Wordpress filter the_excerpt to include page formatting on output, trim excerpt length. From Aaron Russell: http://aaronrussell.co.uk/legacy/improving-wordpress-the_excerpt/

functions.php

//Excerpt with formating from WYSIWYG
function improved_trim_excerpt($text) {
        global $post;
        if ( '' == $text ) {
                $text = get_the_content('');
                $text = apply_filters('the_content', $text);
                $text = str_replace('\]\]\>', ']]>', $text);
                $text = preg_replace('@<script[^>]*?>.*?</script>@si', '', $text);
                //$text = strip_tags($text, '<p>');
                $excerpt_length = 70;
                $perma = get_the_permalink();
                $words = explode(' ', $text, $excerpt_length + 1);
                if (count($words)> $excerpt_length) {
                        array_pop($words);
                        array_push($words, '... <a href="' . $perma .'">Read More</a>');
                        $text = implode(' ', $words);
                }
        }
        return $text;
}
remove_filter('get_the_excerpt', 'wp_trim_excerpt');
add_filter('get_the_excerpt', 'improved_trim_excerpt');

No longer works WordPress 4.6+ need to revisit