ENGLEWOOD, NJ--(MARKET WIRE)--Sep 9, 2008 -- Medical Nutrition USA, Inc. (MDNU - News) today announced financial results for the second fiscal quarter and six months ended July 31, 2008.

Second Quarter Fiscal 2009 vs. 2008

 
--  Branded product revenue increased 10% to $3,102,600 from $2,816,800 on
    a 27% increase in unit sales offset by price reductions;
--  Total sales decreased 1% to $3,326,900 compared to $3,353,300 on
    higher branded product sales offset by lower private label sales of
    $224,300 compared to $536,500;
--  Gross margin was stable at 53% of sales ($1,764,000 compared to
    $1,790,400);
--  Selling, general and administrative expenses increased to $2,061,800,
    or 62% of sales, compared to $1,532,900, or 46% of sales, primarily as a
    result of increased Sales and Marketing expenses of $349,200 for the
    Company's previously announced increase in its sales force and other
    marketing expenses;
--  Operating loss was ($297,800) compared to operating income of
    $166,100;
--  Net loss was ($183,700) or ($0.01) per share compared to net income of
    $160,500 or $0.01 per share.

Six Months ended July 31st - Fiscal 2009 vs. 2008

 
--  Branded product revenue increased 13% to $5,995,100 from $5,286,000 on
    a 29% increase in unit sales offset by price reductions;
--  Total sales increased 7% to $6,636,500 from $6,184,500 on higher
    branded product sales offset by lower private label sales ($641,500
    compared to $898,500);
--  Gross margin increased to $3,533,400, or 53% of sales, from
    $3,332,500, or 54% of sales.
--  Selling, general and administrative expenses increased to $3,999,200,
    or 60% of sales, compared to $2,941,300, or 48% of sales, primarily as a
    result of increased Sales and Marketing expenses of $706,000 for the
    Company's previously announced increase in its sales force and other
    marketing expenses;
--  Operating loss was ($517,300) compared to operating income of
    $299,800;
--  Net loss was ($305,100) or ($0.02) per share compared to net income of
    $214,200 or $0.02 per share.
--  Strong cash position with over $9.1 million in cash and short term
    investments with no debt.

"Our results reflect the ongoing successful implementation of our plan to accelerate market penetration through expansion of our sales force and more aggressive pricing. Unit sales increased 27% over last year and 12% over the previous quarter as a result of both increased penetration and sales to existing customers. We are also very excited by the successful introduction of our new UTI-Stat(TM) product, a proprietary formulation that helps support urinary tract health, and is now available through most of our distributor network. Trials conducted in 10 long-term care facilities in five states showed that 92% of residents with a history of urinary tract infections remained symptom-free while taking UTI-Stat(TM). We expect sales to continue to benefit from our more aggressive marketing strategy, and also from increased sales of UTI-Stat and the third quarter introduction of enhanced Pro-Stat flavors. We expect private label sales to continue to decline over time as part of our long-term strategy to deemphasize private label sales in favor of branded product sales. Overall, we are very pleased with our performance for the quarter," said Frank A. Newman, Chairman Chief Executive.

"We continue to be a leader in clinical research leading to new product development, and expect that the publication of two important trials in the coming months will support the benefits of Pro-Stat in achieving nitrogen balance in older women and of the interdialitic administration of Pro-Stat to hemodialysis patients. Our plans for the retail distribution of certain of our products by the first quarter of next year remain on track. We believe this represents a significant growth opportunity beyond the existing potential for our products in nursing homes and dialysis clinics," he concluded.

Stock Repurchase Plan

In December 2007, the Company's Board of Directors approved a stock repurchase plan, to purchase up to 500,000 shares of Company stock. The plan expired on July 31, 2008. During the term of the plan, the Company purchased 448,000 shares at an average price of $3.15 per share.

Conference call

The Company will host a conference call to discuss these results on Wednesday, September 10th at 11:00 A.M. EDT. To participate, please call (866) 379-6256. The conference call will also be webcast live. To view and hear the webcast, please go to and click on the Investor Relations section where the conference call is posted. Please go to the website 15 minutes early to download and install any necessary audio software. If you are unable to listen live, the conference call will be archived and can be accessed for approximately 90 days.

