Updated from 2:35 p.m. EDT
Shares of Escalon Medical (ESMC - Get Report) were among the best-performing health-related stocks Tuesday, rising 33.7% after the company posted third-quarter results and provided an update to its legal dispute with IntraLase (ILSE).
The medical device maker earned $743,558, or 12 cents a share, on sales of $7.2 million. The one analyst who was polled by Thomson First Call was looking for a loss of 4 cents a share on sales of $6.6 million. A year ago, the company earned $739,174, or 17 cents a share, on sales of $3.6 million. Most of the sales increase came from Escalon's acquisition of Drew Scientific Group, which it acquired in July 2004. Excluding Drew, the company would have earned $940,000, or 15 cents a share, on sales of $4.2 million.
Separately, Escalon said it filed a complaint against IntraLase for breach of contract and breach of fiduciary duty. The complaint alleges that IntraLase acted in bad faith under a license agreement for laser technology. Escalon is seeking declaratory relief, specified damages and specific performance for its rights under the license agreement -- including its right under the agreement to have independent accountants audit the books and records of IntraLase to verify and compute payments due Escalon Medical.Earlier this month, according to Escalon, a California court entered a judgment -- in a separate case -- that IntraLase must pay Escalon royalties on revenue from maintenance contracts and one-year warranties. IntraLase, however, is not required to pay royalties on research grants, though IntraLase must give Escalon an accounting of third-party royalties. Shares of Escalon traded up $1.72 to $6.83. Shares of IntraLase traded down 1 cent to $17.50. Sun Healthcare Group (SUNH) rose 10.9% after the company said it would acquire privately held Peak Medical for about $150 million. The deal, which includes the assumption of some $96 million in debt and the issuance of roughly 9 million shares, is expected to be accretive to Sun's earnings once the deal closes. New Mexico-based Peak operates 62 inpatient facilities that span seven states. For the 12 months ended March 31, 2005, Peak had sales of $225 million. The transaction is expected to close during the second half of 2005. Shares of Sun Healthcare traded up 71 cents to $7.20.