WAYNE, Pa., May 12 /PRNewswire-FirstCall/ --
Escalon Medical Corp. (Nasdaq: ESMC) today announced results for its fiscal
third quarter ended March 31, 2003.  For the third quarter of fiscal 2003,
Escalon Medical reported net income of $455,134, or $0.133 per diluted share,
a 47.8% gain over net income of $307,971, or $0.091 per diluted share, in the
third quarter of fiscal 2002.
    Revenues for the third quarter of fiscal 2003 increased 3.7% to $3,386,892
compared to $3,266,088 in the third quarter of fiscal 2002.  For the third
quarter, product revenue from Sonomed decreased 1.9% to $1,621,000 compared to
$1,653,000 in the prior year period.  Continued improvement in the domestic
market was offset by declines in Latin America, Africa and Asia.  Product
revenue in the Vascular business increased 6.7% to $689,000 in the third
quarter of fiscal 2003 compared to $646,000 in the year ago period.  Revenue
in the Company's Medical / Trek business increased by 1.5% to $406,000 in the
quarter from $400,000 in the third quarter of fiscal 2002.  Revenue in the
Digital business unit was $59,000 for the quarter compared to $137,000 in the
third quarter of 2002.  Royalty revenue from Silicone Oil was $454,000 in the
quarter compared to $430,000 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 Company also received
a $156,000 royalty payment related to the licensing of its intellectual laser
properties.  These payments commenced in the fourth quarter of fiscal year
2002.  The Company's two royalty revenue streams will likely fluctuate
depending on the demand of the underlying products.
    The gross margin as a percent of product revenue was 57.6% in the current
quarter compared to 54.2% in the year ago period.  The improvement related
primarily to changes in product mix at Sonomed.  Marketing, general and
administrative expenses declined to 36.0% of net revenues in the third quarter
from 40.1% of sales in the year ago period due primarily to cost cutting
initiatives at Sonomed.  The Company also took a $195,000 non-cash charge in
the quarter to write off the remaining net book value of the license and
distribution rights related to Povidone Iodine 2.5%.  Having previously
determined that Povidone Iodine 2.5% did not fit strategically with its
product portfolio, management had been seeking partners to generate value from
its product license.  During the quarter, management decided to discontinue
the project after it had exhausted such partnering opportunities and
determined that further expenditures were not warranted.
    For the first nine months of fiscal 2003, Escalon Medical reported a 38.3%
gain in net income to $1,061,963, or $0.309 per diluted share, from net income
of $767,717, or $0.230 per diluted share, in the first nine months of fiscal
2002.  Revenues for the first nine months of fiscal 2003 were $9,662,408
compared to $9,013,524 in the prior year period, a 7.2% gain.
    "The third fiscal quarter was another record in terms of net revenues and
income from operations.  This strong performance has enabled us to continue to
pay down debt and reinvest in our business," commented Richard J. DePiano,
Chairman and Chief Executive Officer.
    Mr. DePiano continued, "At Sonomed, our domestic business was strong, with
a sharp increase in sales of our pachymeter, a device that measures the
thickness of the cornea.  Increased demand resulted from optometrists
beginning to use the device as a standard piece of equipment for glaucoma
screening.  Offsetting this strength was continued softness in Latin America
and a decline in sales in Africa and Asia.  We recently returned from the
American Society of Cataract and Refractive Surgery 2003 Symposium held in San
Francisco, where we introduced a new B-Scan, the E-Z Scan(TM).  While we do
not expect to ship any product until July, we have already begun to receive
orders.  Europe also continues to be an area of focus at Sonomed, and we are
participating in several ophthalmology trade shows in the region in May.
Europe should also benefit from additional management support that was
recently added to the area."
    "Our Vascular segment performed nicely in the quarter with continued
growth in our PD Access(TM) and Smart Needle(TM) business.  We also continue
to focus on increasing trial and usage of our Doppler Guided IV Needle and are
in the process of expanding our sales team in the Northeast region to address
the opportunity we see in the oncology and anesthesia markets."
    Mr. DePiano concluded, "Our focus continues to be to manage the business
to generate cash flow that will enable us to pay down debt and reinvest in our
business.  We continue to make good progress operationally and financially to
position Escalon to take advantages of the growth opportunities we see ahead
in our niche markets."
    Founded in 1987, Escalon develops, markets and distributes ophthalmic
diagnostic, surgical and pharmaceutical products as well as vascular access
devices.  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 and
New Berlin, Wisconsin.

    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, 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, 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          Nine Months Ended
                                 March 31,                  March 31,
                             2003          2002         2003         2002

    Product revenue      $2,776,415    $2,836,512    $8,039,301  $7,721,016
    Other revenue           610,477       429,576     1,623,107   1,292,508
    Revenues, net         3,386,892     3,266.088     9,662,408   9,013,524

    Costs and expenses:
      Cost of goods sold  1,178,377     1,298,521     3,536,340   3,519,450
      Research and
       development          204,283       144,474       578,337     399,743
      Marketing, general
       and administrative 1,220,007     1,310,156     3,786,148   3,750,997
      Write-down of Povidone
       Iodine license and
       distribution rights  195,950            --       195,950          --
        Total costs and
         expenses         2,798,617     2,753,151     8,096,775   7,670,190
    Income from operations  588,275       512,937     1,565,633   1,343,334

    Other income and (expenses):
      Equity in income
       (loss) of unconsolidated
       joint venture             --        (3,518)           --       8,848
      Interest income           609           450         2,087       1,805
      Interest expense     (133,750)     (201,898)     (505,757)   (586,270)
        Total other income
         and (expense)     (133,141)     (204,966)     (503,670)   (575,617)

    Net income             $455,134      $307,971    $1,061,963    $767,717

    Basic net income
     per share               $0.136        $0.094        $0.316      $0.233

    Diluted net income
     per share               $0.133        $0.091        $0.309      $0.230
      Weighted average
       shares - basic     3,355,851     3,292,184     3,355,851   3,292,184
      Weighted average
       shares - diluted   3,420,474     3,385,263     3,441,180   3,339,627


    SELECTED BALANCE SHEET DATA:                     March 31,      June 30,
                                                        2003         2002
                                                    (unaudited)    (audited)

    Cash, cash equivalents and investments           $132,634      $220,826
    Total current assets                            4,642,682     4,287,590
    Total assets                                   16,774,976    16,912,441
    Current liabilities                             4,008,868     4,527,697
    Long-term debt                                  4,495,694     5,191,393
    Total shareholders' equity                      8,270,415     7,193,351

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