WAYNE, Pa., Sept. 28 /PRNewswire-FirstCall/ -- Escalon Medical Corp.
(Nasdaq: ESMC) today announced results for its fiscal fourth quarter and
twelve months ended June 30, 2007.
    For the fiscal year 2007, the Company's reported net revenue increased
to $38,837,780 compared with $29,790,698 in fiscal 2006. This increase in
net revenue was primarily due to a $9.6 million lump sum settlement payment
from IntraLase Corp. to the Company. This increase also included product
revenue of $27,892,738 for fiscal 2007, compared with $27,543,785 in the
prior year. The product revenue increase was primarily related to strong
sales in the Company's Sonomed and Escalon Digital Solutions ("EMI")
business units, which increased approximately 27.0% and 241.9%,
respectively.
    This strong growth was offset by an 18.4% decrease in revenues at the
Company's Drew business unit primarily due to the non-renewal of two OEM
agreements and a temporary delay in the introduction of Drew's new line of
products in fiscal 2007. As previously announced, in July 2007, Drew
received 510(k) clearance from the FDA to market the new TRILOGY Analyzer.
TRILOGY, a multifunction analyzer used in determination of analytes in body
fluids, is an open system intended for clinical use with various chemistry
assays in professional settings. Additionally, Drew anticipates receiving
approval on its new D3 Analyzer in the second quarter of fiscal 2008, which
will provide two new enhanced instruments for sale during the year.
Further, Drew anticipates submitting its new DS-360 Analyzer for FDA
approval in the second half of fiscal 2008.
    The Company reported fiscal 2007 net income of $5,914,603, or $0.92 per
diluted share, compared with a net loss of ($1,985,940), or ($0.32) per
diluted share, in fiscal 2006. This increase was primarily due to increased
royalties from the IntraLase License Agreement and the lump sum settlement
payment from IntraLase Corp. to the Company, which was recorded during the
third quarter of fiscal 2007. The settlement also marked 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.
    For the fourth quarter of fiscal 2007, the Company reported net revenue
of $7,474,120, an 3.7% increase from the $7,207,780, reported in the prior
year period. This growth was offset by a decrease in the Company's Drew
business unit.
    Product revenue increased approximately 11.5% to $7,414,831 for the
three- month period ended June 30, 2007, compared with $6,648,232 for the
same period last fiscal year. For the fourth quarter of fiscal 2007, the
Company reported a net loss of ($1,172,639), or ($0.18) per diluted share,
compared with a net loss of ($1,142,261), or ($0.19) per diluted share, in
the fourth quarter of fiscal 2006
    2007 Recap
    "I am pleased to be report another successful year for Escalon Medical.
Overall, our Sonomed business had an excellent fiscal 2007 driven by
increased sales of the new VuMax high frequency systems and the EZ AB scan
ultrasound systems. Additionally, we are pleased that EMI's expanding
product offering has seen significant market acceptance during the year,
which has driven an increase in digital imaging system sales," said Richard
J. DePiano, Chairman and Chief Executive Officer.
    "Despite the sales decline within our Vascular business unit due to the
termination of several distributor relationships during fiscal 2005 and
2006, the unit's profitability has increased due to efforts to replace the
impacted territories with direct sales. Moving ahead, we look forward to
capitalizing on recent Vascular R&D initiatives and bringing new visual
products to market during 2008," Mr. DePiano added.
    Mr. DePiano concluded, "Furthermore, with the previously announced
reorganization of the Drew business, we have significantly reduced
operating costs and expanded operating margins for the Company as a whole.
We continue to pursue the significant opportunities ahead and, due to our
recent rationalization efforts and anticipated new product launches within
Drew and other business units, we enter 2008 with solid momentum and a
stronger business platform."
    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:
                                           June 30,    June 30,     June 30,
                                             2007        2006         2005

    Net Income (Loss)                    $5,914,603  $(1,985,940) $2,448,111

    Non-GAAP adjustments:

    Stock based compensation               $162,576           $-          $-
    Depreciation and amortization          $590,846     $440,952    $387,651

    Total adjustments                      $753,422     $440,952    $387,651

    Non-GAAP adjusted income (loss)      $6,668,025  $(1,544,988) $2,835,762

    Shares used in computing fully
      diluted earnings per share          6,434,275    6,152,455   6,231,024

    Non-GAAP adjusted income (loss) per
      fully diluted share                     $1.04       $(0.25)      $0.46
    Founded in 1987, Escalon develops markets and distributes ophthalmic
diagnostic and surgical 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 and any acquisitions it may undertake, if any, of which there
can be no assurance, implement cost reductions, 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, the continuity of
royalty revenue, litigation and non-recurring expenses, 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 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 INCOME
                                 (Unaudited)

                          Three Months Ended June 30,   Year Ended June 30,
                               2007         2006         2007         2006
    Net revenues:
    Product revenue         $7,414,831   $6,648,232  $27,892,738  $27,543,785
    Other revenue              $59,289     $559,548  $10,945,042   $2,246,913

    Revenues, net           $7,474,120   $7,207,780  $38,837,780  $29,790,698

    Costs and expenses:
      Cost of goods sold    $4,226,375   $3,993,252  $15,771,254  $16,003,904
      Marketing, general
       and administrative   $3,744,306   $3,599,176  $13,806,399  $13,994,788
      Research and
       development            $822,909     $692,246   $3,461,322   $2,828,196
        Total costs and
         expenses           $8,793,590   $8,284,674  $33,038,975  $32,826,888

    (Loss) income from
     operations            $(1,319,470) $(1,076,894)  $5,798,805  $(3,036,190)

    Other income and
     (expense):
      Gain on sale of
       available for sale
       securities              $75,000           $-      $75,000   $1,157,336
      Equity in Ocular
       Telehealth
       Management, LLC        $(31,963)   $(103,872)    $(87,852)   $(173,844)
      Interest income          $95,072      $49,890     $208,457     $161,588
      Interest expense         $(5,138)    $(16,100)    $(28,753)    $(63,521)
        Total other income
         and (expense)        $132,971     $(70,082)    $166,852   $1,081,559

    Net (loss) income
     before taxes          $(1,186,499) $(1,146,976)  $5,965,657  $(1,954,631)
    Provision for income
     taxes                    $(13,860)     $(4,715)     $51,054      $31,309

    Net (loss) income      $(1,172,639) $(1,142,261)  $5,914,603  $(1,985,940)


    Basic net (loss)
     income per share           $(0.18)      $(0.19)       $0.93       $(0.32)

    Diluted net (loss)
     income per share           $(0.18)      $(0.19)       $0.92       $(0.32)

    Weighted average
     shares - basic          6,374,929    6,152,455    6,374,929    6,152,455
    Weighted average
     shares - diluted        6,434,275    6,152,455    6,434,275    6,152,455



    SELECTED BALANCE SHEET DATA:
                                                  June 30,          June 30,
                                                    2007              2006

    Cash, cash equivalents and Investments       $8,879,462        $3,429,930
    Total current assets                        $21,763,012       $14,911,249
    Total assets                                $45,017,213       $38,644,767
    Current liabilities                          $4,524,607        $4,295,109
    Long-term debt                                       $-          $162,551
    Total shareholders' equity                  $39,405,606       $33,100,107

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