilities                 1,342          1,476
      TOTAL NON-CURRENT
       LIABILITIES                  3,424         11,519

  Series B 12.5% mandatorily
   redeemable, convertible
   preferred stock-related party    6,730          6,344

  STOCKHOLDERS' EQUITY:
  Series C & D preferred
   stock-related party                  1              1
  Common stock                         31             31
  Additional paid-in-capital       83,250         79,192
  Accumulated deficit             (72,931)       (73,659)
      TOTAL STOCKHOLDERS' EQUITY   10,351          5,565
  TOTAL LIABILITIES AND
   STOCKHOLDERS' EQUITY           $30,358        $39,814



              OPTICARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
             Condensed Consolidated Statements of Operations
                (Amounts in thousands, except share data)
                               (Unaudited)

                             Three Months         Six Months
                             Ended June 30,      Ended June 30,
                            2005       2004      2005     2004
  NET REVENUES:
    Managed vision        $6,406     $6,266   $12,786  $ 12,317
    Product sales          2,982      3,064     5,966     6,071
    Other services         5,091      5,536     9,771    10,500
    Other income             455        838       773     1,458
      Total net revenues  14,934     15,704    29,296    30,346

  OPERATING EXPENSES:
    Medical claims
     expense               4,768      4,717     9,437     9,361
    Cost of product sales  1,107      1,033     2,086     2,108
    Cost of services       1,924      2,445     3,642     4,509
    Selling, general and
     administrative        6,280      6,509    12,424    12,658
    Depreciation             254        202       496       413
    Amortization              28         28        55        55
    Interest                 171        271       378       588
      Total operating
       expenses           14,532     15,205    28,518    29,692

  Income from continuing
   operations before income
   tax                       402        499       778       654
  Income tax expense          25         46        50        52
  Income from continuing
   operations                377        453       728       602

  Discontinued operations:
    Loss from discontinued
     operations                -     (1,409)        -    (2,522)
    Income tax benefit         -          -         -         -
    Loss from discontinued
     operations                -     (1,409)        -    (2,522)

  Net income (loss)          377       (956)      728    (1,920)
  Preferred stock
   dividends                (197)      (177)     (386)     (351)
  Net income (loss)
   available to common
   stockholders             $180    $(1,133)     $342   $(2,271)

  EARNINGS (LOSS) PER SHARE:
  Earnings Per Share - Basic:
    Income from continuing
     operations
     applicable to
     common stockholders   $0.00      $0.00     $0.00     $0.00
    Income from continuing
     operations
     applicable to
     participating
     securities            $0.01      $0.01     $0.01     $0.01
    Discontinued
     operations            $0.00     $(0.05)    $0.00    $(0.08)
    Net income (loss) per
     common share          $0.01     $(0.04)    $0.01    $(0.07)

  Earnings Per Share - Diluted:
    Income from continuing
     operations            $0.00      $0.01     $0.00     $0.01
    Discontinued
     operations            $0.00     $(0.05)    $0.00    $(0.08)
    Net income (loss)
     per common share      $0.00     $(0.04)    $0.00    $(0.07)


DATASOURCE: OptiCare Health Systems, Inc.



CONTACT:  Vincent S. Miceli, Corporate Controller of OptiCare Health

Systems, Inc., [phone]

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