96% Revenue Growth Over Its Third Fiscal Quarter 2008

ORANGEBURG, N.Y., Feb. 13, 2009 (GLOBE NEWSWIRE) -- Vision-Sciences, Inc., (Nasdaq:VSCI) today announced results for its third fiscal quarter ended December 31, 2008 (Q3 09) and for the nine months ended December 31, 2008 (YTD 09). For Q3 09, revenues were $3.6 million, an increase of $1.8 million, or 96%, over our fiscal quarter ended December 31, 2007 (Q3 08). Sales for YTD 09 were $9.1 million, an increase of $1.7 million, or 23% compared to $7.4 million for the nine months ended December 31, 2007 (YTD 08). Loss from operations in Q3 09 was $3.1 million, compared to $2.1 million in Q3 08, an increase of $1.0 million. Loss from operations YTD 09 was $10.1 million, compared to $6.0 million YTD 08, an increase of $4.1 million.

Abbreviated results (in '000), except for per share data, for Q3 09 compared to Q3 08, and for YTD 09 compared to YTD 08, are as follows:

                                   Increase/                  Increase/
                   Q3 09    Q3 08 (Decrease) YTD 09   YTD 08 (Decrease)
                  -------- ------- -------- --------  ------- --------
 Sales            $ 3,610  $ 1,845  $1,765  $  9,091  $ 7,402   $1,689
 Loss from
  operations       (3,140)  (2,061)  1,079   (10,119)  (5,951)   4,168
 Net loss          (3,063)  (2,000)  1,063    (5,679)  (4,768)     911
 Net loss
  per share       $ (0.08) $ (0.06) $ 0.02  $  (0.16) $ (0.14)  $ 0.02

Please refer to the attached balance sheet and profit & loss statement.

Medical sales in Q3 09 grew by 123% from Q3 08, from $1.2 million to $2.8 million, and industrial sales for the same period grew by 39%, from $598 thousand to $834 thousand. Medical sales in YTD 09 grew by 23% from YTD 08, from $5.6 million to $6.9 million, while industrial sales for the same period grew by 22%, from $1.8 million to $2.2 million. Quarterly and YTD sales exclude discontinued operations of BEST-DMS. Sales from discontinued operations for Q3 09 and Q3 08 were $82 thousand and $175 thousand, respectively. YTD 09 and YTD 08 sales were $583 thousand and $175 thousand, respectively. Our sales increase for Q3 09 and YTD 09 are a result of (i) additional fiberscope sales over Q3 08, when our sales were impacted by the shortage of parts due to our dispute with Pentax; (ii) the availability of our new videoscopes, which were not available in Q3 08, and (iii) higher unit prices for our videoscope product line than for our fiberscope product line.

The increase in loss from operations of $1.0 million during Q3 09 and of $4.1 million in YTD 09 is mainly attributable to: (i) initial production start-up cost related to our new videoscope products; (ii) initial sales and marketing expenses related to the launching of our videoscope family of products and building our sales force; (iii) higher research and development expenses related to the further development and expansion of our videoscope family of products and development of our new 4000 series line of fiberscopes; and (iv) increased operational expenses to support the anticipated growth of our production capacity for our videoscope and our newly developed 4000 series fiberscope product lines.

As a result of our desire to focus our attention and financial resources on our core business in the medical segment, during this quarter we sold the assets of our health services segment (the BEST-DMS assets). As a result of the BEST-DMS asset sale, we recorded a loss of $10 thousand in Q3 09 and a loss of $783 thousand for YTD 09. Additionally, net loss from the health services segment were classified as discontinued operations in the consolidated statements of operations, in the first nine months of our fiscal 08 and fiscal 09, respectively.

Our net loss for Q3 09 was $3.1 million, or $0.08 per share, compared to $2.0 million, or $0.06 per share in Q3 08. Our net loss for YTD 09 was $5.7 million, or $0.16 per share, of which $783 thousand are due to the discontinued operations of BEST-DMS. In YTD 08, our net loss was $4.8 million, or $0.14 per share.

Ron Hadani, President and CEO, stated, "This quarter's sales represents the start of an expected accelerated growth of our revenues due to the introduction of our videoscope family of products. It is important to note that our sales of our ENT (Ear-Nose-Throat) videoscopes to Medtronic ENT, which started in our second fiscal quarter, became a significant growing component of our videoscope business.

"We are very excited with our state-of-the-art pipeline of newly developed products.