WAYNE, Pa., Nov. 14 /PRNewswire-FirstCall/ -- Escalon Medical Corp.
(Nasdaq: ESMC) today announced results for its fiscal first quarter ended
September 30, 2005.
    Net revenue for the first quarter of fiscal 2006 totaled $7,793,000, a
47.3% increase from the $5,292,000 reported in the first quarter of fiscal
2005. Product revenue increased 53.6%, to $7,123,000 in the first quarter of
fiscal 2006 as compared to $4,636,000 in the first quarter of fiscal 2005. The
increase in both net revenue and product revenue is primarily attributable to
strong sales in the Company's Drew, Sonomed and Vascular business units.
    For the first quarter of fiscal 2006, Escalon reported net income of
$714,000, or $0.112 per diluted share, from net income of $116,000, or $0.019
per diluted share, in the first quarter of fiscal 2005.  During July 2005,
Escalon sold 58,555 shares of IntraLase common stock that had originally been
received in connection with the license of Escalon's intellectual laser
properties to IntraLase in 1997. The stock was sold at $19.8226 per share and
resulted in net proceeds of $1,157,336 after the payment of brokers'
commissions and other fees. The net proceeds were recorded as other income in
the three-month period ended September 30, 2005.
    Diluted shares outstanding increased 3.8% to 6,372,742 at September 30,
2005, from 6,141,958 at September 30, 2004, due primarily to Drew shares being
outstanding for the entire first quarter of fiscal 2006.

    Comments from Management
    Richard J. DePiano, Chairman and Chief Executive Officer commented, "We
are pleased to announce strong first quarter operating results reflecting the
success of initiatives to accelerate growth rates, expand our product
portfolio and enhance our mix of businesses. Our performance this quarter was
driven by strong growth in our Drew business unit, which realized 138.1% year-
over-year revenue growth as a result of increased sale of diabetics and
hematology instruments and the related reagents and controls that are used to
operate the instruments in both domestic and international markets."
    "Our Sonomed business unit realized 9.4% product revenue growth, year-
over-year, driven by increased sales of the Company's EZ AB scan ultrasound
systems and an increase in export sales, which were partially offset by a
continued decrease in demand for the Company's pachymeter product.  Product
revenue at our Vascular business unit increased 34.0% during the first quarter
of fiscal 2006, primarily attributable to an increase in direct sales to end
users by the Company's domestic sales team and, to a lesser extent, increases
in the European market."
    "We are also extremely excited about our recent announcements to acquire
substantially all of the assets of MRP Group, Inc., a privately held
ophthalmic technology solutions provider, and the signing of a non-exclusive
co-marketing agreement with privately-held Anka Systems, Inc., a leader in
web-based connectivity solutions for the ophthalmic physician. We expect these
developments will significantly enhance our Escalon Digital Solutions business
and position us to secure a leadership role in ophthalmic digital imaging and
data management solutions."
    Mr. DePiano concluded, "Looking ahead to the balance of this fiscal year
and beyond, we remain confident with regard to the outlook for both the
markets we serve and our Company and believe the numerous initiatives we have
underway all support our strategy to build a well-balanced portfolio that
promises consistent growth."

    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 implement its growth and marketing strategies,
improve upon the operations of Escalon's business units, including the
integration of Drew's operations and any acquisitions it may undertake, if
any, of which there can be no assurance, 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


                                                          (Unaudited)
                                                       Three Months Ended
                                                           September 30,
                                                       2005          2004

    Product revenue                                $7,123,354    $ 4,636,457
    Other revenue                                     670,180        655,704
    Revenues, net                                   7,793,534      5,292,161

    Costs and expenses:
      Cost of goods sold                            4,105,653      2,671,348
      Research and development                        756,160        315,762
      Marketing, general and administrative         3,284,051      2,182,487
      Total costs and expenses                      8,145,864      5,169,597

    (Loss) income from operations                    (352,330)       122,564

    Other income and (expense):
      Gain on Sale of Available for Sale Securities 1,157,336           --
      Equity in Ocular Telehealth Management          (18,429)      (29,201)
      Interest income                                   4,847        32,092
      Interest expense                                (10,677)        3,413
            Total other income and (expense)        1,133,077         6,304

    Income before income taxes                        780,747       128,868

    Income taxes                                       66,400        12,969

    Net income                                       $714,347      $115,899

    Basic net income per share                         $0.120        $0.021

    Diluted net income per share                       $0.112        $0.019

     Weighted average shares - basic                5,964,292     5,564,469
     Weighted average shares - diluted              6,372,742     6,141,958

    SELECTED BALANCE SHEET DATA:
                                                 September 30,      June 30,
                                                     2005            2005
                                                 (unaudited)      (audited)

    Cash, cash equivalents and investments        $5,325,697     $5,115,772
    Total current assets                          17,257,301     17,664,898
    Total assets                                  39,780,546     40,049,336
    Current liabilities                            4,340,228      4,051,694
    Long-term debt                                   329,565        391,793
    Total shareholders' equity                    34,023,753     34,518,849

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