Derma Sciences, Inc. (Nasdaq:DSCI), a tissue regeneration company focused on advanced wound and burn care, announces the signing of a definitive agreement to sell its First Aid Division (FAD) to Dukal Corporation for approximately $12.2 million, including inventory. Dukal is a privately-held supplier of a broad range of best-in-class disposable medical products and patient-care items for all medical markets, with headquarters in Ronkonkoma, N.Y.

Terms of the agreement call for an immediate payment at closing to Derma Sciences of $9.5 million in cash. In addition, Derma Sciences will hold a note payable of approximately $2.7 million, subject to adjustment based on final inventory figures. Principal and interest will be amortized over 36 months. The FAD had 2015 revenue of $16.7 million. Dukal will also assume third-party supply agreements, the lease obligation at Derma Sciences' warehouse in Houston and related personnel expense. The transaction is expected to close within two weeks of the announcement.

"The sale of our first aid products division represents a decisive strategic step forward for Derma Sciences as we focus on our advanced wound care business," said Stephen T. Wills, Executive Chairman and Interim Principal Executive Officer. "Building upon a strong balance sheet, this transaction removes a lower-margin business and provides us with capital to pursue higher-margin, accretive acquisitions and other initiatives to leverage our core competencies in advanced wound care."

Derma Sciences also announces the sale on May 12, 2016 of 925,000 shares of Comvita Limited (NZX:CVT) common stock for gross proceeds of approximately $7.6 million, resulting in a realized gain of $4.7 million. The Company continues to hold 1,877,277 shares of Comvita common stock, valued at approximately $15.8 million as of June 30, 2016.

"During 2013 and 2014 we invested $8.5 million in Comvita to support the acquisition of apiaries and their harvest modernization strategy, with the goal of ensuring a reliable supply of medical-grade leptospermum honey to meet the growing demand for Derma Sciences' MEDIHONEY® product line. At the time of our sale of this stock, this investment had increased in value to approximately $23 million," Mr. Wills added. "We remain highly committed to our relationship with Comvita as a vital source of raw material for our MEDIHONEY product line."

About Derma Sciences, Inc.

Derma Sciences is a tissue regeneration company focused on advanced wound and burn care. It offers a line of products with patented technologies to help better manage chronic and hard-to-heal wounds, many of which result from diabetes and poor vascular functioning. The Company sells AMNIOEXCEL ® amniotic allograft membrane and AMNIOMATRIX ® amniotic allograft suspension into the $500 million market for skin substitute products. TCC-EZ ® is a gold-standard total contact casting system for diabetic foot ulcers. Derma Sciences' MEDIHONEY ® product line is the leading brand of honey-based dressings for the management of wounds and burns. The product has been shown in clinical studies to be effective in a variety of indications. Other novel products introduced into the $14 billion global wound care market include XTRASORB ® for better management of wound exudate, and BIOGUARD ® for barrier protection against microbes and other contaminants. The Company also offers a full product line of traditional dressings. For more information please visit www.dermasciences.com.

Forward-Looking Statements

Statements contained in this news 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 that may be made in this news release or that are otherwise made by or on behalf of the Company. Factors that 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, 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 U.S. Securities and Exchange Commission.

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