Escalon Medical announces operating results for fiscal 2014; VuPad receives CE mark authorization

Sep 27 2014

Escalon Medical Corp. (NASDAQ: ESMC) today announced its operating results for the fiscal year ended September 30, 2014. The Company was also recently granted authority to apply the CE Mark to the Sonomed Escalon VuPad™, its new tablet-based ultrasound imaging system.

Fiscal 2014 Results

For the year ended June 30, 2014, the company reported a net loss of $381,883 and a net loss from continuing operations of $349,532, or $0.05 per share. This compares to net income of $2.6 million, or $0.35 per share, for fiscal 2013, which includes a net gain of $3.9 million related to the sale of Drew and related debt settlement. The net loss from continuing operations was $1.2 million, or $0.16 per share, for fiscal 2013.

For fiscal 2014, consolidated product revenue increased 7.5% to $12.4 million from $11.5 million in fiscal 2013, led by a gain in sales of the Company's Sonomed Escalon Ultrasound and Digital products.

For fiscal 2014, margins improved slightly to 49.1% compared to 48.6% in the prior year period due to product sales mix. Marketing, general and administrative expenses decreased by 10.6% 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 fiscal 2014 grew by 18.2% to $1.3 million from $1.1 million in the prior fiscal year.

At June 30, 2014, the Company had $2.0 million of cash and no long-term debt. With the recent launch of the VuPad™, the Company has built inventory to satisfy anticipated demand in fiscal 2015, contributing to the $609,657 use of cash for the year. Inventory stood at $2.9 million at June 30, 2014.

VuPad™ Receives CE Mark Authorization

The VuPad™, which received FDA 510(k) clearance earlier in 2014, recently received authorization to apply the CE Mark, allowing sales in the 27 nations that comprise the European Union (EU). The VuPad™ combines Sonomed Escalon's superior UBM and newly enhanced B-scan image quality with an ultra-high-resolution screen that has 25% larger viewing area than other portable ultrasound devices.

"We are excited to offer the VuPad into our extensive European distribution channels, building upon its initial introduction within the United States earlier in the year," commented Chief Executive Officer, Richard J. DePiano, Jr. "The CE marking is well-timed with recent production capacity coming online and our planned marketing activities. We have received very positive feedback from European distributors and clinicians, including at a preview provided at the Societas Internationalis Pro Diagnostica Ultrasonica in Ophthalmologia (SIDUO) Congress held in Berlin, Germany this summer and at the European Society of Cataract and Refractive Surgeons (ESCRS) annual meeting held in London, England earlier this month."

"From a financial perspective, we are satisfied with the progress we have made during the year. We were able to bring our cost structure down while continuing to invest in our ophthalmic product portfolio, including the VuPad™, the VuMAX® HD and other new products. While we reported breakeven results earlier in the year, the fourth quarter was hampered by the transition to new products which involved the discounting of our older product inventory as well as the distribution of demonstration devices to our distributors, which also pressured margins. We also invested in new product inventory in the fourth quarter in advance of anticipated demand in 2015 as well as the American Academy of Ophthalmology Annual Meeting in October in Chicago."

Mr. DePiano concluded, "We remain committed to continuing to update our product portfolio and build on our position as a leader in ophthalmic diagnostic instrumentation and ultrasound solutions. Recent new products are being well received and we are positioned to leverage our experienced sales force and distribution network to grow market share. We will continue to invest in sales and marketing as well as research and development to remain best in class and believe this will lead to accelerated growth in 2015 and increased shareholder value longer term."