WAYNE, Pa., Feb. 14 /PRNewswire-FirstCall/ -- Escalon Medical Corp.
(Nasdaq: ESMC) today announced results for its fiscal second quarter and six
months ended December 31, 2004. For the second quarter of fiscal 2005,
Escalon reported net revenue of $6,338,144 compared to $3,757,925 in the prior
year period, a 68.7% gain. For the six month period ended December 31, 2004,
Escalon reported net revenue of $11,639,801 compared to $7,169,567 in the
prior period, a 62.4% gain. The Company, however, reported a net loss of
$422,625, or $0.072 per diluted share, compared with net income of $820,961,
or $0.196 per diluted share, in the second quarter of fiscal 2004. For the
six month period ended December 31, 2004, the Company reported a net loss of
$309,156, or $0.054 per diluted share, compared with net income of $1,444,117,
or $0.357 per diluted share in the prior year. The increase in net revenue as
well as the reduction in profitability was primarily attributable to the July
2004 acquisition of Drew Scientific, Plc ("Drew"). Diluted shares outstanding
increased by 40.2% quarter over quarter and 41.3% year over year due to the
issuance of 841,686 of a potential 900,000 shares related to the acquisition
of Drew, 800,000 common shares in the March 2004 private equity financing and
the exercise of stock options.
Fiscal Second Quarter and Year-To-Date Results for Escalon Excluding
Results for Drew
* Q2 product revenues were $2,902,000, a 7.7% decrease, and year to date
product revenues were $5,635,000, a 5.9% decrease.
* Q2 other revenues were $504,000, a 17.8% decrease, and year to date
other revenues were $1,159,000, a 2.1% decrease.
* Q2 gross margin was $1,972,000, or 57.9%, as compared to $2,508,000, or
66.7% during Q2 2004; and year to date gross margin was $3,939,000, or
58.0%, as compared to $4,707,000, or 65.6%, during fiscal 2004.
* Q2 income from operations was $0.003 per diluted share compared to
$0.229 per diluted share in Q2 2004; and year to date income from
operations was $0.074 per diluted share compared to $0.430 per diluted
share in the prior year. Q2 was adversely impacted by unusually high
legal, accounting and investor relations expense, which increased
$242,000 as compared to Q2 2004
* Q2 net income was $0.003 per diluted share as compared to $0.196 per
diluted share in Q2 2004; and year to date net income was $0.076 per
diluted share as compared to $0.429 per diluted share in fiscal 2004.
Fiscal Second Quarter and Year-To-Date Results For Drew
* Q2 net revenues were $2,932,000 and year to date net revenues were
$4,846,000.
* Q2 gross margin was $1,029,000, or 35.1%, and year to date gross margin
was $1,688,000, or 34.8%.
* Q2 loss from operations was $0.070 per diluted share and year to date
loss from operations was $0.121 per diluted share.
* Q2 net loss was $0.075 per diluted share and year to date net loss was
$0.130 per diluted share.
Richard J. DePiano, Chairman and Chief Executive Officer commented,
"Escalon's revenue and profitability have been greatly impacted by the
acquisition of Drew. At the time of the acquisition Drew was a turnaround
opportunity as it had not been profitable throughout its history. We have
been steadfast in executing the strategy we laid out to bring Drew into the
Escalon family. We continued to advance on operational initiatives designed to
stabilize and increase Drew's revenue base and to infuse Drew with working
capital in the areas of manufacturing, sales and marketing and product
development. The first steps have been to invest in Drew's current product
range by enhancing features of the instruments with an additional focus on
bringing Drew's product quality and customer satisfaction level up to
Escalon's standards. We have already been successful in boosting production
capacity as well as shortening the lead time for delivery of Drew's high-
margin reagent products. In January we took the important step of recruiting
a Vice President of Sales for Drew's worldwide sales organization. His near
term goals are to lead the process of recruiting a sales force for the
domestic market to complement the team that is already in place. At the same
time he will be working to improve Drew's distributor network within the
domestic market for hematology, diabetes and veterinary applications.
Initially we will concentrate on driving sales in the veterinary market, which
enjoys higher margins."
