WAYNE, Pa., May 15 /PRNewswire-FirstCall/ -- Escalon Medical Corp. today announced results for its fiscal third quarter and nine months ended March 31, 2006.
For the third quarter of fiscal 2006, Escalon reported net revenue of $7,840,000 compared to $7,229,000 in the prior year period, a 8.5% gain. Product revenue increased 16.6%, to $7,286,000 in the third quarter of fiscal 2006 as compared to $6,247,000 in the third quarter of fiscal 2005. The increase in both net revenue and product revenue is primarily attributable to strong sales in the Company's Drew, Sonomed, Vascular and Medical/Trek/EMI business units. For the third quarter of fiscal 2006, Escalon reported a net loss of $576,000, or $0.092 per diluted share, compared with net income of $744,000, or $0.119 per diluted share, in the third quarter of fiscal 2005.
For the nine-month period ended March 31, 2005, Escalon reported net revenue of $22,583,000 compared to $18,883,000 in the prior year period, a 19.6% gain, and product revenue of $20,896,000 compared to $16,649,000 in the prior year period, a 25.5% increase. For the nine-month period ended March 31, 2006, the Company reported a net loss of $844,000, or $0.138 per diluted share, compared with net income of $432,000, or $0.069 per diluted share in the prior year period.
"This quarter reflects the efforts of a well-focused team and a continued commitment to being a resource to our customers," Richard J. DePiano, Chairman and Chief Executive Officer commented. "We recognize there are tremendous opportunities in both our current markets and in new markets to increase the Company's performance level. During the quarter we continued operational initiatives to expand our sales team and build our brand through key trade show and marketing activities and believe these investments will deliver considerable long-term benefits to our organization."
Mr. DePiano added, "Turning to our quarterly operating performance, we achieved increases across all major product groups and reported 2006 third quarter product revenues of $7,286,000, representing growth of 16.6% year- over-year. These results are highlighted by 28.7% top-line growth at our Drew business unit, which realized product revenue of $3,870,000. The performance at Drew was driven by additional sales in the domestic market of diabetics and hematology instruments, partially offset by a small decrease in international sales of instruments."
"Our Sonomed business unit achieved product revenues of $2,001,000 during the quarter, representing modest growth of 1.2% year-over-year. Growth at Sonomed was driven by an increase in product revenues of the Company's EZ AB scan ultrasound systems and an increase in export product revenues, partially offset by a decrease in domestic product revenues and in demand for its pachymeter product. Product revenue at our Vascular unit rose 7.6%, year- over-year, to $893,000 driven by an increase in direct sales to end users by our domestic sales team."
"In our Medical/Trek/EMI unit, product revenue increased 20.3% to $522,000, primarily attributable to an increase in Trek in OEM revenue and an increase in EMI sales of digital imaging systems. During the quarter, we were pleased to complete the acquisition of MRP Group, Inc., a privately held ophthalmic technology solutions provider. While we have not yet begun to realize the full benefits of this strategic acquisition, we have begun the integration of MRP's retinal imaging systems with EMI's existing ophthalmic photography product portfolio which will clearly strengthen our position in the ophthalmic marketplace."
Mr. DePiano concluded, "Looking ahead, our strategic focus remains on the basics of our business and ensuring strong operating performance. We are committed to improving the performance of the Company, maximizing the long-term value of our key products and building our presence worldwide."
Founded in 1987, Escalon develops markets and distributes ophthalmic diagnostic, surgical and pharmaceutical products as well as vascular access devices. Drew, which operates as a separate business unit, provides instrumentation and consumables for the diagnosis and monitoring of medical disorders in the areas of diabetes, cardiovascular diseases and hematology, as well as veterinary hematology and blood chemistry. Escalon seeks to utilize strategic partnerships to help finance its development programs and is also seeking acquisitions to further diversify its product line to achieve critical mass in sales and take better advantage of the Escalon's distribution capabilities. Escalon has headquarters in Wayne, Pennsylvania and manufacturing operations in Long Island, New York, New Berlin, Wisconsin, Dallas, Texas, Oxford, Connecticut and Barrow-in-Furness, U.K.
