Company Reports Improved Second Quarter Product Revenue and Continues to
Broaden Product Portfolio
WAYNE, Pa., Feb. 14 /PRNewswire-FirstCall/ -- Escalon Medical Corp. (Nasdaq: ESMC) today announced results for its fiscal second quarter and six months ended December 31, 2007.
For the second quarter of fiscal 2008, the Company reported improved sales in the Company's Drew, Vascular and Escalon Digital Solutions (EMI) business units, which increased approximately 16%, 10% and 36%, respectively, compared with the same period last fiscal year. Product revenue increased approximately $415,000, or 6%, to $7,450,000 during the three-month period ended December 31, 2007, compared with the same period in 2006. The Company reported net revenue of $7,495,080, a 1.8% decrease from the $7,636,740 reported in the prior year period. This decline was primarily due to decreased royalties received from the IntraLase License Agreement as a result of the settlement agreement between the Company and IntraLase dated February 27, 2007. These decreases were offset by the sales increases at Drew, Vascular and EMI mentioned above.
For the second quarter of fiscal 2008, the Company reported a net loss of $(639,346), or $(0.10) per diluted share, compared with a net loss of $(470,103), or $(0.07) per diluted share, in the second quarter of fiscal 2007. This was attributable to decreased royalties received from the IntraLase License Agreement, as well as increased expenses for the ongoing development of new products. Cost of goods sold totaled approximately $3,951,000, or 53% of product revenue, for the three-month period ended December 31, 2007, compared with $3,878,000, or 55% of product revenue, for the same period last fiscal year.
For the six-month period ended December 31, 2007, the Company reported net revenue of $14,388,351 compared with $14,804,900 in the prior period. This decline was primarily due to decreased royalties received from the IntraLase License Agreement as a result of the settlement agreement between the Company and IntraLase dated February 27, 2007. Product revenue increased approximately 5% during the six-month period ended December 31, 2007 as compared with the same period last fiscal year. The increase was primarily related to increases in the Drew and EMI business units.
The Company reported a net loss for the six months ended December 31, 2007 of $(1,468,137), or $(0.23) per diluted share, compared with a net loss of $(1,184,220), or $(0.19) per diluted share, in the prior year period. Cost of goods sold totaled approximately $7,874,000, or 55% of product revenue, for the six-month period ended December 31, 2007, compared with $7,509,000, or 55% of product revenue, for the same period last fiscal year.
Operating expenses decreased approximately 5% during the six-month period ended December 31, 2007 as compared with the same period in the prior fiscal year. This was due to a significant decrease in legal fees related to the IntraLase litigation and to the Company's realizing the effect of the cost reduction plan implemented in the prior fiscal year.
Recap of Fiscal Second Quarter 2008
Richard J. DePiano, Chairman and Chief Executive Officer, commented, "During the second quarter, we continued to see the benefits of the restructuring plans implemented in fiscal 2007, as evidenced by our lower operating expenses for the six-month period. Further, we extended our product portfolio during the second quarter. In January, we received our third FDA market clearance since December for our VascuView(TM) Visual Ultrasound System. This follows earlier clearances to market of our MASTER-VU(R) and D3 Hematology Systems. We are very pleased with these developments, as we expect these products will be well received in the U.S. marketplace."
Mr. DePiano added, "Turning to our operating performance for the second quarter of fiscal 2008, product revenue grew by $415,000, or 6%, to $7,450,000 compared to $7,034,000 last year. In the Drew business unit, product revenue increased $437,000, or 16%, compared with the same period last fiscal year. This is mainly due to the introduction of the newly introduced Trilogy and D3 instruments, and increased reagent revenues generated from Drew's United Kingdom facility."
"At our Sonomed business unit, product revenue decreased $203,000, or 7%, compared with the last fiscal year. This was primarily caused by an increase in sales discounts during the period, resulting from a large increase in sales to more price sensitive international markets combined with a decrease in overall domestic sales. Product revenue increased $80,000, or 10%, to $876,000 in the Vascular business unit during the three-month period ended December 31, 2007, compared with the same period last fiscal year. This was due to an increase in direct sales to end users by the Company's domestic sales team, and by turning over the territory of a terminated domestic distributor to the domestic sales team."
