WAYNE, Pa., May 15 /PRNewswire-FirstCall/ -- Escalon Medical Corp.
(Nasdaq: ESMC) today announced results for its fiscal third quarter and
nine months ended March 31, 2007.
For the third quarter of fiscal 2007, the Company reported net revenue
of $16,558,760, a 111.2% increase from the $7,839,758 reported in the prior
year period. For the third quarter of fiscal 2007, the Company reported net
income of $8,271,462, or $1.29 per diluted share, compared with a net loss
of $(576,225), or $(0.09) per diluted share, in the third quarter of fiscal
2006. These increases were primarily due to the settlement agreement that
the Company entered into with IntraLase Corp. during the third quarter
ended March 31, 2007 to acquire the intellectual property under the
licensing agreement and to resolve all outstanding disputes and litigation
between the parties. Under the terms of the settlement agreement, IntraLase
made a lump sum payment to the Company of $9.6 million, which was recorded
during the third quarter of 2007. The settlement also marks the end of any
future royalty payments to be received under the License Agreement, which
is expected to have a material effect on earnings in subsequent periods.
This effect will be partially offset by the elimination of legal fees
related to this matter.
Product revenue decreased approximately 5.3% to $6,900,461 for the
three- month period ended March 31, 2007, compared with $7,286,704 for the
same period last fiscal year. Product revenue at the Company's Sonomed,
Medical/Trek/EMI and Vascular business units increased approximately 9.1%,
11.7% and 2.4%, respectively, during the third quarter ended March 31,
2007, when compared with the same period last fiscal year. This growth was
offset by a decrease in the Company's Drew business unit. Revenue at Drew
decreased 16.8%, during the three-month period ended March 31, 2007, when
compared with the same period last fiscal year.
For the nine-month period ended March 31, 2007, the Company reported
net revenue of $31,363,660, compared with $22,582,918 in the prior period,
and product revenue of $20,477,907, compared with $20,895,553 in the prior
year nine-month period. The decrease in product revenue was primarily
related to decreases in the Drew and Vascular business units. The Company
reported net income for the nine months ended March 31, 2007 of $7,087,242,
or $1.10 per diluted share, compared with a net loss of $(843,679), or
$(0.14) per diluted share, in the prior year period. This increase was
primarily due to the proceeds received from IntraLase as a result of the
settlement agreement recorded during the third quarter of 2007.
Recap of Fiscal Third quarter 2007
"The integration of MRP's retinal imaging systems with EMI's existing
ophthalmic photography product portfolio continues to enhance our operating
results. Furthermore, we remain on track in our efforts to implement the
previously announced reorganization of the Drew business, which we believe
will reduce operating costs and expand operating margins for the Company as
a whole," said Richard J. DePiano, Chairman and Chief Executive Officer.
Mr. DePiano added, "Reviewing our operating performance for the third
quarter of fiscal 2007, product revenue decreased approximately $387,000,
or 5.3%, to $6,900,000 during the three-month period ended March 31, 2007
as compared with the same period last fiscal year. As anticipated, product
revenue in our Drew business unit decreased $651,000, or 16.8%, compared
with the same period last fiscal year. The decrease is primarily due to a
reduction of approximately $900,000 in international sales of diabetic and
hematology instruments, offset by increased sales of spare parts.
"At our Sonomed business unit, product revenue increased $182,000, or
9.1%, compared with the same period last fiscal year. This increase was
caused by an increase in sales of the Company's EZ scan ultrasound systems,
primarily into international markets. In our Vascular business unit,
product revenue increased $21,000, or 2.4%, to $914,000, primarily due to
increased direct sales to end users by Escalon's domestic sales team."
"In the Medical/Trek/EMI business unit, product revenue increased
$61,000, or 11.7%, to $583,000 during the three-month period ended March
31, 2007 as compared with the same period last fiscal year. The increase in
Medical/Trek/EMI product revenue is primarily attributed to an increase of
approximately $108,000 in EMI sales of digital imaging systems. With the
integration of MRP's retinal imaging systems largely behind us, we have a
much stronger position in the ophthalmic digital imaging marketplace than
we have in the past and expect this to continue as we move forward."
Non-GAAP Measures
To supplement the Company's consolidated financial statements presented
in accordance with GAAP, the Company has begun providing certain non-GAAP
measures of financial performance. These non-GAAP measures include non-GAAP
net loss and non-GAAP loss per fully diluted share.
The Company's reference to these non-GAAP measures should be considered
in addition to results prepared under current accounting standards, but are
not a substitute for, nor superior to, GAAP results. These non-GAAP
measures are provided to enhance investors overall understanding of the
Company's current financial performance and provide further information for
comparative purposes due to the adoption of the new accounting standard FAS
123R.
