OptiCare Reports Fourth Quarter and Year End 2004 Financial Results

OptiCare Reports Fourth Quarter and Year End 2004 Financial
Results 


WATERBURY, Conn., March 31  /PRNewswire-FirstCall/ -- OptiCare Health Systems,
Inc. (AMEX:OPT) announced today for the fourth quarter ended December 31, 2004,
total net revenue on a continuing operations basis increased approximately 3.9%
to $14,378,000 from $13,842,000 in the same period in 2003. For the full year,
total net revenue on a continuing operations basis decreased approximately 3.6%
to $58,903,000 from approximately $61,099,000 in 2003.  Results from continuing
operations exclude the Company's Distribution Segment which was sold on January
12, 2005.

OptiCare also reported income from continuing operations for the fourth quarter
ended December 31, 2004 of $286,000 compared to a loss of $640,000 for the
fourth quarter 2003.  For the year ended December 31, 2004, OptiCare reported
income from continuing operations of $38,000 compared to a loss from continuing
operations of $7,053,000 for the year ended December 31, 2003.  The loss in
2003 resulted primarily from a one-time charge of $1,896,000 related to an
early extinguishment of debt and the write-off of $4,927,000 in deferred tax
assets.

"Our 2004 operating results demonstrate that the Company continues to focus on
its core businesses of Consumer Vision and Managed Vision and has established a
solid foundation to build upon," stated, Christopher J. Walls, OptiCare's
President and Chief Executive Officer.

In addition, on January 12, 2005, OptiCare closed a series of transactions
which resulted in a significant debt reduction while increasing its equity.
Taken together, these transactions lowered OptiCare's long-term debt and
accounts payable by approximately $6,145,000 and $1,530,000, respectively, and
increased its equity by approximately $4,445,000.  The transactions included,
among other things, the following:

   * Palisade Concentrated Equity Partnership, L.P., OptiCare's majority
     stockholder, and Linda Yimoyines, the spouse of OptiCare's Chairman and
     former Chief Executive Officer, purchased for approximately $4,445,000
     of OptiCare's Series D Preferred Stock;

   * OptiCare sold, effective December 31, 2004, substantially all of the
     assets and certain liabilities of its Distribution Division, which
     consisted of Wise Optical and its Optical Buying Group, for an
     aggregate purchase price of approximately $4,150,000, less a working
     capital adjustment of approximately $575,000 and closing costs of
     approximately $349,000, to Wise Optical, LLC and AECC/Pearlman Buying
     Group, LLC, both entities formed by OptiCare's Chairman and former
     Chief Executive Officer; and

   * OptiCare amended the terms of its revolving credit, term loan and
     security agreement with OptiCare's senior lender, to reduce the
     tangible net worth covenant for December 2004 and January 2005 from
     ($3,000,000) to ($6,500,000).  Without this amendment, OptiCare would
     have been in violation of the tangible net worth covenant at December
     31, 2004.  Under the revolving credit, term loan and security
     agreement, as amended; OptiCare must maintain a tangible net worth of
     at least ($3,000,000) million after February 1, 2005.



"The recent sale of our Distribution Segment and the issuance of the Series D
Preferred Stock significantly lowered our debt, increased stockholders' equity
and will reduce our debt service on a prospective basis which should improve
the Company's financial performance in 2005," stated Mr. Walls.

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 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

                       Consolidated Balance Sheets
         (Amounts In Thousands, Except Share And Per Share Data)


                                                            December 31,
                                                       2004           2003
  ASSETS
  CURRENT ASSETS:
   Cash and cash equivalents                         $2,228         $1,695
   Accounts receivable, net                           2,164          2,044
   Inventories                                        1,851          1,773
   Assets held for sale                               7,894         11,578
   Notes receivable                                      82            105
   Other current assets                                 599            354
     Total Current Assets                            14,818         17,549

  Property and equipment, net                         2,628          2,761
  Goodwill                                           16,663         16,565
  Intangible assets, net                              1,068          1,179
  Assets held for sale, non-current                   1,150          4,670
  Deferred debt issuance costs, net                     342            398
  Notes receivable, less current portion                734            791
  Restricted cash                                     1,413          1,158
  Other assets                                          998            784
    TOTAL ASSETS                                   $ 39,814        $45,855

