Medical Nutrition USA, Inc. Reports 10% Increase in Branded Product Unit Sales for the Quarter

ENGLEWOOD, NJ--(Marketwire - June 09, 2009) - Medical Nutrition USA, Inc. (NASDAQ: MDNU) today announced financial results for the first fiscal quarter ended April 30, 2009.

First Quarter Fiscal 2010 vs. 2009

-- Branded product revenue increased 8% to $3,112,400 from $2,892,500 on a 10% increase in unit sales offset by lower pricing during the first month of the quarter; -- Total sales increased nearly 4% percent to $3,427,700 from $3,309,600 on higher branded product sales offset by a decrease in private label sales and lower pricing during the first month of the quarter; -- Gross profit increased to $1,817,400 or 53% of sales, from $1,769,400 or 53% of sales; -- Selling, general and administrative expenses decreased to $1,857,900 or 54% of sales, compared to $1,937,400 or 59% of sales; -- Net cash used in operating activities was $16,100 compared to $459,100 provided by operating activities in the same quarter a year ago. The decrease is primarily due to an approximately $200,000 federal tax refund received in the three months ended April 30, 2008, and an increase of approximately $144,000 in bonus payments made during the period related to performance during the fiscal year ended January 31, 2009; -- Net loss was $143,900 or $(0.01) per share compared to a net loss of $121,400 or $(0.01) per share; and -- Strong cash position with approximately $9.6 million in cash and short term investments and no debt. 

“The quarter finished strongly despite getting off to a slow start because of strong distributor buying in January in anticipation of a price increase,” Medical Nutrition USA, Inc.'s Chairman and Chief Executive Officer Frank A. Newman, said. “By April we were back on trend with branded unit sales growth of 14% for the month versus 10% for the quarter, which included record sales of Pro-Stat® AWC.

“Consistent with our practice of developing a new product every 10 - 12 months, in Q1 we launched Pro-Stat® AWC with Citrulline, an enhanced formulation for long-term care residents with advanced wounds, such as pressure ulcers. Citrulline helps sustain the body’s production of nitric oxide, which is essential for effective wound healing. This important enhancement to Pro-Stat® AWC reflects our continuing dedication to developing significant and highly effective new products on a timely basis.

“Evidence as to the effectiveness of Pro-Stat® continues to mount. The June issue of the Journal of The American Dietetic Association (JADA) reports an important new clinical trial on the effects of Pro-Stat® in maintaining nitrogen balance and lean body mass in older women. The growing bulwark of clinical data attesting to the benefits of Pro-Stat is a valuable resource for clinicians and an important competitive advantage.

“We expect total revenue for fiscal 2010 to increase by approximately 16 - 18% as a result of strong branded product sales offset by lower private label sales. Second quarter sales are expected to grow by approximately 14 - 16% compared to the second quarter of the prior year.

“With $9.6 million cash on hand, strong cash flow and no debt we remain well positioned to grow our business organically and also through acquisitions, should suitable opportunities arise. We look forward to continuing our strong performance throughout the remainder of fiscal 2010.”

Conference call

Management will host a conference call on Tuesday, June 9 at 11:00 a.m. EDT to discuss these results, recent activities, corporate news and strategy. A live webcast of the conference call can be accessed through the company’s web site at: www.mdnu.com. The live conference call dial-in number is: 866-379-6256 (United States and Canada) with the ID: 10467555. An archive of the webcast can be accessed through the same link above; and an audio-only replay of the call will be available following the conference call by dialing 800-642-1687 or 706-645-9291 and providing the same ID shown above. The audio-only replay will be available through Thursday, June 11.

About Medical Nutrition USA

Medical Nutrition USA develops and distributes products for the nutritionally at risk who are under medical supervision. Its products are used primarily in long-term care facilities, hospitals, dialysis clinics and bariatric clinics. The Company’s product lines include Pro-Stat®, Fiber-Stat® and UTI-Stat™, as well as private label products. Additional information is available at www.mdnu.com.

This press release contains forward-looking statements that are subject to certain risks and uncertainties. Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed. Risks and uncertainties that could cause or contribute to such material difference include, but are not limited to, general economic conditions, changes in customer demand, changes in trends in the nursing home, renal care, health food and bariatric surgery markets, changes in competitive pricing for products, and the impact of our competitors’ new product introductions. Our future financial condition and results of operations, as well as any forward-looking statements are subject to change and inherent risk and uncertainties. Other important factors that may cause actual results to differ materially from those expressed in forward-looking statements is contained in the Medical Nutrition USA, Inc. Annual Report on Form 10-K for the year ended January 31, 2009 as filed with the Securities and Exchange Commission on April 24, 2009.

 MEDICAL NUTRITION USA, INC. CONDENSED BALANCE SHEETS April 30, January 31, --------------- --------------- 2009 2009 --------------- --------------- (unaudited) ASSETS Current Assets: Cash and cash equivalents $ 9,599,100 $ 9,654,300 Accounts receivable, net of allowance of $62,000 and $65,600, respectively 1,191,600 1,377,400 Inventories 529,100 510,600 Deferred income taxes 405,600 406,500 Prepaid income taxes 9,500 8,300 Other current assets 184,900 191,900 --------------- --------------- Total current assets 11,919,800 12,149,000 Fixed Assets, net of accumulated depreciation and amortization of $374,500 and $345,400, respectively 313,400 318,800 Other Assets: Deferred income taxes 976,600 969,000 Security deposits 15,300 15,300 Investment in Organics Corporation of America 125,000 125,000 Intangible assets, net of amortization 274,100 276,800 --------------- --------------- $ 13,624,200 $ 13,853,900 --------------- --------------- LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable $ 708,200 $ 530,700 Accrued expenses 573,000 967,600 Accrued rebates 54,300 73,700 --------------- --------------- Total current liabilities 1,335,500 1,572,000 --------------- --------------- Stockholders’ Equity: Preferred stock $0.001 par value, 5,000,000 shares authorized; no shares outstanding as of April 30, 2009 and January 31, 2009 -- -- Common stock, $0.001 par value; 20,000,000 shares authorized; 14,190,682 and 14,128,614 shares issued, respectively 14,200 14,100 Additional paid-in-capital 25,219,700 25,067,600 Accumulated deficit (12,641,800) (12,497,900) Less treasury stock, at cost, 99,345 and 98,080 shares, respectively (303,400) (301,900) --------------- --------------- Total stockholders’ equity 12,288,700 12,281,900 --------------- --------------- $ 13,624,200 $ 13,853,900 --------------- --------------- MEDICAL NUTRITION USA, INC. CONDENSED STATEMENTS OF OPERATIONS THREE MONTHS ENDED APRIL 30, --------------------------- 2009 2008 -------------- ----------- (unaudited) (unaudited) Sales $ 3,427,700 $ 3,309,600 Cost of sales 1,610,300 1,540,200 -------------- ----------- Gross profit 1,817,400 1,769,400 -------------- ----------- Selling, general and administrative expenses 1,857,900 1,937,400 Research and development 147,100 51,500 -------------- ----------- Operating loss (187,600) (219,500) Interest income 37,600 68,900 -------------- ----------- Loss before income tax benefit (150,000) (150,600) Income tax benefit (6,100) (29,200) -------------- ----------- Net loss $ (143,900) $ (121,400) -------------- ----------- Loss per common share: Basic $ (0.01) $ (0.01) -------------- ----------- Diluted $ (0.01) $ (0.01) -------------- ----------- Weighted average common shares outstanding Basic 14,130,752 13,974,529 -------------- ----------- Diluted 14,130,752 13,974,529 -------------- -----------