WAYNE, Pa., May 3 /PRNewswire-FirstCall/ -- Escalon Medical Corp. (Nasdaq: ESMC) today announced the divesture of its SMARTNEEDLE and pd ACCESS Doppler guided needle product lines to Vascular Solutions, Inc. (Nasdaq: VASC).
The sales price was $5,750,000, cash of $5,000,000 at closing and $750,000 payable in cash upon the successful completion of the transfer of the manufacturing to Vascular Solutions, plus a one time earn-out payment in an amount equal to 25% of the net sales of the VascuView TAP products sold between July 1, 2010 and June 30, 2011. The manufacturing transfer is expected to be complete within four months. During this four month transition, Escalon will continue to manufacture product in its Wisconsin facility under a supply agreement concurrently entered into with Vascular Solutions.
As a business, Escalon Vascular Access has matured over the eleven years under Escalon ownership. Management's goals to develop a strong presence in the catheter laboratory market, achieve proof of concepts for several other applications and to add visual ultrasound to the product portfolio, were realized up to and during fiscal 2010.
"The divestiture of the Vascular Access product line was based on extensive strategic evaluation which concluded that the divesture of these non core product lines would enable us to better focus our efforts and resources on our Ophthalmic and IVD businesses," said Richard J. DePiano, Jr., President of Escalon. "We expect to use the cash we receive in the transaction to strengthen our balance sheet, to provide additional working capital, enhance our ability to strategically expand our business and provide the means to selectively pursue opportunities for synergistic growth."Escalon Vascular Access product line revenues from operations were $3,868,000, $4,119,000 and $3,467,000 in fiscal 2009, 2008, 2007, respectively. Earnings from operations, net of taxes, were $420,000, $344,000 and $(35,000) in 2009, 2008, and 2007, respectively. The sale of this product line will have a material effect on earnings in subsequent periods. Since 1997, Escalon has acquired selective businesses or product lines with a mission to enhance or expand such for the sole purpose of creating shareholder value. During this time Escalon has acquired six separate businesses or product lines and has divested of four. Each divesture provided Escalon with a stronger balance sheet and provided additional working capital, both of which enable it to grow its business.