"With respect to Sonomed, unit sales of our pachymeter product experienced
significant expansion in fiscal 2004. Fiscal 2005 has seen a decline to
historical sales levels. At the same time, we experienced increasing demand
for our E-Z Scan(TM) product line, which was launched at the end of fiscal
2004. We are particularly excited about our latest offering, the Vu-Max(TM)
product line. Vu-Max(TM) is a high-frequency device that provides a detailed
image of the front of the eye. The device has a number of applications
including glaucoma screening, refractive surgery and post-operative cataract
surgery. The Vu-Max will be particularly useful when implantable corrective
lenses are more widely accepted in the United States. We commenced a direct
marketing campaign for the VuMax(TM) this month targeting vitreo-retinal
ophthalmic surgeons."
"In our Vascular segment, revenues continued to be hampered by changes
within our distribution channel. However, we are pleased to report that the
resulting decrease in product revenue from these changes was largely offset by
our direct sales effort and solid increases in the European market."
"As a result of the Drew acquisition, the Company has incurred an
unusually high level of legal, accounting and investor relations expense. The
litigation with IntraLase has also driven up our legal costs. Coupling this
with weakness in revenue at Sonomed and Vascular has lead to the decrease in
profitability we are currently experiencing in our pre-Drew companies. In the
coming quarters, legal and accounting expenses should diminish, especially
when we put the IntraLase litigation behind us."
"Our balance sheet remains strong despite the reduction in cash from June
30, 2004. We have paid off $6.2 million in debt since fiscal year end.
Countering the decrease in cash, IntraLase's IPO in October has enabled us to
book our holdings in their stock. As of December 31, 2004, the shares we held
in IntraLase were worth $5.9 million."
"Looking ahead, we are committed to maximizing Drew's operating and
financial performance and while the impact of our efforts to date cannot be
seen in our second quarter results we are pleased with the progress we have
made."
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 division, 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. The Company 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 Company'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 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
the Company's business units, including Drew, generate cash and identify,
finance, integrate operations of Drew 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, 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 STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
2004 2003 2004 2003
Product revenue $ 5,742,848 $ 3,144,034 $ 10,388,801 $ 5,985,160
Other revenue 595,296 613,891 1,251,000 1,184,407
Revenues, net 6,338,144 3,757,925 11,639,801 7,169,567
Costs and expenses:
Cost of goods
sold 3,337,468 1,249,660 6,013,333 2,462,459
Research and
development 474,779 225,992 791,478 433,122
Marketing, general
and administrative 2,916,770 1,321,653 5,105,729 2,535,285
Total costs
and expenses 6,729,017 2,797,305 11,910,540 5,430,866
(Loss)/income
from operations (390,873) 960,620 (270,739) 1,738,701
Other income
and expenses:
Equity in Ocular
Telehealth
Management, LLC (7,109) - (36,310) -
Interest income 12,349 282 44,441 961
Interest expense (29,934) (107,880) (26,521) (226,439)
Total other
income and
expenses (24,694) (107,598) (18,390) (225,478)
(Loss)/income
before income
taxes (415,567) 853,022 (289,129) 1,513,223
Income taxes 7,058 32,061 20,027 69,106
Net (loss)/income $(422,625) $820,961 $(309,156) $ 1,444,117
Basic net
(loss)/income
per share $(0.072) $ 0.243 $ (0.054) $ 0.429
Diluted net (loss)/
income per share $(0.072) $ 0.196 $ (0.054) $ 0.357
Weighted average
shares - basic 5,869,028 3,371,920 5,716,748 3,368,643
Weighted average
shares - diluted 5,869,028 4,187,117 5,716,748 4,046,118
Selected Balance Sheet Data: December 31, June 30,
2004 2004
(unaudited) (audited)
Cash, cash equivalents and investments $9,636,644 $ 12,601,971
Total current assets 19,776,496 17,565,760
Total assets 42,363,546 29,457,115
Current liabilities 5,952,030 3,600,427
Long-term debt 522,469 2,396,019
Total shareholders' equity 35,889,047 23,460,669
SOURCE Escalon Medical Corp.
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Related links:
http://www.escalonmed.com
CONTACT:
Richard J. DePiano, Chairman and CEO of
Escalon Medical Corp., +1-610-688-6830; or Joseph Calabrese at
Financial Relations Board, +1-212-827-3772, for Escalon Medical
Corp.
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