WAYNE, Pa., Feb. 14 /PRNewswire-FirstCall/ -- Escalon Medical Corp.
(Nasdaq: ESMC) today announced results for its fiscal second quarter ended
December 31, 2001.  For the second quarter of fiscal 2002, Escalon Medical
reported net income of $255,428, or $0.077 per diluted share.  This compares
to net income of $198,910, or $0.060 per diluted share, in the second quarter
of fiscal 2001.
    Revenues for the second quarter of fiscal 2002 decreased 3.6% to
$2,831,721 compared to $2,937,395 in the second quarter of fiscal 2001.  For
the second quarter, revenue from Sonomed was down slightly at $1,488,000
compared to $1,547,000 in the prior year period.  A higher percentage of sales
to distributors decreased the average selling price per unit due to
distributor discounts.  Product revenue in the Vascular business increased
24.7% to $611,000 in the second quarter of fiscal 2002 compared to $490,000 in
the year ago period.  The improvement resulted from unit sales gains as well
as improved margins due to a shift away from distributors.  Revenue in the
Company's Medical / Trek business declined by 18.7% to $733,000 in the quarter
from $901,000 in the second quarter of fiscal 2001. Included in this figure is
revenue earned in connection with the sale of the license and distribution
rights of Silicone Oil.  Revenue from Silicone Oil was $418,000 in the quarter
compared to $559,000 in the year ago period.  Additional consideration, which
is based upon future sales of Silicone Oil by Bausch & Lomb, is expected to
continue through fiscal 2005.
    The gross margin as a percent of sales was 64.9% in the current quarter
compared to 66.5% in the year ago period.  Impacting the gross margin in the
quarter was the decline in sales of Silicone Oil, which has no costs
associated with it, offset by year-over-year margin improvements in the
Vascular Access business primarily due to increased sales price per unit.
Marketing, general and administrative expenses continue to be well controlled
and benefited from a $218,000 decline in amortization expense as a result of
the implementation of FAS 142.
    "Given the current economic environment, we are pleased at maintaining
overall sales volume, commented Richard J. DePiano, Chairman and Chief
Executive Officer.  "We see our strategy of expanding our market position
overseas achieving results.  We continue to focus on long-term growth
opportunities in our businesses."
    Mr. DePiano continued, "At Sonomed, we are executing our global expansion
strategy.  This resulted in gross revenues increasing 23% in overseas markets.
The incremental distributor discount, which is an element of our strategy,
reduced the growth in net revenue to 10%."  Mr. DePiano continued, "This
helped compensate for the weakness in the domestic market seen during the
quarter."
    "We had another excellent quarter in the Vascular Access business," added
Mr. DePiano.  "We are beginning to see the success of our sales strategy in
this business which has lead to increased revenue and profitability.  We are
also excited about our recently developed Doppler-guided I.V. product that
could help us penetrate new markets such as hematology, oncology and I.V.
therapy.  The product is being evaluated next month in a preeminent
institution in Philadelphia.  Success in these areas could greatly expand our
market potential."
    Mr. DePiano concluded, "In fiscal 2002 we remain focused on our current
business lines and improving product margins."
    For the first six months of fiscal 2002, Escalon Medical reported net
income of $459,747, or $0.139 per diluted share, compared to net income of
$306,301, or $0.094 per diluted share, in the first six months of fiscal 2001.
Revenues for the first six months of fiscal 2002 were $5,747,436 compared to
$5,897,360 in the prior year period.
    Founded in 1987, Escalon develops, markets and distributes ophthalmic
diagnostic, surgical and pharmaceutical products as well as vascular access
devices.  The Company utilizes 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 Company's distribution capabilities.  Escalon has headquarters in Wayne,
Pennsylvania and manufacturing operations in Long Island, New York and New
Berlin, Wisconsin.
    Note:  This press release contains statements that are forward-looking,
including statements about the Company's future prospects.  They are based on
the Company'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 the Company is able to improve upon
the operations of Sonomed, the vascular access business and Escalon Medical
Imaging, generate cash and identify, finance and enter into business
relationships and acquisitions, uncertainties and risks related to new product
development, manufacturing and market acceptance of new products, marketing
acceptance of existing products in new markets, research and development
activities, including failure to demonstrate clinical efficacy, delays by
regulatory authorities, scientific and technical advances by the Company 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 the Company'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 OPERATIONS

                              Three Months Ended        Six Months Ended
                                 December 31,              December 31,
                              2001         2000         2001         2000
    Product revenues, net $2,831,721    $2,937,395   $5,747,436  $5,897,360

    Costs and expenses:
      Cost of goods sold     992,668       983,384    2,220,930   2,028,055
      Research and
       development           132,483        87,577      255,270     198,641
      Marketing, general
       and administrative  1,295,245     1,421,999    2,440,838   2,778,304
        Total costs and
         expenses          2,420,396     2,492,960    4,917,038   5,005,000

    Income from operations   411,325       444,435      830,398     892,360

    Other income and
     (expenses):
      Equity in income
       (loss) of
       unconsolidated
       joint venture          20,967        24,854       12,365     (29,968)
      Interest income            466            10        1,356       2,929
      Interest expense      (177,330)     (270,389)    (384,372)   (559,020)
        Total other income
         and (expense)      (155,897)     (245,525)    (370,651)   (586,059)

    Net income (loss):
      Reported net income    255,428       198,910      459,747     306,301
      Add: FAS 142
       adjustment                 --       217,794           --     432,264
      Adjusted net income    255,428       416,704      459,747     738,565

    Basic net income
     (loss) per share:
      Reported net income     $0.078        $0.061       $0.140      $0.094
      Add:  FAS 142
       adjustment                 --         0.067           --       0.133
      Adjusted net income     $0.078        $0.128       $0.140      $0.227

    Diluted net income
      (loss) per share:
      Reported net income     $0.077        $0.060       $0.139      $0.094
      Add: FAS 142
       adjustment                 --         0.066           --       0.132
      Adjusted net income     $0.077        $0.126       $0.139      $0.226

      Weighted average
       shares - basic      3,292,184     3,242,184    3,292,184   3,242,184
      Weighted average
       shares - diluted    3,318,740     3,302,017    3,318,740   3,268,384


    SELECTED BALANCE SHEET DATA:
                                        December 31, 2001   June 30, 2001
                                          (unaudited)         (audited)

    Cash, cash equivalents and
     investments                       $      94,130       $      80,830
    Total current assets                   3,792,076           4,185,152
    Total assets                          17,128,816          17,798,422
    Current liabilities                    4,272,123           7,188,848
    Long-term debt                         6,289,697           4,502,325
    Total shareholders' equity             6,566,996           6,107,249

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