Zila Selling Dental Supply Division

Nov. 6, 2001
Divestiture represents refocusing of Zila's strategic direction.

Zila, Inc. (Nasdaq: ZILA) announced it is selling its Zila Dental Supply division. Total gross proceeds from the divestiture of the division's assets will be approximately $13.8 million in a combination of cash and notes. The gross proceeds will be subject to certain closing adjustments. The division's full-service operations have been sold to

Henry Schein, Inc. (Nasdaq: HSIC). Definitive agreements also have been signed for the sale of the division's mail-order operations to PracticeWares, Inc., of Sacramento, California.

Zila President Joseph Hines said, "Approximately $3 million of the

proceeds will be used to accelerate progress of the Phase III clinical trial presently underway in support of the OraTest(R) oral cancer detection product New Drug Application. Also, a portion of the proceeds will be used to pay off Zila's existing line of credit.

"The divestiture represents a major refocusing of Zila's strategic

direction, allowing the Company to concentrate on the development and marketing of our own proprietary pharmaceutical, biotechnology and nutraceutical products," Hines continued. "While Zila Dental Supply accounted for a little more than 50 percent of fiscal year 2001 revenues, margins on the division's sales were substantially lower than margins on Zila's proprietary offerings.

"With a strong balance sheet, an unused credit line and improved cash reserves," Hines noted, "Zila will be well-positioned to grow its core business lines, fund a productive product development program, and seek out accretive, synergistic technologies and acquisitions. By focusing on proprietary pharmaceutical, biotechnology and nutraceutical products, rather than lower-margin distribution operations, we believe we can more quickly achieve revenue and income objectives and, in turn, build shareholder value."

Henry Schein Inc. is the largest distributor of healthcare products and services to office-based healthcare practitioners in the combined North American and European markets. Recognized for its excellent customer service and low prices, the Company serves more than 400,000 customers worldwide, including dental practices and laboratories, physician practices and veterinary clinics, as well as government and other institutions.

For more information, visit the Henry Schein Web site at www.henryschein.com .

SOURCE Zila, Inc.

-0- 11/05/2001

/CONTACT: Joseph Hines for Zila, Inc., +1-602-266-6700/

/Web site: http://www.henryschein.com /

/Web site: http://www.zila.com /