WAYNE, Pa., Sept. 26 /PRNewswire-FirstCall/ --
Escalon Medical Corp. (Nasdaq: ESMC) today announced results for its fiscal
fourth quarter and year ended June 30, 2002.  For the fourth quarter of fiscal
2002, Escalon Medical reported net income of $211,140, or $0.063 per diluted
share.  This compares to net income of $170,281, or $0.052 per diluted share,
in the fourth quarter of fiscal 2001, which was prior to the company's
adoption of Statement of Financial Accounting Standards No. 142 ("SFAS 142").
    Revenues for the fourth quarter of fiscal 2002 declined 3.1% to $3,060,408
compared to $3,158,102 in the fourth quarter of fiscal 2001.  For the fourth
quarter, revenue from Sonomed was down 6.9% to $1,402,789 compared to
$1,506,283 in the prior year period.  The softness was related primarily to
weakness in the domestic market.  Product revenue in the Vascular business
increased 18.2% to $718,592 in the fourth quarter of fiscal 2002 compared to
$608,071 in the year ago period.  The improvement resulted from unit sales
gains as well as a continuing shift toward sales achieved through our internal
sales force.  Revenue in the Company's Medical / Trek business declined by
22.6% to $808,013 in the quarter from $1,043,748 in the fourth 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 $461,594 in the quarter compared to $725,526 in the year ago
period.  This decrease is largely due to the fulfillment of a backorder
situation during 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.  Revenue in the Digital business unit was
$131,014 for the quarter as a result of Escalon Digital taking over all the
operations related to the CFA Digital Imaging System.  Prior to January 1,
2002, all revenues had been recognized by the joint venture between the
Company and Megavision.
    The gross margin as a percent of sales was 63.4% in the current quarter
compared to 59.2% in the year ago period.  Benefiting the gross margin was the
year-over-year margin improvements in the Vascular business primarily due to
increased sales price per unit, offset by the decline in sales of Silicone
Oil, which has no costs associated with it.  Marketing, general and
administrative expenses increased slightly in the quarter and benefited from a
$205,186 decline in amortization expense year over year as a result of the
implementation of SFAS 142.
    For fiscal 2002, Escalon Medical reported net income of $978,857, or
$0.291 per diluted share, compared to net income of $592,200, or $0.179 per
diluted share, in fiscal 2001.  Revenues for fiscal 2002 were $12,073,932
compared to $11,880,017 in fiscal 2001, an increase of 1.6%.  Revenues were
led by a 24.4% increase in the Vascular business, which contributed $2,634,000
in fiscal 2002.  Revenues in the Sonomed business increased by 1.4% in fiscal
2002 to $6,071,000.  In the Medical / Trek business, revenues declined 17.8%
to $3,102,000 for the year, largely due to a $500,000 decrease in revenue
earned in connection with Silicone Oil.  The Digital business contributed
$267,000 to revenues in fiscal 2002.
    "Despite a lackluster economic environment, we saw sales increase modestly
during the year, largely on the gains in our Vascular business," commented
Richard J. DePiano, Chairman and Chief Executive Officer.  "Importantly, we
remained profitable and generated strong cash flow, which allowed us to reduce
our term loan and line of credit by over $2.0 million in fiscal 2002."
    Mr. DePiano continued, "In addition to the top line gains in the Vascular
business, we have made good strides reducing costs through improved
manufacturing efficiencies.  This led to an improvement in Vascular's gross
margin from 52.0% of sales in fiscal 2001 to 62.5% of sales in fiscal 2002.
We made progress during the quarter introducing our Doppler Guided IV Needle
into new institutions in the Philadelphia market and feedback continues to be
positive on its use in oncology.  We remain focused on penetrating new markets
such as hematology, and I.V. therapy and look to slowly build our sales force
to increase usage."
    "At Sonomed, sales were weaker than expected in the fourth quarter,
although they were up for the year.  While international sales continued to
benefit from our entry into Latin America, domestic sales were soft.
International markets such as the Far East will be a particular focus in
2003."
    Mr. DePiano concluded, "Our long-term growth strategy remains consistent,
we will focus on expanding our market position overseas and also look for
opportunities to tailor our existing products to new niche markets.  While the
economy remains uncertain, we continue to expect to see sales gains in 2003
and continue to manage the business to remain profitable."
    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 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 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, 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             Year Ended
                                    June 30,                  June 30,
                               2002         2001         2002        2001

    Product revenues, net   $3,060,408  $3,158,102  $12,073,932 $11,880,017

    Costs and expenses:
     Cost of goods sold      1,120,875   1,289,427    4,640,325   4,296,525
     Research and development  155,017     130,392      554,760     491,582
     Marketing, general and
      administrative         1,345,997   1,335,588    5,096,994   5,430,813
       Total costs and
        expenses             2,621,889   2,755,407   10,292,079  10,218,920
    Income from operations     438,519     402,695    1,781,853   1,661,097

    Other income and (expenses):
     Loss from termination
      of joint venture         (23,434)         --      (23,434)         --
     Equity in income (loss)
      of unconsolidated
      joint venture                 --      (3,760)       8,848     (19,164)
    Interest income                542        (632)       2,347       2,297
    Interest expense          (204,487)   (228,022)    (790,757) (1,052,030)
     Total other income and
      (expense)               (227,379)   (232,414)    (802,996) (1,068,897)
    Net income :
     Reported net income       211,140     170,281      978,856     592,200
     Add: FAS 142 adjustment        --     205,186           --     856,679
     Adjusted net income       211,140     375,467      978,856   1,448,879
    Basic net income per share:
     Reported net income        $0.063      $0.052       $0.293      $0.180
     Add: FAS 142 adjustment        --       0.062           --       0.260
     Adjusted net income        $0.063      $0.114       $0.293      $0.440
    Diluted net income per share:
     Reported net income        $0.063      $0.052       $0.291      $0.179
     Add: FAS 142 adjustment        --       0.062           --       0.259
     Adjusted net income        $0.063      $0.114       $0.291      $0.438

    Weighted average shares -
     basic                   3,345,851   3,292,184    3,345,851   3,292,184
    Weighted average shares -
     diluted                 3,360,492   3,307,986    3,360,492   3,307,986


    SELECTED BALANCE SHEET DATA:                    June 30,        June 30,
                                                      2002            2001
                                                   (audited)       (audited)

    Cash, cash equivalents and investments          $220,826        $80,830

    Total current assets                           4,287,590      4,185,152
    Total assets                                  16,912,441     17,642,462
    Current liabilities                            4,527,697      7,032,888
    Long-term debt                                 5,191,393      4,502,325
    Total shareholders' equity                     7,193,351      6,107,249

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