Carrington Laboratories Q2 Revenue Increases 83%; New Record Set for Quarterly Revenue

-- Second-Quarter Revenue Increases To Record $8 Million
-- Income Before DelSite Expenditure Climbs To $968,000 From Loss of
$475,000 Last Year
-- Substantial Gains Reported In Specialty Manufacturing Revenue
-- Six-Month Results Show Small Net Income Compared With $1.9 Million
Loss Last Year
-- DelSite Drug Delivery Subsidiary Funded from Operations
-- Total R&D Spending $1.7 Million Year To Date

IRVING, Texas, July 31 /PRNewswire-FirstCall/ -- Carrington Laboratories, Inc. (Nasdaq: CARN), citing substantial increases in raw material and specialty manufacturing revenues, today reported second-quarter net income of $339,000, or three cents per diluted share, compared with a loss of $858,000, or nine cents per diluted share, a year earlier. Revenues climbed 83 percent to $8.0 million from $4.3 million. Second-quarter income before spending on the DelSite subsidiary was $968,000 compared with a $475,000 loss for the 2002 second quarter.

For the six months ended June 30, 2003, total revenue increased 84 percent to $14.9 million from $8.1 million last year. Net income improved to $40,000 compared to a loss of $1.9 million the prior year. Income for the six months, excluding the DelSite spending, was $1.4 million compared with a loss of $1.2 million for the same period in 2002.

Benefiting From Growth Strategy

"We continue to execute our primary near-term growth strategy of increasing the top line," said Carlton E. Turner, president and chief executive officer. "Sales gains in bulk raw material sales and specialty manufacturing for the company's Caraloe, Inc. subsidiary were the key drivers in revenue improvements, for both the quarter and year to date. We are also benefiting from expansion of our customer base and improved operational efficiencies."

Raw Materials, Specialty Manufacturing Fuel Gains

Turner noted that revenue for Caraloe nearly tripled to $6.1 million from $2.2 million in the second quarter of 2002. Raw material sales more than doubled to $3.0 million from $1.4 million. Specialty manufacturing revenue more than quadrupled to $2.9 million from $612,000. Contributing substantially to Caraloe's second-quarter improvement was $1.5 million in revenue from a business acquired late last year.

Year to date, Caraloe revenue nearly tripled to $10.5 million from $3.6 million. Raw material sales more than doubled to $5.8 million from $2.3 million and specialty manufacturing revenue more than quadrupled to $4.4 million from $920,000. The acquired business contributed $1.8 million in year-to-date revenue.

Second-quarter revenue in the Medical Services segment dipped slightly to $1.9 million from $2.2 million. Year-to-date revenues for the segment were about even with the prior year at $4.4 million compared with $4.5 million.

Ongoing Investments In Future

"During the first six months of this year we've implemented significant changes in our infrastructure while continuing to invest substantially in future growth, including spending of $1.1 million for new equipment and process improvements," Turner said. "This has led to increased efficiencies and improved margins.

"In the second quarter our DelSite expenditures to further develop the promising GelSite(TM) technology for controlled delivery of drugs and vaccines increased to $629,000 from $383,000. Year to date, DelSite spending increased to $1.3 million from $679,000," Turner continued. "DelSite continues to focus on the two most promising of several delivery routes: intranasal and injectable."

Solid Near, Long-Term Outlook

"We are encouraged by the expansion of our customer base and the increased sales to our major customers," Turner said. "In addition, we continue to make solid progress at DelSite, which reinforces our belief that this part of our operation offers great potential in the rapidly expanding drug delivery area.

"We believe the growth of our base business combined with the longer-term potential for DelSite, bodes well for the future of Carrington Laboratories."

About Carrington

Carrington Laboratories, Inc., is an ISO 9001-certified, research-based biopharmaceutical and consumer products company currently utilizing naturally occurring complex carbohydrates to manufacture and market products for mucositis, radiation dermatitis, wound and oral care; manufacture and market the nutraceutical raw material Manapol(R) and the raw material Hydrapol(TM) for use in cosmetic formulations. Carrington also manufactures and markets consumer products sold under its AloeCeuticals(R) brand and manufactures quality products for other companies. Manufacturing operations comply with cGMP standards. The company's DelSite subsidiary is developing its proprietary GelSite(TM) technology designed to provide controlled release of peptide- and protein-based drugs. Carrington's technology is protected by more than 120 patents in 26 countries. Select products are honored with the internationally coveted CE mark, recognized by more than 20 countries around the world.

Certain statements in this release concerning Carrington may be forward- looking. Actual events will be dependent upon a number of factors and risks including, but not limited to: subsequent changes in plans by the company's management; delays or problems in production; changes in the regulatory process; changes in market trends; and a number of other factors and risks described from time to time in the company's filings with the Securities & Exchange Commission, including the Form 10Q filed May 14, 2003.

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