WAYNE, Pa., Sept. 28 /PRNewswire-FirstCall/ -- Escalon Medical Corp. today announced results for its fiscal fourth quarter and twelve months ended June 30, 2007.
For the fiscal year 2007, the Company's reported net revenue increased to $38,837,780 compared with $29,790,698 in fiscal 2006. This increase in net revenue was primarily due to a $9.6 million lump sum settlement payment from IntraLase Corp. to the Company. This increase also included product revenue of $27,892,738 for fiscal 2007, compared with $27,543,785 in the prior year. The product revenue increase was primarily related to strong sales in the Company's Sonomed and Escalon Digital Solutions ("EMI") business units, which increased approximately 27.0% and 241.9%, respectively.
This strong growth was offset by an 18.4% decrease in revenues at the Company's Drew business unit primarily due to the non-renewal of two OEM agreements and a temporary delay in the introduction of Drew's new line of products in fiscal 2007. As previously announced, in July 2007, Drew received 510(k) clearance from the FDA to market the new TRILOGY Analyzer. TRILOGY, a multifunction analyzer used in determination of analytes in body fluids, is an open system intended for clinical use with various chemistry assays in professional settings. Additionally, Drew anticipates receiving approval on its new D3 Analyzer in the second quarter of fiscal 2008, which will provide two new enhanced instruments for sale during the year. Further, Drew anticipates submitting its new DS-360 Analyzer for FDA approval in the second half of fiscal 2008.
The Company reported fiscal 2007 net income of $5,914,603, or $0.92 per diluted share, compared with a net loss of ($1,985,940), or ($0.32) per diluted share, in fiscal 2006. This increase was primarily due to increased royalties from the IntraLase License Agreement and the lump sum settlement payment from IntraLase Corp. to the Company, which was recorded during the third quarter of fiscal 2007. The settlement also marked the end of any future royalty payments to be received under the License Agreement, which is expected to have a material effect on earnings in subsequent periods.
For the fourth quarter of fiscal 2007, the Company reported net revenue of $7,474,120, an 3.7% increase from the $7,207,780, reported in the prior year period. This growth was offset by a decrease in the Company's Drew business unit.
Product revenue increased approximately 11.5% to $7,414,831 for the three- month period ended June 30, 2007, compared with $6,648,232 for the same period last fiscal year. For the fourth quarter of fiscal 2007, the Company reported a net loss of ($1,172,639), or ($0.18) per diluted share, compared with a net loss of ($1,142,261), or ($0.19) per diluted share, in the fourth quarter of fiscal 2006
2007 Recap
"I am pleased to be report another successful year for Escalon Medical. Overall, our Sonomed business had an excellent fiscal 2007 driven by increased sales of the new VuMax high frequency systems and the EZ AB scan ultrasound systems. Additionally, we are pleased that EMI's expanding product offering has seen significant market acceptance during the year, which has driven an increase in digital imaging system sales," said Richard J. DePiano, Chairman and Chief Executive Officer.
"Despite the sales decline within our Vascular business unit due to the termination of several distributor relationships during fiscal 2005 and 2006, the unit's profitability has increased due to efforts to replace the impacted territories with direct sales. Moving ahead, we look forward to capitalizing on recent Vascular R&D initiatives and bringing new visual products to market during 2008," Mr. DePiano added.
Mr. DePiano concluded, "Furthermore, with the previously announced reorganization of the Drew business, we have significantly reduced operating costs and expanded operating margins for the Company as a whole. We continue to pursue the significant opportunities ahead and, due to our recent rationalization efforts and anticipated new product launches within Drew and other business units, we enter 2008 with solid momentum and a stronger business platform."
Non-GAAP Measures
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.
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 the adoption of the new accounting standard FAS 123R.
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 non-GAAP measures and the reconciliation to the most directly comparable GAAP measure of all non-GAAP measures are as follows:
June 30, June 30, June 30, 2007 2006 2005 Net Income (Loss) $5,914,603 $(1,985,940) $2,448,111 Non-GAAP adjustments: Stock based compensation $162,576 $- $- Depreciation and amortization $590,846 $440,952 $387,651 Total adjustments $753,422 $440,952 $387,651 Non-GAAP adjusted income (loss) $6,668,025 $(1,544,988) $2,835,762 Shares used in computing fully diluted earnings per share 6,434,275 6,152,455 6,231,024 Non-GAAP adjusted income (loss) per fully diluted share $1.04 $(0.25) $0.46
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, 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 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 and any acquisitions it may undertake, if any, of which there can be no assurance, implement cost reductions, 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 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 (Unaudited) Three Months Ended June 30, Year Ended June 30, 2007 2006 2007 2006 Net revenues: Product revenue $7,414,831 $6,648,232 $27,892,738 $27,543,785 Other revenue $59,289 $559,548 $10,945,042 $2,246,913 Revenues, net $7,474,120 $7,207,780 $38,837,780 $29,790,698 Costs and expenses: Cost of goods sold $4,226,375 $3,993,252 $15,771,254 $16,003,904 Marketing, general and administrative $3,744,306 $3,599,176 $13,806,399 $13,994,788 Research and development $822,909 $692,246 $3,461,322 $2,828,196 Total costs and expenses $8,793,590 $8,284,674 $33,038,975 $32,826,888 (Loss) income from operations $(1,319,470) $(1,076,894) $5,798,805 $(3,036,190) Other income and (expense): Gain on sale of available for sale securities $75,000 $- $75,000 $1,157,336 Equity in Ocular Telehealth Management, LLC $(31,963) $(103,872) $(87,852) $(173,844) Interest income $95,072 $49,890 $208,457 $161,588 Interest expense $(5,138) $(16,100) $(28,753) $(63,521) Total other income and (expense) $132,971 $(70,082) $166,852 $1,081,559 Net (loss) income before taxes $(1,186,499) $(1,146,976) $5,965,657 $(1,954,631) Provision for income taxes $(13,860) $(4,715) $51,054 $31,309 Net (loss) income $(1,172,639) $(1,142,261) $5,914,603 $(1,985,940) Basic net (loss) income per share $(0.18) $(0.19) $0.93 $(0.32) Diluted net (loss) income per share $(0.18) $(0.19) $0.92 $(0.32) Weighted average shares - basic 6,374,929 6,152,455 6,374,929 6,152,455 Weighted average shares - diluted 6,434,275 6,152,455 6,434,275 6,152,455 SELECTED BALANCE SHEET DATA: June 30, June 30, 2007 2006 Cash, cash equivalents and Investments $8,879,462 $3,429,930 Total current assets $21,763,012 $14,911,249 Total assets $45,017,213 $38,644,767 Current liabilities $4,524,607 $4,295,109 Long-term debt $- $162,551 Total shareholders' equity $39,405,606 $33,100,107
