WAYNE, Pa., Oct. 4, 2012 /PRNewswire/ -- Escalon Medical Corp. (Nasdaq: ESMC) (the "Company") today announced the sale of its Clinical Diagnostics Business to ERBA Diagnostics, Inc. (NYSE MKT: ERB).
The Escalon Clinical Diagnostics Business ("ECD') consists of Drew Scientific, Inc., and its wholly owned subsidiaries JAS Diagnostics, Inc. ("JAS") and Drew Scientific Limited Co. ECD develops and sells A1c and Hematology diagnostic instruments, reagents and chemistries. Drew was focused on providing instrumentation and consumables for the physician office labs, small hospital labs and veterinary research laboratories. Drew also supplies the reagent and other consumable materials needed to operate the instruments. JAS specializes in the manufacture of a broad range of liquid stable, diagnostics chemistry reagents used in IVD tests. Many of these reagents are single vial stable, which offer ease of use, increased speed of results and extended on-board stability. The sales price was $6,500,000 in cash.
The Company acquired Drew in 2004. Since the Company's entry into the clinical diagnostics business, the Company's strategic objective had been to expand our presence in the reagent segment of the IVD market. Drew was focused on the equipment side of the IVD business; JAS synergistically expanded the Company's position into the clinical chemistry consumable market. The Company restructured the business in an effort to position it for profitability. As the path to profitability was longer than anticipated, the Company continued to invest into the business. Management realized that further investment and focus was needed to move ECD into profitability. Therefore, as the opportunity to seek strategic partners developed into opportunities for combinations, management pursued the opportunity presented by ERBA Diagnostics. ERBA Diagnostics develops, manufactures and markets proprietary diagnostic reagents, instrumentation and software, specializing in a full range of products from ERBA international group of companies in USA, Italy, Czech Republic, India and Turkey, including not only the Autoimmune and Infectious Elisa product lines, but also the full line of biochemistry, clinical chemistry and urine analysis products.
"The sale of Escalon Clinical Diagnostics business was based on the continuing extensive strategic evaluation and enables us to better focus our efforts and resources on our Ophthalmic business" 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 Ophthalmic business and provide the means to selectively pursue opportunities for synergistic growth."Escalon Clinical Diagnostics revenues from operations were $12,985,000, $13,708,000 and $18,077,000, in fiscal 2012, 2011, 2010, respectively. The sale of this business will have a material effect on earnings in subsequent periods. Since 1997, the Company has acquired selective business's or product lines with a mission to enhance or expand such for the sole purpose of creating shareholder value. During this time the Company has acquired six separate businesses or product lines and has divested of five. Each divesture provided Escalon with a stronger balance sheet and provided additional working capital, both of which enable it to grow its business.