  LIABILITIES AND STOCKHOLDERS' EQUITY
  CURRENT LIABILITIES:
   Accounts payable                                   2,727            734
   Claims payable and claims incurred but not
    reported                                          1,897          1,534
   Accrued salaries and related expenses              2,743          2,186
   Accrued expenses                                   1,874          1,184
   Current portion of long-term debt                    332         10,818
   Current portion of capital lease obligations          11             10
   Liabilities of held for sale business              5,683          6,755
   Other current liabilities                          1,119            407
    Total Current Liabilities                        16,386         23,628

  NON-CURRENT LIABILITIES:
   Long-term debt, less current portion              10,024          1,775
   Capital lease obligations, less current portion       19             --
   Other liabilities                                  1,476            405

     Total Non-Current Liabilities                   11,519          2,180

  COMMITMENTS AND CONTINGENCIES (Notes 10, 12, and 19)

  SERIES B 12.5% REDEEMABLE, CONVERTIBLE PREFERRED
  STOCK AT AGGREGATE LIQUIDATION PREFERENCE-RELATED
  PARTY                                               6,344          5,635

  STOCKHOLDERS' EQUITY:
  Series C Preferred Stock, $.001 par value
  ($16,251 aggregate liquidation preference);
    406,158 shares issued and outstanding at
     December 31, 2004 and December 31, 2003,
      respectively                                        1              1
  Common Stock, $0.001 par value; 150,000,000 shares
   authorized; 30,638,283 and 30,386,061 shares issued
    and outstanding at December 31, 2004 and 2003,
     respectively                                        31             30
  Additional paid-in-capital                         79,192         79,700
  Accumulated deficit                               (73,659)       (65,319)

    TOTAL STOCKHOLDERS' EQUITY                        5,565         14,412
  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $39,814        $45,855


              OptiCare Health Systems, Inc. And Subsidiaries
             Condensed Consolidated Statements Of Operations
                (Amounts In Thousands, Except Share Data)


                               Three Months             Twelve Months
                             Ended December 31,      Ended December 31,

                            2004         2003         2004         2003
                               (Unaudited)
  NET REVENUES:
   Managed vision         $ 6,631      $ 6,104      $25,495     $ 28,111
   Product sales            2,649        2,745       11,580       11,295
   Other services           4,635        4,989       19,907       18,971
   Other income               463            4        1,921        2,722
    Total net revenues     14,378       13,842       58,903       61,099

  OPERATING EXPENSES:
   Medical claims expense   4,882        4,749       19,156       22,000
   Cost of product sales      927        1,056        4,128        3,837
   Cost of services         1,948        2,080        8,322        8,001
   Selling, general and
    administrative          5,777        5,842       25,053       24,165
   Loss from early
    extinguishment of debt     --           48           --        1,896
   Depreciation               203          335          848        1,168
   Amortization                31           27          117          114
   Interest                   304          330        1,190        2,044
     Total operating
      expenses             14,072       14,467       58,814       63,225

  Income (loss) from
   continuing operations
    before tax                306         (625)          89       (2,126)
  Income tax expense           20           15           51        4,927

  Income (loss) from
   continuing operations      286         (640)          38       (7,053)

  Discontinued operations:
  Loss from discontinued
   operations, net of
    income tax             (1,131)      (1,220)       (3,973)     (5,300)

  Loss on disposal of
   discontinued operations (3,401)          --        (4,405)         --

  Loss from discontinued
   operations              (4,532)      (1,220)       (8,378)     (5,300)

  Net loss                 (4,246)      (1,860)       (8,340)    (12,353)

   Preferred stock
    dividends                (181)        (159)        (709)        (618)

  Net loss available to
   common stockholders   $ (4,427)    $ (2,019)     $(9,049)   $ (12,971)


  EARNINGS (LOSS) PER SHARE:
  Income (loss) from
   continuing operations:
    Basic                   $0.00      $ (0.03)     $ (0.02)     $ (0.25)
    Diluted                 $0.00      $ (0.03)     $ (0.02)     $ (0.25)
  Loss from discontinued
   operations:
    Basic                 $ (0.15)     $ (0.04)     $ (0.28)     $ (0.18)
    Diluted               $ (0.15)     $ (0.04)     $ (0.28)     $ (0.18)
  Net loss:
    Basic                 $ (0.14)     $ (0.07)     $ (0.30)     $ (0.43)
    Diluted               $ (0.14)     $ (0.07)     $ (0.30)     $ (0.43)


DATASOURCE: OptiCare Health Systems, Inc.



CONTACT:  William A. Blaskiewicz, Chief Financial Officer of OptiCare

Health Systems, Inc., [phone]

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