Nutrition 21 Reports First Quarter Fiscal 2006 Results

PURCHASE, N.Y., Nov 01, 2005 (BUSINESS WIRE) -- Nutrition 21, Inc. (NXXI), the leading developer and marketer of chromium-based nutritional supplements, today reported financial results for the first fiscal quarter ended September 30, 2005.

Total revenues for the quarter increased 31% to $3.60 million as compared to $2.74 million for the same quarter in fiscal 2005 Gross profit was $3.0 million, a 41% increase over the first quarter of fiscal 2005. Operating loss for the first quarter of fiscal 2006 was $0.8 million, an improvement of $0.4 million when compared to an operating loss of $1.2 million for the same period a year ago. Net loss for the quarter was $1.1 million or ($0.03) per diluted share compared to a net loss of $1.2 million or ($0.03) per diluted share for the same period last year. At September 30, 2005, the Company reported cash, cash equivalents and short-term investments of $7.8 million compared to $8.7 million at June 30, 2005.

"We are pleased with the 31% increase in first quarter revenue, as well as with the 41% increase in our gross profit," reported Gail Montgomery, President and CEO of Nutrition 21, Inc. "We believe our ingredient sales are benefiting from our medical and consumer public relations outreach. In addition, our legal action against GNC has signaled our serious intent to monitor and defend our patents.

Over the past few months we have signed two distribution agreements for the use of Chromax chromium picolinate in functional foods and supplements in Europe and Korea; an exclusive supply and licensing agreement with CNS, Inc. for the use of Chromax in fiber supplements; and an agreement with Dong Sung Pharmaceuticals to distribute Chromax and Diachrome as finished consumer products to the Korean healthcare market. Commencement of distribution under these international agreements is contingent on certain government approvals and other conditions. Several major US consumer product companies have already incorporated Chromax into niche products and we are in discussion with others for use in more prominent and broadly marketed brands.

The August 2005 U.S. Food & Drug Administration (FDA) determination that chromium picolinate is safe for use in people with and at risk for type 2 diabetes should facilitate medical acceptance of our products. As further evidence is presented to suggest that low chromium status is associated with insulin resistance, we believe Chromax and Diachrome will play an increasingly important role in helping to manage the public health crisis associated with increasing incidence of type 2 diabetes," stated Montgomery.

According to a recent report by the Centers for Disease Control and Prevention diabetes now affects nearly 21 million Americans, and another 1.5 million people aged 20 years or older are expected to be newly diagnosed with diabetes in 2005. Type 2 diabetes accounts for more than 90% of all diagnosed cases of diabetes and usually begins as insulin resistance; a disorder in which the cells of the body do not use insulin properly. Another 41 million people are estimated to be insulin resistant, and at risk of developing type 2 diabetes, heart disease and stroke.

"The FDA ruling and our ongoing progress in establishing new distribution channels are important factors which should contribute to increased sales and improved gross margins as we move forward," concluded Ms. Montgomery.

About Nutrition 21

Nutrition 21 is a nutritional biosciences company and the maker of chromium-based supplements with health benefits substantiated by clinical research. The Company markets Chromax(R) chromium picolinate, which is the most-studied form of the essential mineral chromium. Nutrition 21 also developed Diachrome(R), which is available through diabetes educators or at Nutrition 21 holds 36 patents for nutrition products and uses, 27 of which are for chromium compounds and their uses. More information is available at and

Safe Harbor Provision:

This press release may contain certain forward-looking statements. The words "believe," "expect," "anticipate," "should," and other similar expressions generally identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. These forward-looking statements are based largely on the Company's current expectations and are subject to a number of risks and uncertainties, including without limitation: the effect of the expiration of patents; regulatory issues; uncertainty in the outcomes of clinical trials; changes in external market factors; changes in the Company's business or growth strategy or an inability to execute its strategy due to changes in its industry or the economy generally; the emergence of new or growing competitors; various other competitive factors; and other risks and uncertainties indicated from time to time in the Company's filings with the Securities and Exchange Commission, including its Form 10-K for the year ended June 30, 2005. Actual results could differ materially from the results referred to in the forward-looking statements. In light of these risks and uncertainties, there can be no assurance that the results referred to in the forward-looking statements contained in this press release will in fact occur. Additionally, the Company makes no commitment to disclose any revisions to forward-looking statements, or any facts, events or circumstances after the date hereof that may bear upon forward-looking statements.

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