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-KSB for the year ended January 31, 2008 as filed with the Securities and Exchange Commission on April 29, 2008 and Form 10-Q for the quarter ended April 30, 2008 filed on June 16, 2008.

 
                          Medical Nutrition USA, Inc.
                      Condensed Statements of Operations

                        For the Six Months         For the Three Months
                          ended July 31,              ended July 31,
                        2008          2007          2008          2007
                            (unaudited)                 (unaudited)
Sales               $  6,636,500  $  6,184,500  $  3,326,900  $  3,353,300
Cost of sales          3,103,100     2,852,000     1,562,900     1,562,900
                    ------------  ------------  ------------  ------------
Gross Profit           3,533,400     3,332,500     1,764,000     1,790,400

Selling, general &
 administrative        3,999,200     2,941,300     2,061,800     1,532,900
Research &
 development              51,500        91,400             -        91,400
                    ------------  ------------  ------------  ------------

Operating (loss)
 income                 (517,300)      299,800      (297,800)      166,100

Interest income          121,800       199,300        52,900       104,800
                    ------------  ------------  ------------  ------------

(Loss) income before
 income taxes           (395,500)      499,100      (244,900)      270,900

Income tax (benefit)
 expense                 (90,400)      284,900       (61,200)      110,400
                    ------------  ------------  ------------  ------------

Net (loss) income   $   (305,100) $    214,200  $   (183,700) $    160,500
                    ============  ============  ============  ============

(Loss) earnings per
 share

Basic               $      (0.02) $       0.02  $      (0.01) $       0.01
                    ============  ============  ============  ============

Diluted             $      (0.02) $       0.01  $      (0.01) $       0.01
                    ============  ============  ============  ============

Weighted average
 common shares
 outstanding

Basic                 13,931,496    14,084,092    13,889,399    14,108,193
                    ============  ============  ============  ============

Diluted               13,931,496    15,616,442    13,889,399    15,764,791
                    ============  ============  ============  ============




                       Medical Nutrition USA, Inc.
                        Condensed Balance Sheets

                                                  7/31/08       1/31/08
Assets                                          (unaudited)

Cash and cash equivalents                       $  4,748,000  $  5,208,000
Short-term investments                             4,398,400     4,336,800
Accounts receivable, net                           1,062,400     1,054,500
Inventories                                          462,000       401,800
Deferred income taxes                                369,700       877,700
Prepaid income taxes                                  12,300       232,000
Other current assets                                 226,800       179,800
                                                ------------  ------------

Total current assets                              11,279,600    12,290,600

Fixed assets, net                                    257,100       199,000

Other assets

Deferred income taxes                              1,109,700       480,000
Security deposits                                     15,300        15,300
Investment in Organics Corp of America               125,000       125,000
Intangible assets, net                               265,000       252,700
                                                ------------  ------------

Total assets                                    $ 13,051,700  $ 13,362,600
                                                ============  ============

Liabilities and Stockholders' Equity

Current Liabilities

Accounts payable                                $    486,900  $    364,800
Accrued expenses                                     536,500       466,000
Accrued rebates                                       47,600        61,700
                                                ------------  ------------

Total current liabilities                          1,071,000       892,500
                                                ------------  ------------

Stockholders' equity

Common stock                                          13,800        14,000
Additional paid-in capital                        24,508,100    24,687,900
Accumulated deficit                              (12,310,900)  (12,005,800)
                                                ------------  ------------
                                                  12,211,000    12,696,100
Less: treasury stock                                (230,300)     (226,000)
                                                ------------  ------------

Total shareholders' equity                        11,980,700    12,470,100
                                                ------------  ------------

Total liabilities and shareholders' equity      $ 13,051,700  $ 13,362,600
                                                ============  ============

     Contacts:
     Medical Nutrition USA, Inc.
     Alan Levy
     Vice President/Finance
     Chief Financial Officer
     800-221-0308
     Email Contact