Escalon Medical Corp. (NASDAQ: ESMC) today announced results for its fiscal third quarter ended March 31, 2009.
For the third quarter of fiscal 2009, the Company reported increased net revenue of $9,205,000, compared with $8,188,000 in the third quarter of fiscal 2008. This included product revenue of $9,174,000 for the third quarter of fiscal 2009, a 12.7% increase, compared with $8,139,000 in the prior year's third quarter.
The Company experienced continued customer demand at its Drew and EMI business units, which reported 2009 third quarter product revenue growth of 41.4% and 88.5%, respectively, compared with the same period last fiscal year. This growth was offset by decreased 2009 third quarter sales in the Sonomed, Vascular and Medical/Trek business units of 11.9%, 30% and 4%, respectively.
For the nine-month period ended March 31, 2009, the Company reported net revenue of $26,001,000, compared with $22,576,000 in the prior year comparable period. Product revenue increased approximately 15.5% to $25,904,000 during the nine-month period ended March 31, 2009, compared with $22,422,000 in the same period last fiscal year. The growth was driven by increased product revenue within three of the Company's business units, highlighted by 33.8% at Drew, primarily related to the acquisition of JAS Diagnostics in May 2008 and Biocode Hycel in December 2008. Sonomed and EMI product revenue increased 1.1% and 32.5%, respectively.
For the third quarter of fiscal 2009, the Company reported a net loss of $(683,173), or $(0.09) per diluted share, compared with net loss of $(1,942,622), or $(0.30) per diluted share, in the third quarter of fiscal 2008. Operating results were impacted by lower cost of goods sold, which totaled approximately $4,729,000, or 51.5% of product revenue, for the three-month period ended March 31, 2009, as compared to $4,913,000, or 60.4% of product revenue, for the same period last fiscal year.
The Company reported a net loss for the nine months ended March 31, 2009 of $(1,861,000), or $(0.27) per diluted share, compared with a net loss of $(3,410,759), or $(0.53) per diluted share, in the prior year period. Cost of goods sold as a percentage of product revenue decreased to approximately 54.8% during the nine-month period ended March 31, 2009, as compared to approximately 57.0% for the same period last fiscal year. Additionally, operating expenses increased approximately 2.7% during the nine-month period ended March 31, 2009, compared to the same period in the prior fiscal year. The increase is related to the acquisition of JAS Diagnostics in May 2008 and Biocode Hycel in December 2008.
Richard J. DePiano, Chairman and Chief Executive Officer, commented, "We produced solid revenue growth through the first nine months of fiscal 2009 and, despite increasing operating and research and development expenses, lowered our net loss. While we are still disappointed with our net loss, we are encouraged by the trend our clinical diagnostics division has been experiencing. Mr. DePiano concluded, "Overall, we continue to take steps to diversify our product portfolio, enhance our market position and seek potential growth opportunities we see ahead in our niche markets."
Non-GAAP Measures
To supplement the Company's consolidated financial statements presented in accordance with GAAP, the Company provides 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:
Three Months Ended Nine Months Ended
March 31, March 31,
2009 2008 2009 2008
Net (loss) $(683,173) $(1,942,622) $(1,861,030) $(3,410,759)
Non-GAAP
adjustments:
Stock based
compensation $37,444 $142,454 $223,756 $203,367
Depreciation and
amortization $193,238 $137,774 $525,652 $434,101
Total adjustments $230,682 $280,228 $749,408 $637,468
Non-GAAP adjusted
(loss) $(452,491) $(1,662,394) $(1,111,622) $(2,773,291)
Shares used in
computing basic
and fully diluted
earnings per
share 6,435,106 6,255,665 6,895,411 6,388,905
Non-GAAP adjusted
(loss) per fully
diluted share $(0.07) $(0.27) $(0.16) $(0.43)
Founded in 1987, the Company (http://www.escalonmed.com/) develops, markets and distributes ophthalmic diagnostic, surgical and pharmaceutical products as well as vascular access devices. Drew Scientific, 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 the Company's distribution capabilities, although such partnerships or acquisitions may not occur. The Company has headquarters in Wayne, Pennsylvania and operations in Long Island, New York, New Berlin, Wisconsin, Lawrence, Massachusetts, Dallas, Texas, Waterbury, Connecticut, Miami, Florida, Barrow-in-Furness, U.K. and Le Rheu, France.
