By a News Reporter-Staff News Editor at Marketing Weekly News -- Escalon Medical Corp. (Nasdaq: ESMC) announced its operating results for the third fiscal quarter and nine months ended March 31, 2014, including an operating profit for the three-month period.
For the fiscal third quarter ended March 31, 2014, the company reported net income of $86,084 and net income from continuing operations of $112,354, or $0.01 per share. This compares to a net loss of $285,000 and a net loss from continuing operations of $283,761, or $0.04 per share, for the prior year period.
For the first nine months of fiscal 2014, the company reported a net loss of $9,223; however net income from continuing operations was a positive $68,426, or $0.01 per share. This compares to net income of $3.3 million, or $0.44 per share, in the year ago period, which includes a net gain of $4.1 million related to the sale of Drew and related debt settlement. The net loss from continuing operations was $781,424, or $0.10 per share, for the first nine months of the prior fiscal year.
For the three month period, consolidated product revenue was $3.2 million, an increase of 15.7% compared to $2.7 million in the prior year period, led by a gain in sales of the Company's Sonomed Escalon ultrasound products. For the nine months ended March 31, 2014, consolidated product revenue increased approximately 8.4% to $9.4 million from $8.6 million in the prior year period.
Year to date in fiscal 2014, margins have improved slightly to 51.5% compared to 50.1% in the prior year period due to product sales mix. Marketing, general and administrative expenses decreased by 13.0% 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 nine months of fiscal 2014 grew by 26.5% to $1.0 million from $803,256 in the prior year period.
At March 31, 2014, the Company had $2.4 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 $197,769 in the first nine months of fiscal 2014, primarily related to an increase in inventory.
"I am pleased we were able to report another quarter of positive financial results, on top of our continued investment in developing our ophthalmic product line," commented Chief Executive Officer, Richard J. DePiano, Jr. "Our latest tablet-based ultrasound system, the VuPad™, recently received U.S. Food and Drug Administration 510(k) clearance, and we are confident we will receive CE Marking and clearance by other international regulatory bodies in the coming months. The VuPad™ has received excellent feedback at recent ophthalmic meetings and, as manufacturing ramps up, we anticipate sales will build."
Mr. DePiano added, "We remain committed to continuing to update our ophthalmic product offerings and are excited by the opportunity surrounding the VuPad™, the VuMAX® HD and other new products in our pipeline. We will also look at select opportunities to add best-in-class ophthalmic product solutions to our distribution network to leverage our experienced sales force and further demonstrate our ongoing commitment to build on our position as a leader in ophthalmic diagnostic instrumentation and ultrasound solutions. While planned increases to research and development expenses as well as increased sales and marketing costs could pressure financial results in the short term, we believe the planned increases will lead to sustainable growth and increased shareholder value longer term."
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