WAYNE, Pa., Sept. 29 /PRNewswire-FirstCall/ -- Escalon Medical Corp.
(Nasdaq Small Cap: ESMC) today announced results for its fiscal fourth quarter
and twelve months ended June 30, 2005. Net revenue for fiscal 2005 totaled
$26,925,000, an 82.9% increase from the $14,721,000 reported in fiscal 2004,
primarily attributable to revenues resulting from the July 2004 acquisition of
Drew Scientific Group, Plc ("Drew"). Product revenue increased 93.3%, to
$23,864,000 in fiscal 2005 as compared to $12,348,000 in fiscal 2004,
primarily attributable to Drew.
Net income for fiscal 2005, totaled $2,448,000, or $0.393 per diluted
share, compared to net income of $2,742,000, or $0.637 per diluted share, in
fiscal 2004. Fiscal 2005 net income was negatively impacted by non-recurring
items and an unusually high amount of legal and accounting fees. These
included a one-time supplemental retirement benefit of $1,087,000 awarded to
the Company's Chairman and CEO in June 2005 and accounting fees of $97,000
primarily related to the Company's first quarterly filing with the SEC
subsequent to the Drew acquisition, litigation costs of $482,000 related to
IntraLase, and initial costs incurred of $180,000 related to compliance with
the Sarbanes-Oxley Act of 2002.
In addition to the non-recurring costs of $1,846,000 noted above, the
acquisition of Drew generated a loss from operations in fiscal 2005 of
$1,310,000 as the Company infused Drew with working capital and stabilized its
operations. Fiscal 2005 revenues were positively impacted by a gain of
$3,412,000 on the sale of IntraLase stock. Without these transactions, net
income for fiscal 2005 would have been $2,192,000 as compared to $2,742,000
for fiscal 2004.
Diluted shares outstanding increased 44.8% to 6,231,000 at June 30, 2005,
from 4,304,000 at June 30, 2004, due to the issuance of 900,000 shares related
to the acquisition of Drew, 800,000 shares in the March 2004 private equity
financing and the exercise of stock options.
For the fourth quarter of fiscal 2005, Escalon reported net revenue of
$8,042,000 compared to $3,939,000 in the prior year period, a 104% gain,
primarily attributable to revenues resulting from the Drew acquisition. For
the fourth quarter of fiscal 2005, Escalon reported net income of $2,016,000,
or $0.323 per diluted share, from net income of $559,000 or $0.103 per diluted
share, in the fourth quarter of fiscal 2004. Fourth quarter 2005 net income
reflected a gain of $3,412,000 on the sale of the IntraLase stock and was
negatively impacted by a one-time supplemental retirement benefit award to the
Company's Chairman and CEO of $1,087,000 and litigation costs of $278,000
related to IntraLase.
Fiscal Fourth Quarter and Fiscal 2005 Results for Escalon Excluding
Results for Drew in thousands
* Q4 product revenues were $3,965 a 10.5% increase, and fiscal 2005
product revenues were $12,571 a 1.8% increase.
* Q4 other revenues were $732, a 23% increase, and fiscal 2005 other
revenues were $2,820, a 18.8% increase. The increase primarily relates
to an increase in royalty payments received from IntraLase.
* Q4 gross margin was $2,975 or 67.2%, as compared to $2,290, or 58.2%
during Q4 2004; and fiscal 2005 gross margin was $9,787 or 63.6%, as
compared to $9,245, or 62.8%, during fiscal 2004.
* Q4 loss from operations was $(884) compared to income from operations of
$697 in Q4 2004; and fiscal 2005 income from operations was $549
compared to $3,262 in the prior year. Fiscal 2005 operating expenses
increased as a result of unusually high amounts of legal and accounting
fees, primarily related to Escalon's first quarter filing with the
Securities and Exchange Commission, IntraLase litigation costs,
increased auditors' fees and a one-time supplemental retirement benefit
award.
* Q4 net income was $0.381 per diluted share as compared to $0.103 per
diluted share in Q4 2004; and fiscal 2005 net income was $0.603 per
diluted share as compared to $0.637 per diluted share in fiscal 2004.
Fiscal Fourth Quarter and Fiscal 2005 Results for Drew (in thousands)
* Q4 net revenues were $3,615 and fiscal 2005 net revenues were $11,534.
* Q4 gross margin was $928, or 25.7%, and fiscal 2005 gross margin was
$3,980, or 34.5%.
* Q4 loss from operations was $(354) and fiscal 2005 loss from operations
was $(1,231).
* Q4 net loss was $(0.059) per diluted share and fiscal 2005 net loss was
$(0.210) per diluted share.
Continued Progress on Strategic Initiatives
Richard J. DePiano, Chairman and Chief Executive Officer commented, "We
are pleased with our performance in fiscal 2005, a year of transition and
growth for our entire organization. We continued to successfully bring Drew
into the Escalon family and took significant actions to accelerate the
implementation of our long-term strategy focused on increasing both revenue
and profitability drivers and developing a platform for sustained growth.
While the impact of our efforts to date is not fully demonstrated in our
fiscal 2005 financial results, our progress to date gives us confidence that
Escalon is positioned to capitalize on growth opportunities and deliver
increased, long-term profitability and enhanced shareholder value."
Mr. DePiano continued, "Turning to our operating results for the year,
product revenue within our Sonomed business unit increased $67,000, to
$7,663,000, driven by increasing demand for our E-Z Scan(TM) product line,
which was launched at the end of fiscal 2004, and increased export sales. This
growth offset lowered domestic demand for our pachymeter product, which
experienced significant expansion in fiscal 2004 due to enhanced techniques in
glaucoma screening performed by optometrists."
