EXHIBIT 99.1
PRESS RELEASE
AT THE COMPANY AT FRB | WEBER SHANDWICK
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Richard J. DePiano Alison Ziegler
Chairman and CEO 212/445-8432
610/688-6830
FOR IMMEDIATE RELEASE
ESCALON (R) MEDICAL CORP. REPORTS SOLID THIRD QUARTER RESULTS
WAYNE, PA - MAY 12, 2003 -- Escalon Medical Corp. (Nasdaq Small Cap: ESMC) today
announced results for its fiscal third quarter ended March 31, 2003. For the
third quarter of fiscal 2003, Escalon Medical reported net income of $455,134,
or $0.133 per diluted share, a 47.8% gain over net income of $307,971, or $0.091
per diluted share, in the third quarter of fiscal 2002.
Revenues for the third quarter of fiscal 2003 increased 3.7% to $3,386,892
compared to $3,266,088 in the third quarter of fiscal 2002. For the third
quarter, product revenue from Sonomed decreased 1.9% to $1,621,000 compared to
$1,653,000 in the prior year period. Continued improvement in the domestic
market was offset by declines in Latin America, Africa and Asia. Product revenue
in the Vascular business increased 6.7% to $689,000 in the third quarter of
fiscal 2003 compared to $646,000 in the year ago period. Revenue in the
Company's Medical / Trek business increased by 1.5% to $406,000 in the quarter
from $400,000 in the third quarter of fiscal 2002. Revenue in the Digital
business unit was $59,000 for the quarter compared to $137,000 in the third
quarter of 2002. Royalty revenue from Silicone Oil was $454,000 in the quarter
compared to $430,000 in the year ago period. Additional consideration, which is
based upon future sales of Silicone Oil by Bausch & Lomb, is expected to
continue through fiscal 2005. The Company also received a $156,000 royalty
payment related to the licensing of its intellectual laser properties. These
payments commenced in the fourth quarter of fiscal year 2002. The Company's two
royalty revenue streams will likely fluctuate depending on the demand of the
underlying products.
The gross margin as a percent of product revenue was 57.6% in the current
quarter compared to 54.2% in the year ago period. The improvement related
primarily to changes in product mix at Sonomed. Marketing, general and
administrative expenses declined to 36.0% of net revenues in the third quarter
from 40.1% of sales in the year ago period due primarily to cost cutting
initiatives at Sonomed. The Company also took a $195,000 non-cash charge in the
quarter to write off the remaining net book value of the license and
distribution rights related to Povidone Iodine 2.5%. Having previously
determined that Povidone Iodine 2.5% did not fit strategically with its product
portfolio, management had been seeking partners to generate value from its
product license. During the quarter, management decided to discontinue the
project after it had exhausted such partnering opportunities and determined that
further expenditures were not warranted.
For the first nine months of fiscal 2003, Escalon Medical reported a 38.3% gain
in net income to $1,061,963, or $0.309 per diluted share, from net income of
$767,717, or $0.230 per diluted share, in the first nine months of fiscal 2002.
Revenues for the first nine months of fiscal 2003 were $9,662,408 compared to
$9,013,524 in the prior year period, a 7.2% gain.
"The third fiscal quarter was another record in terms of net revenues and
income from operations. This strong performance has enabled us to continue to
pay down debt and reinvest in our business," commented Richard J. DePiano,
Chairman and Chief Executive Officer.
Mr. DePiano continued, "At Sonomed, our domestic business was strong, with a
sharp increase in sales of our pachymeter, a device that measures the thickness
of the cornea. Increased demand resulted from optometrists beginning to use the
device as a standard piece of equipment for glaucoma screening. Offsetting this
strength was continued softness in Latin America and a decline in sales in
Africa and Asia. We recently returned from the American Society of Cataract and
Refractive Surgery 2003 Symposium held in San Francisco, where we introduced a
new B-Scan, the E-Z Scan(TM). While we do not expect to ship any product until
July, we have already begun to receive orders. Europe also continues to be an
area of focus at Sonomed, and we are participating in several ophthalmology
trade shows in the region in May. Europe should also benefit from additional
management support that was recently added to the area."
"Our Vascular segment performed nicely in the quarter with continued growth in
our PD Access(TM) and Smart Needle(TM) business. We also continue to focus on
increasing trial and usage of our Doppler Guided IV Needle and are in the
process of expanding our sales team in the Northeast region to address the
opportunity we see in the oncology and anesthesia markets."
Mr. DePiano concluded, "Our focus continues to be to manage the business to
generate cash flow that will enable us to pay down debt and reinvest in our
business. We continue to make good progress operationally and financially to
position Escalon to take advantages of the growth opportunities we see ahead in
our niche markets."
Founded in 1987, Escalon develops, markets and distributes ophthalmic
diagnostic, surgical and pharmaceutical products as well as vascular access
devices. 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 the
Company's distribution capabilities. Escalon has headquarters in Wayne,
Pennsylvania and manufacturing operations in Long Island, New York and New
Berlin, Wisconsin.
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 improve upon the operations of the Company's business units,
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, 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, 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.
-- FINANCIAL TABLES FOLLOW --
ESCALON MEDICAL CORP. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
2003 2002 2003 2002
Product revenue $ 2,776,415 $ 2,836,512 $ 8,039,301 $ 7,721,016
Other revenue 610,477 429,576 1,623,107 1,292,508
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Revenues, net 3,386,892 3,266.088 9,662,408 9,013,524
Costs and expenses:
Cost of goods sold 1,178,377 1,298,521 3,536,340 3,519,450
Research and development 204,283 144,474 578,337 399,743
Marketing, general and administrative 1,220,007 1,310,156 3,786,148 3,750,997
Write-down of Povidone Iodine license
and distribution rights 195,950 -- 195,950 --
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Total costs and expenses 2,798,617 2,753,151 8,096,775 7,670,190
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Income from operations 588,275 512,937 1,565,633 1,343,334
Other income and (expenses):
Equity in income (loss) of
unconsolidated -- (3,518) -- 8,848
joint venture
Interest income 609 450 2,087 1,805
Interest expense (133,750) (201,898) (505,757) (586,270)
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Total other income and
(expense) (133,141) (204,966) (503,670) (575,617)
----------- ----------- ----------- -----------
Net income $ 455,134 $ 307,971 $ 1,061,963 $ 767,717
=========== =========== =========== ===========
Basic net income per share $ 0.136 $ 0.094 $ 0.316 $ 0.233
=========== =========== =========== ===========
Diluted net income per share $ 0.133 $ 0.091 $ 0.309 $ 0.230
=========== =========== =========== ===========
Weighted average shares - basic 3,355,851 3,292,184 3,355,851 3,292,184
Weighted average shares - diluted 3,420,474 3,385,263 3,441,180 3,339,627
SELECTED BALANCE SHEET DATA:
March 31, June 30,
2003 2002
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(unaudited) (audited)
Cash, cash equivalents and investments $ 132,634 $ 220,826
Total current assets 4,642,682 4,287,590
Total assets 16,774,976 16,912,441
Current liabilities 4,008,868 4,527,697
Long-term debt 4,495,694 5,191,393
Total shareholders' equity 8,270,415 7,193,351
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