Escalon® Medical Corp. Reports Second Quarter Fiscal 2014 Results; New Product Introductions Underway

ARDMORE, Pa., Feb. 14, 2014

For the fiscal second quarter, consolidated product revenue was $3.1 million, flat with the first fiscal quarter of 2014 but down compared to the $3.6 million in the prior year period.  For the six months ended December 31, 2013, consolidated product revenue increased approximately 5% to $6.2 million from $5.9 million in the year ago period.

For the fiscal second quarter ended December 31, 2013, the company reported a net loss of $109,000, or $0.01 per share, and a net loss from continuing operations of $83,000, or $0.01 per share.  This compares to net income of $4.0 million, or $0.53 per share, for the year ago period, which includes a net gain of $4.0 million related to the sale of Drew and related debt settlement.  Net income from continuing operations was $126,527, or $0.02 per share, for the year ago period.  For the first six months of fiscal 2014, the company reported a net loss of $95,000, or $0.01 per share, and a net loss from continuing operations of $44,000.  This compares to net income of $3.6 million, or $0.46 per share, which includes the $4.0 million gain.  The net loss from continuing operations was $497,864, or $0.07 per share, for the first six months of the prior fiscal year.

Year to date in fiscal 2014, margins remained steady at 50.1% compared to 49.7% in the prior year period.  Marketing, general and administrative expenses decreased by 13.9% primarily due to declines in payroll expenses.  As a result of the planned update of existing products as well as the introduction of new products, research and development expenses for the first six months of fiscal 2014 grew by 32.1% to $700,000 from $530,000 in the prior year period.

At December 31, 2013, the Company had $2.6 million of cash and no long term debt and its continuing operations were near breakeven on a cash basis with a net use of cash of $44,433 in the first six months of fiscal 2014.

"We remain committed to reinvesting in our ophthalmic product line to develop and deliver new best-in-class ophthalmic ultrasound solutions," commented Chief Executive Officer, Richard J. DePiano, Jr.  "We have seen a strong reception to our first new product, the VuMAX® HD introduced earlier in calendar 2013, with solid sales both internationally and with several top institutions in the U.S.  Early indications for our next new product, the VuPad™, which was previewed at the annual meeting of the American Academy of Ophthalmology in November, are promising.  We filed a 510(k) pre-market clearance application for the VuPad™ with the US FDA in late January and anticipate clearance in our third fiscal quarter, followed shortly thereafter by approval from other regulatory bodies."

"While we have considerable work ahead of us, we're pleased to have reported growth in sales year over year and are further encouraged given the preliminary market feedback regarding the soon-to-be-released VuPad™ product.  With an improved financial position, we are poised to pursue strategic growth opportunities to leverage our technology and exciting research and development programs."