Escalon® Medical Corp. Reports Profit in the Third Quarter of Fiscal 2014

PR Newswire

ARDMORE, Pa., May 14, 2014 /PRNewswire/ -- Escalon Medical Corp. (ESMC) today announced its operating results for the third fiscal quarter and nine months ended March 31, 2014, including an operating profit for the three-month period.

For the fiscal third quarter ended March 31, 2014, the company reported net income of $86,084 and net income from continuing operations of $112,354, or $0.01 per share.  This compares to a net loss of $285,000 and a net loss from continuing operations of $283,761, or $0.04 per share, for the prior year period.

For the first nine months of fiscal 2014, the company reported a net loss of $9,223; however net income from continuing operations was a positive $68,426, or $0.01 per share.  This compares to net income of $3.3 million, or $0.44 per share, in the year ago period, which includes a net gain of $4.1 million related to the sale of Drew and related debt settlement.  The net loss from continuing operations was $781,424, or $0.10 per share, for the first nine months of the prior fiscal year.

For the three month period, consolidated product revenue was $3.2 million, an increase of 15.7% compared to $2.7 million in the prior year period, led by a gain in sales of the Company's Sonomed Escalon ultrasound products.  For the nine months ended March 31, 2014, consolidated product revenue increased approximately 8.4% to $9.4 million from $8.6 million in the prior year period.

Year to date in fiscal 2014, margins have improved slightly to 51.5% compared to 50.1% in the prior year period due to product sales mix.  Marketing, general and administrative expenses decreased by 13.0% primarily due to declines in payroll expenses.  As a result of the planned update of existing products as well as the introduction of new products, research and development expenses for the first nine months of fiscal 2014 grew by 26.5% to $1.0 million from $803,256 in the prior year period.

At March 31, 2014, the Company had $2.4 million of cash and no long-term debt, and its continuing operations were near breakeven on a cash basis with a net use of cash of $197,769 in the first nine months of fiscal 2014, primarily related to an increase in inventory.

"I am pleased we were able to report another quarter of positive financial results, on top of our continued investment in developing our ophthalmic product line," commented Chief Executive Officer, Richard J. DePiano, Jr.  "Our latest tablet-based ultrasound system, the VuPad™, recently received U.S. Food and Drug Administration 510(k) clearance, and we are confident we will receive CE Marking and clearance by other international regulatory bodies in the coming months.  The VuPad™ has received excellent feedback at recent ophthalmic meetings and, as manufacturing ramps up, we anticipate sales will build."

Mr. DePiano added, "We remain committed to continuing to update our ophthalmic product offerings and are excited by the opportunity surrounding the VuPad™, the VuMAX® HD and other new products in our pipeline.  We will also look at select opportunities to add best-in-class ophthalmic product solutions to our distribution network to leverage our experienced sales force and further demonstrate our ongoing commitment to build on our position as a leader in ophthalmic diagnostic instrumentation and ultrasound solutions.  While planned increases to research and development expenses as well as increased sales and marketing costs could pressure financial results in the short term, we believe the planned increases will lead to sustainable growth and increased shareholder value longer term."

About Escalon Medical  
Founded in 1987, Escalon Medical Corp. (ESMC) specializes in the development, marketing and distribution of ophthalmic diagnostic imaging and surgical products branded under the Sonomed Escalon name.  Products include a variety of ophthalmic ultrasound, digital imaging and photography, and image management systems as well as surgical products including intraocular gases, fiber optic light guides and sources, and other surgical vitreoretinal instruments.  The Company seeks to grow its ophthalmic business by further developing and diversifying its product offering through internal development programs, strategic partnerships, and the acquisition of technology so as to best leverage the Company's distribution capabilities. The Company has headquarters in Ardmore, Pennsylvania and research and development, manufacturing and distribution operations in Lake Success, New York, New Berlin, Wisconsin and Stoneham, Massachusetts.  For additional information visit www.escalonmed.com and www.sonomedescalon.com

Forward Looking Statements  
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. These statements 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: develop, obtain regulatory clearance of and launch new products, implement its growth and marketing strategies; improve upon the operations of the Company including the ability to make acquisitions and the integration of any acquisitions it may undertake, if any, of which there can be no assurance; grow our remaining ophthalmic business unit; improve our financial position; implement cost reductions; generate cash; and identify, finance and enter into business relationships and acquisitions.  Other factors include 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; ability to reduce staffing and other costs and retain benefit of prior reductions; third party reimbursement and physician training, and 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 for year ended June 30, 2013, and its other filings with the Securities and Exchange Commission, all of which are available from the Securities and Exchange Commission as well as other sources.

                                             

ESCALON MEDICAL CORP. AND SUBSIDIARY

Unaudited Condensed Consolidated Statements of Operations



Three Months Ended


Nine Months Ended


March 31,


March 31,










2014


2013


2014


2013









Revenues, net

$  3,151,651


$ 2,724,740


$  9,360,219


$8,635,078









Costs and expenses:








    Cost of goods sold

1,473,334


1,337,442


4,539,870


4,309,894

    Marketing, general and administrative

1,250,159


1,409,274


3,743,548


4,303,775

    Research and development

315,850


272,889


1,016,082


803,256

       Total costs and expenses

3,039,343


3,019,605


9,299,500


9,416,925









Income (loss) from operations

112,308


(294,865)


60,719


(781,847)

Other income (expense)








     Other income

--


11,033


7,543


79,770

     Interest income

46


71


164


132

     Interest expense

--


--


--


(79,479)

         Total other income (expense)

46


11,104


7,707


423

Net income (loss) from continuing operations

112,354


(283,761)


68,426


(781,424)

Net (loss) income from discontinued

      operations, before tax

(26,270)


(2,103)


(77,649)


4,135,506

Income tax expense

--


--


--


(80,000)

Net (loss) income from discontinued

      operations, net of tax

(26,270)


(2,103)


(77,649)


4,055,506

Net income (loss) 

$   86,084


$   (285,864)


$   (9,223)


$   3,274,082

Basic and Diluted Net Income (Loss) per Share








     Continuing operations

$      0.01


$    (0.04)


$         0.01


$     (0.10)

     Discontinued operations

--


--


(0.01)


0.54

      Net income (loss)

$     0.01


$    (0.04)


$      --


$      0.44

Weighted Average Shares - basic

7,526,430


7,526,430


7,526,430


7,526,430


7,526,430


7,526,430


7,526,430


7,526,430

 

Selected Balance Sheet Data (Unaudited)






March 31, 2014


June 30, 2013

Cash and Cash Equivalents

$2,409,396


$2,654,701

Inventory

2,465,056


1,853,686

Working Capital

3,926,845


4,003,293

Total Assets

7,548,312


7,272,165

Total Liabilities

3,722,137


3,443,239

Stockholders' Equity

3,826,175


3,828,926

 

 

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