"In our Vascular business unit we are pleased to report that increases in
direct sales to end users by our domestic sales team, as well as modest
increases in the European market, drove unit revenue growth of 4.09%, to
$3,180,000 during fiscal 2005. This growth was partially offset by a decrease
in revenue from our distributor network as we strategically terminated
relationships with several distributors in fiscal 2005. Product revenue in
our Medical/Trek/EMI business unit improved 1.83%, to $1,727,000, during
fiscal 2005 primarily as result of increased OEM revenue from Bausch & Lomb."
"At year-end our balance sheet remained healthy despite the reduction in
cash from June 30, 2004. In fiscal 2005 we paid off approximately $6.4 million
in debt, and IntraLase's IPO in October 2004 enabled us to realize net
proceeds of approximately $3.4 million through the sale of 191,000 shares of
IntraLase stock during May. After June 30, 2005 the Company realized
additional net proceeds of approximately $1.2 million through the sale of an
additional 58,535 shares of IntraLase stock. We continue to own 3,000 shares
of IntraLase, which are classified as available-for-sale securities."
Mr. DePiano added, "We have made solid progress in fiscal 2005 and we
believe our achievements demonstrate that Escalon has the right operating
strategies in place. We expect fiscal 2006 to be another year of progress as
we continue to build on our strengths, enhance our market position and achieve
our growth and profitability goals."
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. Escalon 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 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 Escalon's future prospects. They are based on the Escalon'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 Escalon is able to improve upon the operations of Escalon's business
units, including the integration of Drew's operations, 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 Escalon'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,
2005 2004 2005 2004
Product revenue $ 7,215,583 $ 3,343,226 $23,864,322 $ 12,347,922
Other revenue 826,313 595,196 3,060,300 2,372,845
Revenues, net 8,041,896 3,938,422 26,924,622 14,720,767
Costs and expenses:
Cost of goods sold 4,138,360 1,648,644 13,158,061 5,475,703
Research and
development 635,574 176,251 1,892,706 776,496
Marketing, general
and administrative 4,505,696 1,416,266 12,556,374 5,206,067
Total costs and
expenses 9,279,630 3,241,161 27,607,141 11,458,266
(Loss) income from
operations (1,237,734) 697,261 (682,519) 3,262,501
Other income and
(expenses):
Gain on Sale of
Available for Sale
Securities 3,411,761 -- 3,411,761 --
Equity in Ocular
Telehealth
Management (13,671) -- (63,613) --
Interest income 15,655 48,755 69,262 59,072
Interest expense (12,582) (86,310) (55,116) (406,543)
Total other income
and (expense) 3,401,163 (37,555) 3,362,294 (347,471)
Income before income
taxes 2,163,429 659,706 2,679,775 2,915,030
Income taxes 147,727 101,267 231,665 173,300
Net income $ 2,015,702 $ 558,439 $ 2,448,110 $ 2,741,730
Basic net income
per share $ 0.338 $ 0.111 $ 0.420 $ 0.704
Diluted net income
per share $ 0.323 $ 0.103 $ 0.393 $ 0.637
Weighted average
shares - basic 5,963,477 5,016,380 5,831,564 3,896,951
Weighted average
shares - diluted 6,249,122 5,423,804 6,231,024 4,304,375
SELECTED BALANCE SHEET DATA:
June 30, June 30,
2005 2004
(audited) (audited)
Cash, cash equivalents and investments $ 5,115,772 $12,601,971
Total current assets 17,664,898 17,565,760
Total assets 40,049,336 29,457,115
Current liabilities 4,051,694 3,600,427
Long-term debt 391,793 2,396,019
Total shareholders' equity 34,518,849 23,460,669
Escalon (excluding Drew)
Three Months Ended Year Ended
June 30, 2005 June 30, 2005
(in thousands) (in thousands)
Product revenue $3,695 $12,571
Other revenue 732 2,820
Total revenue 4,427 15,391
Cost of goods sold 1,452 5,604
Gross margin 2,975 9,787
Operating expenses 3,859 9,238
(Loss) income from operations -884 549
Other income (expense) -3,414 -3,441
Income before income taxes 2,530 3,990
Income taxes 148 232
Net income (loss) $2,382 $3,758
Diluted net income (loss) per share $0.381 $0.603
Drew
Three Months
Ended Year Ended
June 30, 2005 June 30, 2005
(in thousands) (in thousands)
Product revenue $3,519 $11,294
Other revenue 96 240
Total revenue 3,615 11,534
Cost of goods sold 2,687 7,554
Gross margin 928 3,980
Operating expenses 1,282 5,211
(Loss) income from operations -354 -1,231
Other income (expense) -13 -79
Income before income taxes -367 -1,310
Income taxes 0 0
Net income(loss) -$367 -$1,310
Diluted net per share -$0.059 -$0.210
Condensed Consolidated
Statement of Operations
Three Months
Ended Year Ended
June 30, 2005 June 30, 2005
(in thousands) (in thousands)
Product revenue $7,214 $23,865
Other revenue 828 3,060
Total revenue 8,042 26,925
Cost of goods sold 4,138 13,158
Gross margin 3,904 13,767
Operating expenses 5,141 14,449
(Loss) income from operations -1,238 -682
Other income (expense) -3,400 -3,362
Income before income taxes 2,162 2,680
Income taxes 148 232
Net income (loss) $2,015 $2,448
Diluted net income (loss) per share $0.322 $0.393
SOURCE Escalon Medical Corp.
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CONTACT:
At The Company - Richard J. DePiano, Chairman
and CEO, Escalon Medical Corp., +1-610-688-6830; At Financial
Relations Board - Joseph Calabrese, +1-212-827-3772, for Escalon
Medical Corp.
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