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Retractable Technologies, Inc. Reports 77% Gross Profit Increase For Q3 2010

Retractable Technologies, Inc. ("Retractable") (NYSE AMEX: RVP), a leading maker of safety medical devices, reported a gross profit of $5.2 million for the three months ended September 30, 2010, a 77.1% increase over its gross profit for the three months ended September 30, 2009. Retractable also reported a gross profit of more than $11.4 million for the nine months ended September 30, 2010, a 76.4% increase over the nine months ended September 30, 2009.

Comparison of Three Months Ended September 30, 2010 and September 30, 2009

Domestic sales accounted for 80.1% and 84.8% of the net sales for the three months ended September 30, 2010 and 2009, respectively. Domestic revenues increased 7.5% principally due to higher average sales prices. International revenues increased 48.8% due primarily to higher volumes. Overall, unit sales increased 2.7%. Domestic unit sales decreased 8.9%, which may be attributable to a reduction in flu vaccine being administered. International unit sales increased 38.4%, which may be due to the lower international sales last year due to increased domestic demand by the Department of Health and Human Services during the same period.

Gross profit increased primarily due to higher revenues and lower unit manufacturing costs. The average cost of manufactured product sold per unit decreased by 15.8% due to lower piece part prices due to increasing our molding operations at the Little Elm facility and a significant increase in the number of units produced, thereby reducing the unit costs attributable to fixed costs. Profit margins can fluctuate depending upon, among other things, the Cost of manufactured product and the capitalized cost of product recorded in inventory, as well as product sales mix. Royalty expense increased 21.9% due to higher gross revenue.

Operating expenses decreased 35.5%. The decrease was due to lower litigation costs and lower stock option expense, mitigated by amounts paid to employees who had a salary reduction last year. The lower litigation costs are the result of an agreement between us and our counsel to cap certain litigation fees. This is the first quarter that the full effect of the agreement is being realized.

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