Specifically, the Company believes the non-GAAP measures provide useful
information to both management and investors by isolating certain expenses,
gains and losses that may not be indicative of its core operating results
and business outlook. In addition, the Company believes non-GAAP measures
that exclude stock-based compensation expense enhance the comparability of
results against prior periods. The non-GAAP measures and the reconciliation
to the most directly comparable GAAP measure of all non-GAAP measures are
as follows:
Three Months Ended Nine-Months Ended
March 31, March 31,
2007 2006 2007 2006
Net Income (Loss) $8,271,462 $(576,225) $7,087,242 $(843,679)
Non-GAAP adjustments:
Stock based compensation $123,772 $- $123,772 $-
Depreciation and
amortization $155,392 $120,884 $437,474 $338,829
Total adjustments $279,164 $120,884 $561,246 $338,829
Non-GAAP adjusted income
(loss) $8,550,626 $(455,341) $7,648,488 $(504,850)
Shares used in computing
basic and fully diluted
earnings per share 6,435,106 6,255,665 6,421,321 6,091,938
Non-GAAP adjusted income
(loss) per fully
diluted share $1.33 $(0.07) $1.19 $(0.08)
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. 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 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 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
-- implement its growth and marketing strategies, improve upon the
operations of the Company's business units, including the integration
of Drew's and MRP's operations, the reorganization of the Drew business
and the integration of any acquisitions it may undertake, if any, of
which there can be no assurance,
-- implement cost reductions,
-- generate cash,
-- identify, finance and enter into business relationships and
acquisitions. Other factors include uncertainties and risks related to
-- new product development, commercialization, 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
Escalon or third parties,
-- introduction of competitive products,
-- third party reimbursement and physician training, and
-- 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 INCOME
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
2007 2006 2007 2006
Net revenues:
Product revenue $6,900,461 $7,286,704 $20,477,907 $20,895,553
Other revenue 9,658,299 553,054 10,885,753 1,687,365
Revenues, net 16,558,760 7,839,758 31,363,660 22,582,918
Costs and expenses:
Cost of goods sold 4,036,285 4,382,268 11,544,879 12,010,652
Research and
development 843,858 717,920 2,638,413 2,135,950
Marketing, general and
administrative 3,361,582 3,283,722 10,062,093 10,395,612
Total costs and
expenses 8,241,725 8,383,910 24,245,385 24,542,214
Income (loss) from
operations 8,317,035 (544,152) 7,118,275 (1,959,296)
Other (expense) and
income:
Gain on sale of
available for sale
securities 0 0 0 1,157,336
Equity in Ocular
Telehealth
Management, LLC (25,191) (18,508) (55,889) (69,972)
Interest income 54,451 33,974 113,385 111,698
Interest expense (8,676) (27,515) (23,615) (47,421)
Total other income
(expense) 20,584 (12,049) 33,881 1,151,641
Net income (loss)
before taxes 8,337,619 (556,201) 7,152,156 (807,655)
Provision for income
taxes 66,157 20,024 64,914 36,024
Net income (loss) $8,271,462 $(576,225) $7,087,242 $(843,679)
Basic net income (loss)
per share $1.30 $(0.09) $1.11 $0.14
Diluted net income
(loss) per share $1.29 $(0.09) $1.10 $0.14
Weighted average shares
- basic 6,378,757 6,255,665 6,363,251 6,091,938
Weighted average shares
- diluted 6,435,106 6,255,665 6,421,321 6,091,938
ESCALON MEDICAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, June 30,
2007 2006
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $9,548,207 $3,379,710
Available for sale securities 75,000 50,220
Accounts receivable, net 4,198,133 3,996,243
Inventory, net 8,301,816 7,122,916
Other current assets 267,171 362,160
Total current assets 22,390,327 14,911,249
Furniture and equipment, net 912,024 969,956
Goodwill 21,072,260 21,072,260
Trademarks and trade names, net 620,106 620,106
Patents, net 240,498 313,702
Covenant not to compete and
customer list, net 351,023 420,073
Other assets 142,709 337,421
Total assets $45,728,947 $38,644,767
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $198,966 $232,837
Accounts payable 1,707,663 1,558,501
Accrued expenses 2,089,556 2,503,771
Total current liabilities 3,996,185 4,295,109
Long-term debt, net of current portion 14,113 162,551
Accrued post-retirement benefits 1,087,000 1,087,000
Total liabilities 5,097,298 5,544,660
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;
6,386,857 and 6,344,657 issued
and outstanding at March 31, 2007
and June 30, 2006, respectively 6,387 6,345
Common stock warrants 1,601,346 1,601,346
Additional paid-in capital 66,006,248 65,699,370
Retained earnings (27,035,185) (34,122,427)
Accumulated other comprehensive
(loss) income 52,853 (84,527)
Total shareholders' equity 40,631,649 33,100,107
Total liabilities and
shareholders' equity $45,728,947 $38,644,767
SOURCE Escalon Medical Corp.
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CONTACT:
Richard J. DePiano, Chairman and CEO of
Escalon Medical Corp., +1-610-688-6830; or Joseph Calabrese of
Financial Relations Board, +1-212-827-3772, for Escalon Medical
Corp.
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