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Escalon Reports Q2 Fiscal 2009 Results

Escalon Medical Corp. (Escalon) has reported net revenues of $8.1 million for the second quarter of fiscal 2009, compared with the net revenues of $7.4 million in the year-ago quarter. It also reported a net loss of $0.69 million, or $0.10 per diluted share, for the second quarter of fiscal 2009, compared with the net loss of $0.63 million, or $0.10 per diluted share, in the year-ago quarter.

For the second quarter of fiscal 2009, the company reported increased net revenue included product revenue of $8,061,000 for the second quarter of fiscal 2009, an 8.2% increase, against $7,450,000 in the prior year’s second quarter.

The company continued to experience strong customer demand across most of its core businesses, reporting 2009 second quarter product revenue growth at its Drew, Sonomed and Vascular business units of about 19%, 1.2% and 2.5%, respectively, against the same period last fiscal year. This growth was slightly offset by decreased 2009 second quarter sales in the Medical/Trek and EMI business units of 6.3% and 3.6%, respectively.

For the six-month of 2008, the company reported net revenue of $16,796,000 against $14,388,000 in the prior year comparable period. Product revenue increased about 17.1% during the six-month period ended December 31, 2008, against $14,284,000 in the same period last fiscal year. The growth was driven by increased product revenue within four of its business units highlighted by 29% at Drew primarily related to the acquisition of JAS Diagnostics in May 2008, 13.8% at EMI, 12.9% at Vascular and a 7.8% increase at Sonomed.

For the second quarter of fiscal 2009, the company reported a net loss of $(696,995), or $(0.10) per diluted share, against net loss of $(639,346), or $(0.10) per diluted share, in the second quarter of fiscal 2008. Operating results were impacted by higher cost of goods sold, which totaled about $4,637,000, or 57.5% of product revenue, for the three-month period ended December 31, 2008, as compared to $3,951,000 or 53%, of product revenue for the same period last fiscal year.

The company reported a net loss for the six months ended December 31, 2008 of $(1,117,857), or $(0.18) per diluted share, against a net loss of $(1,468,137), or $(0.23) per diluted share, in the prior year period. Cost of goods sold as a percentage of product revenue increased slightly, to about 56.7% during the six-month period ended December 31, 2008, as compared to about 55.1% for the same period last fiscal year. Additionally, operating expenses increased about 5.8% during the six-month period ended December 31, 2008, compared to the same period in the prior fiscal year. The increase was due to a significant increase in research and development expenses in the Sonomed and EMI business segments.

Recap of First Half of Fiscal 2009

Richard J. DePiano, chairman and chief executive officer, commented, “We produced solid revenue growth through the first six months of fiscal 2009 and, despite increasing operating and research and development expenses, lowered our net loss. We still have improvements to make but our efforts to diversify our product portfolio, increase sales and strengthen our financial position have been effective.”

DePiano added, “Product revenue increased about 17.1% during the 2009 six-month period and 8.2% during the second quarter of fiscal 2009. Within our Drew business segment, fiscal 2009 second quarter product revenue increased $599,000, or 19.0%, and for the six-month period increased $1,814,000, or 29.3%, to $8,003,000. The second quarter growth in product revenue was related to the acquisition of JAS Diagnostics in May 2008. Additionally, the growth at Drew was attributable to improved reagent revenues and increased sales of Drew’s D3 instrument, due in part to more favorable pricing and exchange rates.”

“At Sonomed, second quarter 2009 product revenue increased $31,000, or 1.2%, to $2,560,000 primarily driven by an increase in international sales within Southeast Asia, India and the Pacific Rim due to an intensified marketing effort within the region. For the 2009 six month period, Sonomed product revenue increased $370,000, or 7.8%, to $5,132,000 as compared to the same period last fiscal year. Within our Vascular segment, product revenue increased $22,000, or 2.5%, to $898,000 during the 2009 second quarter due to stronger sales of Vascular’s core needle business and an increase in direct sales to end users by the company’s domestic sales team. Consistent with these trends, during the 2009 six-month period, Vascular sales increased $216,000, or 12.9%, to $1,896,000,” DePiano added.

“Product revenue decreased $20,000, or 3.6%, in the EMI business segment during the fiscal 2009 second quarter when compared to the same period last year. However, the company continues to expand EMI’s product offerings and has recently expanded its sales force. These initiatives have contributed to increased EMI product revenue by $129,000, or 13.8%, during the six-month period ended December 31, 2008. In the Medical/Trek business segment, product revenue decreased $21,000, or 6.3%, to $310,000 for the 2009 fiscal second quarter and decreased $83,000, or 11.6%, to $633,000 during the 2009 fiscal six-month period. 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.”

DePiano concluded, “Overall, we continue to take steps to diversify our product portfolio, enhance our market position as well as take advantage of potential growth opportunities we see ahead in our niche markets.”