Escalon(R) Reports First Quarter Fiscal 2009 Results Escalon Reports on Discussions Regarding Potential Acquisition of Haematology Business Assets
For the first quarter of fiscal 2009, the Company reported increased net
The Company experienced strong customer demand across most of its core businesses, reporting 2009 first quarter product revenue growth at its Drew, Sonomed, Vascular and EMI business units of approximately 40%, 15%, 24% and 39%, respectively, compared with the same period last fiscal year. This growth was slightly offset by decreased 2009 first quarter sales in the Medical/Trek business unit of 16%.
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Focused on expanding its competitive positioning and building its product
portfolio, the Company's 2009 first quarter profitability was impacted by
increased operating, research and development and sales and marketing
expenses. Cost of goods sold as a percentage of product revenue decreased
slightly to approximately 56% of product revenues, compared to approximately
57% of product revenue for the 2008 first quarter, and operating expenses
increased approximately 11.3% during the 2009 first quarter. This increase
was primarily related to increased research and development expenses at the
Sonomed division for the development of three new products. Operating expenses
also grew due to increased marketing, general and administrative expenses at
the Drew and Medical/Trek divisions. The increase at Drew was primarily
related to the acquisition of JAS in
For the first quarter of fiscal 2009, the Company reported a net loss of
Recap of First Quarter 2009
Mr. DePiano added, "In the Drew business unit, product revenue increased
"Within Vascular, product revenue increased
Mr. DePiano concluded, "Overall, we are pleased with our top-line performance during the first fiscal quarter of 2009, where we began to realize the benefits of our development efforts. We continue to take steps to diversify our product portfolio, enhance our market position as well as build on our strengths, and believe these initiatives will ultimately support the continued expansion of the organization and generate long-term financial growth."
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 9/30/2007 12/31/2007 3/31/2008 6/30/2008 9/30/2008 Net loss $(828,791) $(639,346) $(1,942,622) $(11,648,884) $(480,862) Non-GAAP adjustments: Goodwill impairment $- $- $- $9,574,655 $- Stock based compensation $12,934 $159,977 $- $73,846 $148,868 Depreciation and amortization $145,083 $151,245 $137,773 $148,410 $167,098 Total adjustments $158,017 $311,222 $137,773 $9,796,911 $315,966 Non-GAAP adjusted (loss) income $(670,774) $(328,124) $(1,804,849) $(1,851,973) $(164,896) Shares used in computing basic and fully diluted earnings per share 6,388,086 6,389,315 6,389,315 6,389,315 6,413,930 Non-GAAP adjusted income (loss) per fully diluted share $(0.11) $(0.05) $(0.28) $(0.29) $(0.03)
Discussions Regarding Potential Acquisition of Haematology Business Assets
Escalon also announced that it is holding discussions to purchase, through its subsidiary, Drew Scientific Holdings, Inc., certain assets of the haematology business of Biocode Hycel, the French subsidiary of Immunodiagnostic Systems plc, a producer of diagnostic testing kits. The haematology business, if acquired, will be operated as part of Escalon's Drew business unit.
Final deal terms between the parties have not been reached.
The transaction will be subject to the satisfaction of a number of conditions, including the negotiation of definitive terms, the execution of a definitive purchase agreement, and assuming successful consultation with the relevant employee representative councils as required under applicable law.
The parties are seeking to conclude negotiations in the short term and to complete the transaction during Escalon's second quarter of fiscal 2009, although there is no assurance that the transaction will be successfully negotiated or that closing of the transaction will occur in that time frame, if at all.
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
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 -- 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
-Financial Tables Follow- ESCALON MEDICAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME For the Three Months Ended September 30, 2008 2007 Net revenues: Product revenue $8,669,165 $6,833,350 Other revenue 28,278 59,921 Revenues, net 8,697,443 6,893,271 Costs and expenses: Cost of goods sold 4,844,140 3,922,586 Marketing, general and administrative 3,276,317 2,939,908 Research and development 1,046,165 923,361 Total costs and expenses 9,166,622 7,785,855 Income (loss) from operations (469,180) (892,584) Other (expense) and income: Equity in Ocular Telehealth Management, LLC (21,000) (34,111) Interest income 47,526 101,697 Interest expense (9,408) (3,793) Total other income 17,118 63,793 Net (loss) before taxes (452,062) (828,791) Provision for income taxes 28,800 0 Net (loss) $(480,862) $(828,791) Basic net (loss) per share $(0.07) $(0.13) Diluted net income (loss) per share $(0.07) $(0.13) Weighted average shares - basic 6,413,930 6,388,086 Weighted average shares - diluted 6,413,930 6,388,086 ESCALON MEDICAL CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, June 30, 2008 2008 Cash and cash equivalents $2,310,537 $3,708,456 Total assets 30,676,515 31,896,020 Total current liabilities 5,567,300 6,025,676 Long-term debt, net of current portion 125,434 250,871 Total liabilities 6,779,734 7,363,547 Accumulated deficit (43,748,329) (43,267,466) Total shareholders' equity 23,896,782 24,532,473
SOURCE Escalon Medical Corp.