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. 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:
-- implement its growth and marketing strategies, improve upon the
operations of the Company business units, including the ability to
make acquisitions 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
acquisitions, and make timely payments for any financing, and
-- new product development, commercialization, manufacturing and market
acceptance of new products,
Other factors include uncertainties and risks related to:
-- 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, 2008, subsequent quarterly reports filed on Form 10-Q and the Company's 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 SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended March 31, Nine Months Ended March 31,
2009 2008 2009 2008
Net revenues:
Product revenue $9,173,876 $8,138,627 $25,903,900 $22,421,603
Other revenue 31,122 48,940 97,123 154,315
Revenues, net 9,204,998 8,187,567 26,001,023 22,575,918
Costs and expenses:
Cost of goods sold 4,729,430 4,912,381 14,209,211 12,786,574
Marketing, general
and administrative 4,212,994 4,097,401 10,859,315 10,409,662
Research and
development 810,130 1,040,116 2,749,131 2,840,227
Total costs and
expenses 9,752,554 10,049,898 27,817,657 26,036,463
(Loss) from operations (547,556) (1,862,331) (1,816,635) (3,460,545)
Other (expense)
and income:
Equity in Ocular
Telehealth
Management, LLC (31,336) (14,013) (65,387) (64,735)
Gain on sale of assets - - 91,871 -
Interest income 285 78,189 50,938 265,277
Interest expense (104,566) (17,987) (121,817) (24,276)
Total other income (135,617) 46,189 (44,395) 176,266
Net (loss) before
taxes (683,173) (1,816,142) (1,861,030) (3,284,279)
Provision for
income taxes 0 126,480 0 126,480
Net (loss) $(683,173) $(1,942,622) $(1,861,030) $(3,410,759)
Basic net (loss)
per share $(0.09) $(0.30) $(0.27) $(0.53)
Diluted net (loss)
per share $(0.09) $(0.30) $(0.27) $(0.53)
Weighted average
shares - basic 7,413,930 6,389,315 6,895,411 6,388,905
Weighted average
shares - diluted 7,413,930 6,389,315 6,895,411 6,388,905
ESCALON MEDICAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, June 30,
2009 2008
ASSETS
Current assets:
Cash and cash equivalents $1,222,647 $3,708,456
Accounts receivable, net 6,351,066 3,896,297
Inventory, net 10,327,981 8,670,160
Note receivable 80,000 -
Other current assets 404,863 297,807
Total current assets 18,386,557 16,572,720
Furniture and equipment, net 952,721 1,078,839
Goodwill 11,590,786 11,590,786
Trademarks and trade names 694,006 694,006
Patents, net 2,517,638 157,883
Covenant not to compete, customer list and
other intangibles, net 1,546,055 1,691,610
Other assets 27,577 110,176
Total assets $35,715,340 $31,896,020
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $376,314 $501,752
Accounts payable 3,343,379 2,628,004
Accrued expenses 1,868,815 2,895,920
Deferred revenue 305,332 -
Total current liabilities 5,893,840 6,025,676
Long-term debt, net of current portion 5,514,174 250,871
Accrued post-retirement benefits 1,087,000 1,087,000
Total long-term liabilities 6,601,174 1,337,871
Total liabilities 12,495,014 7,363,547
Shareholders equity:
Preferred stock,, $0.001 par value;
2,000,000 shares authorized; no shares issued - -
Common stock, $0.001 par value;
35,000,000 share authorized; 7,413,930 and
6,413,930 issued and outstanding at March 31,
2009 and June 30, 2008, respectively 7,414 6,414
Common stock warrants 1,733,460 1,601,346
Additional paid-in capital 67,418,884 66,299,242
Accumulated deficit (45,128,496) (43,267,466)
Accumulated other comprehensive (loss) income (810,936) (107,063)
Total shareholders' equity 23,220,326 24,532,473
Total liabilities and shareholders' equity $35,715,340 $31,896,020
ESCALON MEDICAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2009 2008
Cash and cash equivalents $1,222,647 $3,708,456
Total assets $35,715,340 $31,896,020
Long-term debt, net of
current portion $376,314 $501,752
Total long-term liabilities $6,601,174 $1,337,871
Accumulated deficit $(45,128,496) $(43,267,466)
Total Shareholders' equity $23,220,326 $24,532,473
Total liabilities and
shareholders' equity $35,715,340 $31,896,020
First Call Analyst:
FCMN Contact: rdepianojr@escalonmed.com
SOURCE: Escalon Medical Corp.
CONTACT: Richard J. DePiano, Chairman and CEO of Escalon Medical Corp.,
+1-610-688-6830
Web Site: http://www.escalonmed.com/
