Escalon Medical Corp. (Nasdaq Market: ESMC) announced the results for its fiscal first quarter ended September 30, 2009.
For the first quarter of fiscal 2010, product revenue decreased approximately $234,000, or 2.7%, to $8,435,000 during the three-month period ended September 30, 2009 as compared to the same period last fiscal year. The Company reported the decreased net revenue of $8,434,000 compared with $8,669,000 in fiscal 2008. Revenue at Sonomed, Vascular, EMI and Medical/Trek decreased 20.8%, 6.7%, 2.3% and .9%, respectively, during the three-month period ended September 30, 2009 when compared to the same period last fiscal year. These decreases were offset by increased sales at the Drew business unit of 9%, during the three-month period ended September 30, 2009 compared to the same period last fiscal year.
Other revenue decreased approximately $9,000 or 32.1% during the three-month period ended September 30, 2009 as compared to the same period last fiscal year. This was attributable to decreased Bio-Rad royalties received in the Drew business unit.
Cost of goods sold as a percentage of product revenue decreased to approximately 54.4% of revenues during the three-month period ended September 30, 2009, as compared to approximately 55.9% of product revenue for the same period last fiscal year.
Marketing, General and Administrative expenses increased approximately 14.9% during the three-month period ended September 30, 2009 as compared to the same period in the prior fiscal year. The Drew business unit had increased marketing, general and administrative expenses of 67.6% related to the acquisition of Biocode Hycel ("Biocode") on December 31, 2008 for the three-month period ended September 30, 2009 as compared to the same period in the prior fiscal year. This was offset by decreases of 21.7%, 6.6% and 30.8% at Sonomed, Vascular, EMI and Medical/Trek, respectively, for the same period. Research and development decreased 58.7%, 39.7%, and 33.3% at Drew, Sonomed and EMI, respectively, for the three-month period ended September 30, 2009 as compared to the same period last year. These decreases were partially offset by a 62.9% increase at Vascular related to the completion of Vascular's modified VascuView product.
In the Drew business unit, product revenue increased $383,000, or 9.0%, as compared to the same period last fiscal year. The increase in product revenue is related to the acquisition of Biocode. Biocode generated $1,336,000 in revenue for the period ended September 30, 2009.
Product revenue decreased $535,000, or 20.8%, at the Sonomed business unit as compared to the same period last fiscal year. The decrease in product revenue was primarily caused by a significant contraction in the capital equipment marketplace related to the global economic recession.
Product revenue decreased $67,000, or 6.7%, to $931,000 in the Vascular business unit during the three-month period ended September 30, 2009 as compared to the same period last fiscal year. The decrease in product revenue in the Vascular business unit was primarily related to weaker sales of Vascular's core needle business. Vascular's modified VascuView was submitted for FDA clearance in September 2009. Vascular anticipates initial sales of the modified VascuView to take place in January 2010.
Product revenue decreased $12,000, or 2.3%, in the EMI business unit when compared to the same period last year. The decrease in sales is related to the weakening of the capital equipment market related to the global economic recession, offset by increased custom system sales during the three month period ended September 30, 2009.
In the Medical/Trek business unit, product revenue decreased $3,000, or 0.9%, to $320,000 during the three-month period ended September 30, 2009 as compared to the same period last fiscal year. The decrease in Medical/Trek product revenue is attributed to Medical/Trek's aging product line of Ispan Intraocular gases and fiber optic light sources.
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:
Quarter Ended September 30, 2009
2009 2008
---- ----
Net loss $(657,499) $(480,862) Non-GAAP adjustments: Stock based compensation $39,973 $148,868 Depreciation and amortization $249,092 $167,098
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Total adjustments $289,065 $315,966
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Non-GAAP adjusted (loss)
income $(368,434) $(164,896)
========= =========
Shares used in computing
basic and fully diluted
earnings per share 7,526,430 6,413,930
========= =========
Non-GAAP adjusted income
(loss) per fully diluted
share $(0.05) $(0.03)
====== ======
Founded in 1987, the Company (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.
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, 2009, 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.
--Financial Tables Follow--
SELECTED BALANCE SHEET DATA:
ESCALON MEDICAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, June 30,
2009 2009
---- ----
ASSETS Current assets:
Cash and cash equivalents $1,830,869 $1,810,045
Accounts receivable, net 4,670,691 4,853,856
Inventory, net 9,218,105 9,830,922
Other current assets 1,360,057 1,065,823
--------- ---------
Total current assets 17,079,722 17,560,646
---------- ---------- Furniture and equipment,
net 834,103 892,966 Goodwill 2,065,236 2,065,236 Trademarks and trade names 694,006 694,006 Patents, net 1,774,914 1,824,172 Covenant not to compete and
customer list, net 1,846,110 1,880,639 Other assets 55,528 137,737
------ -------
Total assets $24,349,619 $25,055,402
=========== ===========
LIABILITIES AND
SHAREHOLDERS' EQUITY Current liabilities:
Current portion of long-
term debt $1,367,121 $1,374,711
Accounts payable 3,257,092 2,553,481
Accrued expenses 2,187,986 2,919,540
--------- ---------
Total current liabilities 6,812,199 6,847,732
--------- ---------
Long-term debt, net of
current portion 4,924,800 4,741,207 Accrued post-retirement
benefits 1,027,821 1,027,821
--------- ---------
Total long-term
liabilities 5,952,621 5,769,028
--------- ---------
Total liabilities 12,764,820 12,616,760
---------- ---------- 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; 7,526,430
issued and outstanding at
September 30, 2009 and
June 30, 2009,
respectively 7,526 7,526
Common stock warrants 1,733,460 1,733,460 Additional paid-in capital 67,498,718 67,458,745 Accumulated deficit (56,890,003) (56,232,503) Accumulated other
comprehensive (loss) (764,902) (528,586)
-------- --------
Total shareholders' equity 11,584,799 12,438,642
---------- ----------
Total liabilities and
shareholders' equity $24,349,619 $25,055,402
=========== ===========
First Call Analyst:
FCMN Contact: rdepianojr@escalonmed.com
SOURCE: Escalon Medical Corp.
CONTACT: Richard J. DePiano, Chairman and CEO, +1-610-688-6830
Web Site: http://www.escalonmed.com/