"In our Medical/Trek business unit, product revenue decreased $48,000, or 13%, to $331,000 during the second quarter 2008 as compared with the same period last fiscal year. This is primarily attributable to a decrease in the sale of Trek's mature product line and less contract work than in the same period last fiscal year. Additionally, product revenue increased $149,000, or 36% in our EMI business unit, when compared with last year. This is due to increased sales of digital imaging systems. The EMI division continues to realize the benefits of the successful expansion of its sales effort and product offerings."
Mr. DePiano concluded, "We continue to see improved sales progress at our Drew, Vascular and EMI units and improved results in our Medical/Trek business unit. Additionally, we expect to maintain momentum during the second half of fiscal 2008 regarding new product introductions. We also expect continued benefits from new product introductions and our streamlined operations in fiscal 2008."
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.
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 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 depreciation and amortization and the adoption of the new accounting standard FAS 123R.
The non-GAAP measures and the reconciliation to the most directly
comparable GAAP measure of all non-GAAP measures are as follows:
Six Months Ended Three Months Ended
December 31, December 31,
2007 2006 2007 2006
Net Income (Loss) $(1,468,137) $(1,184,220) $(639,346) $(470,103)
compensation $172,911 $123,774 $159,977 $123,774
amortization $296,328 $282,082 $151,245 $146,803
Total adjustments $469,239 $405,856 $311,222 $270,577
income (loss) $(998,898) $(778,364) $(328,124) $(199,526)
Shares used in
per share 6,388,701 6,346,315 6,389,315 6,347,972
income (loss) per
fully diluted share $(0.16) $(0.12) $(0.05) $(0.03)
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, Waterbury, 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, the reorganization of the Drew business
and the integration of any acquisitions it may undertake, if any, of
which there can be no assurance,
-- implement cost reductions,
-- generate cash,
-- identify, finance and enter into business relationships and
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
-- delays by regulatory authorities, scientific and technical advances by
Escalon or third parties,
-- introduction of competitive products,
-- 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, 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
Three Months Ended Six Months Ended
December 31, December 31,
2007 2006 2007 2006
Product revenue $7,449,626 $7,033,860 $14,282,976 $13,577,446
Other revenue 45,454 602,880 105,375 1,227,454
Revenues, net 7,495,080 7,636,740 14,388,351 14,804,900
Costs and expenses:
Cost of goods sold 3,951,607 3,878,214 7,874,193 7,508,594
Research and development 876,750 1,080,950 1,800,111 1,794,555
Marketing, general and
administrative 3,372,353 3,144,611 6,312,261 6,700,511
Total costs and
expenses 8,200,710 8,103,775 15,986,565 16,003,660
Loss from operations (705,630) (467,035) (1,598,214) (1,198,760)
Other (expense) and
Equity in Ocular
LLC (16,611) (12,155) (50,722) (30,698)
Interest income 85,391 13,498 187,088 58,934
Interest expense (2,496) (5,654) (6,289) (14,939)
Total other income 66,284 (4,311) 130,077 13,297
Net (loss) before taxes (639,346) (471,346) (1,468,137) (1,185,463)
Benefit from income taxes - (1,243) 0 (1,243)
Net (loss) $(639,346) $(470,103) $(1,468,137) $(1,184,220)
Basic net (loss) per
share $(0.10) $(0.07) $(0.23) $(0.19)
Diluted net (loss) per
share $(0.10) $(0.07) $(0.23) $(0.19)
Weighted average shares
- basic 6,389,315 6,347,972 6,388,701 6,346,315
Weighted average shares
- diluted 6,389,315 6,347,972 6,388,701 6,346,315
SELECTED BALANCE SHEET DATA:
December 31, June 30,
Cash, cash equivalents and Investments $7,527,023 $8,879,462
Total current assets $20,063,637 $21,763,012
Total assets $43,292,124 $45,017,213
Current liabilities $4,131,912 $4,524,607
Long-term debt $- $-
Total shareholders' equity $38,073,212 $39,405,606
|SOURCE Escalon Medical Corp.|
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