Derma Sciences Reports First Quarter 2008 Results

Sales Reach $11.7 Million

PRINCETON, N.J., May 15 /PRNewswire-FirstCall/ -- Derma Sciences, Inc.
(OTC Bulletin Board: DSCI), a provider of advanced wound-care products,
announced results today for the first quarter ended March 31, 2008. For the
quarter, sales were up 47 percent from the previous year, including sales
from the newly acquired First Aid Division. The Company reported a loss
consistent with earlier guidance, due primarily to higher than expected
integration costs associated with its First Aid Division.

For the quarter, the Company reported sales of $11.7 million, compared
to sales in the first quarter of the previous year of $8.0 million. Gross
margins declined to 27 percent from the previous year's 35 percent, due to
the additional integration costs causing temporary downward margin pressure
on the First Aid Division's products and a shortfall in expected overhead
absorption in the company's manufacturing facility in Toronto. This
shortfall was primarily due to timing related issues on two large private
label orders. SG&A costs were up significantly, consistent with the
Company's growth strategy that was implemented in the second half of 2007.
The Company reported a loss of $1.4 million or $0.04 loss per share, vs. a
loss of $138,953 or $0.01 loss per share in the first quarter of 2007.

CEO Ed Quilty commented, "We are seeing gratifying growth in our sales
from our proprietary branded business for products such as our
MEDIHONEY(TM). We continued to expand the sales force, as our strategic
plan specifies, and at the end of the quarter we had 10 sales reps and one
clinical nurse, versus a year-earlier sales force of 2 sales reps.
MEDIHONEY sales were $319,179 for the quarter -- on target for the
product's projected first full quarter of sales. There have been over 800
clinical evaluations within the US and Canada since the product was
launched last fall. Also, we have two additional 510K clearances for line
extensions that we will bring to market in Q2, and we are confident that we
will have MEDIHONEY into the OTC market by the end of the year.

"Although we have had some manufacturing cost issues in our new First
Aid division, we are successfully navigating through those and are nearing
our long-term cost structure goals. We are confident once our integration
is complete that we will be able to layer consistent strong sales growth
onto this division."

Quilty continued, "We are gearing up to launch our novel MOBILITY1(TM)
intermittent pneumatic compression device later this year, and are in
various phases of negotiation with several other companies for the
licensing/distribution of novel wound care products we intend to launch
over the next eighteen months. These new products will help to leverage our
growing sales force, and will allow us to return to profitability more
quickly.

"Lastly, we continue to make progress with our products under
development. The Phase II protocol for DSC127, our novel angiotensin analog
for wound healing and scar prevention, is almost complete and will be
submitted to the FDA shortly thereafter. With regard to our novel
GUARDION(TM) line of barrier dressings, the most recent communications with
the FDA give us confidence that we are close to marketing clearance. We
look forward to having this best-in-class product, with effectiveness
against superbugs such as MRSA, in the market by the end of the year."

CFO John Yetter pointed out that on April 2, the Company completed a
private placement of $6.1 million with a group of institutional investors,
and that the funds from this placement give the Company the financial
resources to execute its growth plans.

Quilty said that the Company believes that both its principal product
segments will continue to grow quickly, and referenced recent announcements
of contracts with MedAssets and Amerinet, large group purchasing
organizations. He pointed out that while the Company's proprietary branded
products are more visible to the public -- MEDIHONEY being the most
prominent example at present -- the Company's private-label and OEM
business is expanding at a rapid rate.

He continued, "Sales in our First Aid Division were strong during the
quarter, and as the integration of that operation progresses in the
quarters ahead, we expect to see improving margins. We have excellent new
business opportunities in the First Aid Division for contracts that would
begin in late 2008 and into 2009, and expect to see solid growth in that
business. The volume-oriented manufacturing for our private-label segment
has enabled us to outfit our state-of-the-art manufacturing facilities."

About Derma Sciences

Derma Sciences is a global manufacturer and marketer of advanced
wound-care products. Its key product, MEDIHONEY, is sold throughout the
world by Derma Sciences and Comvita New Zealand -- the licensor of the
patented honey-based technology -- and is the leading brand of honey-based
dressings for the management of wounds and burns. The product has been
shown to be effective in a variety of wounds and burns, and was recently
the focus of a large-scale randomized controlled trial on leg ulcers. For
more information about Derma Sciences, Inc., visit its home page on the
Internet at http://www.dermasciences.com.

Forward-looking Statements

Statements contained in this release that are not statements of
historical fact may be deemed to be forward-looking statements. Without
limiting the generality of the foregoing, words such as "may," "will,"
"expect," "believe," "anticipate," "intend," "could," "estimate" or
"continue" are intended to identify forward-looking statements. Readers are
cautioned that certain important factors may affect the Company's actual
results and could cause such results to differ materially from any
forward-looking statements which may be made in this release or which are
otherwise made by or on behalf of the Company. Factors which may affect the
Company's results include, but are not limited to, product demand, market
acceptance, impact of competitive products and prices, product development,
completion of an acquisition, commercialization or technological
difficulties, the success or failure of negotiations and trade, legal,
social and economic risks. Additional factors that could cause or
contribute to differences between the Company's actual results and
forward-looking statements Include but are not limited to, those discussed
in the Company's filings with the Securities and Exchange Commission.



Contact: Derma Sciences, Inc. Allen & Caron Inc
Edward J. Quilty Rudy Barrio (US Investors)
Chairman and CEO r.barrio@allencaron.com
equilty@dermasciences.com
(609) 514-4744 Brian Kennedy (media)
brian@allencaron.com
(212) 691-8087

- FINANCIAL TABLES FOLLOW -



DERMA SCIENCES, INC.

Consolidated Statements of Operations
(Unaudited)

Three Months ended March 31,
2008 2007
Net Sales $11,724,822 $7,965,797
Cost of sales 8,516,164 5,161,369
Gross Profit 3,208,658 2,804,428
Operating expenses
Selling, general and administrative 4,386,866 2,668,154
Research and development 48,108 125,000
Total operating expenses 4,434,974 2,793,154
Operating (loss) income (1,226,316) 11,274
Other expense, net:
Interest expense 264,915 50,246
Other expense, net 8,614 26,557
Total other expense, net 273,529 76,803
Loss before (benefit) provision for income taxes (1,499,845) (65,529)
(Benefit) provision for income taxes (90,057) 73,424
Net Loss $(1,409,788) $(138,953)
Loss per common share - basic and diluted $(0.04) $(0.01)
Shares used in computing loss per common share -
basic and diluted 34,038,207 25,246,596




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Via: Healthcare