Note: This press release contains statements that are considered forward- looking under the Private Securities Litigation Reform Act of 1995, including statements about Escalon's future prospects. They are based on the Escalon's current expectations and are subject to a number of uncertainties and risks, and actual results may differ materially. The uncertainties and risks include whether Escalon is able to implement its growth and marketing strategies, improve upon the operations of Escalon's business units, including the integration of Drew's operations and any acquisitions it may undertake, if any, of which there can be no assurance, generate cash and identify, finance and enter into business relationships and acquisitions, uncertainties and risks related to new product development, commercialization, manufacturing and market acceptance of new products, marketing acceptance of existing products in new markets, the continuity of royalty revenue, litigation and non- recurring expenses, research and development activities, including failure to demonstrate clinical efficacy, delays by regulatory authorities, scientific and technical advances by Escalon or third parties, introduction of competitive products, third party reimbursement and physician training as well as general economic conditions. Further information about these and other relevant risks and uncertainties may be found in Escalon's report on Form 10- K, and its other filings with the Securities and Exchange Commission, all of which are available from the Commission as well as other sources.
ESCALON MEDICAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended Nine Months Ended March 31, March 31, 2006 2005 2006 2005 Net revenues: Product revenue $7,286,704 $6,246,836 $20,895,553 $16,648,739 Other revenue 553,054 982,241 1,687,365 2,233,987 Revenues, net 7,839,758 7,229,077 22,582,918 18,882,726 Costs and expenses: Cost of goods sold 4,382,268 2,998,745 12,010,652 9,019,701 Research and development 717,920 463,808 2,135,950 1,257,132 Marketing, general and administrative 3,283,722 2,938,673 10,395,612 8,050,678 Total costs and expenses 8,383,910 6,401,226 24,542,214 18,327,511 (Loss) income from operations (544,152) 827,851 (1,959,296) 555,215 Other (expense) and income: Gain on sale of available for sale securities 0 0 1,157,336 0 Equity in Ocular Telehealth Management, LLC (18,508) (13,632) (69,972) (49,942) Interest income 33,974 9,166 111,698 53,607 Interest expense (27,515) (15,915) (47,421) (42,534) Total other (expense) and income (12,049) (20,381) 1,151,641 (38,869) Net (loss) income before taxes (556,201) 807,470 (807,655) 516,346 Provision for income taxes 20,024 63,912 36,024 83,938 Net (loss) income $(576,225) $743,558 $(843,679) $432,408 Basic net (loss) income per share $(0.092) $0.125 $(0.138) $0.075 Diluted net (loss) income per share $(0.092) $0.119 $(0.138) $0.069 Weighted average shares - basic 6,255,665 5,932,920 6,091,938 5,787,753 Weighted average shares - diluted 6,255,665 6,251,847 6,091,938 6,238,515 ESCALON MEDICAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS March 31, June 30, 2006 2005 (Unaudited) ASSETS Current assets: Cash and cash equivalents $3,154,427 $5,115,772 Available for sale securities 69,600 1,207,317 Accounts receivable, net 5,180,361 4,752,310 Inventory, net 6,576,841 5,856,285 Notes receivable 500,000 100,000 Other current assets 225,940 633,214 Total current assets 15,707,169 17,664,898 Furniture and equipment, net 990,800 911,700 Goodwill 21,253,187 20,166,450 Trademarks and trade names, net 620,106 616,906 Patents, net 337,718 402,814 Other intangibles 267,925 0 Other assets 369,152 286,568 Total assets $39,546,057 $40,049,336 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $243,957 $230,344 Accounts payable 1,694,137 1,135,680 Accrued expenses 2,176,494 2,685,670 Total current liabilities 4,114,588 4,051,694 Long-term debt, net of current portion 224,729 391,793 Accrued post-retirement benefits 1,087,000 1,087,000 Total liabilities 5,426,317 5,530,487 Shareholders equity: Preferred stock, $0.001 par value; 2,000,000 shares authorized; no shares issued Common stock, $0.001 par value; 35,000,000 share authorized; 6,344,670 and 5,963,477 issued and outstanding at March 31, 2006 and June 30, 2005, respectively 6,345 5,964 Common stock warrants 1,601,346 1,601,346 Additional paid-in capital 65,699,370 63,898,190 Retained earnings (32,980,166) (32,136,487) Accumulated other comprehensive (loss) income (207,155) 1,149,836 Total shareholders' equity 34,119,740 34,518,849 Total liabilities and shareholders' equity $39,546,057 $40,049,336
Escalon Medical Corp.CONTACT: Richard J. DePiano, Chairman and CEO of Escalon Medical Corp.,+1-610-688-6830; or Joseph Calabrese of Financial Relations Board forEscalon Medical Corp, +1-212-827-3772
