Second consecutive quarter of market share gains; Reports positive
cash flow CINCINNATI, April 28 /PRNewswire-FirstCall/ -- LCA-Vision
Inc. (NASDAQ: LCAV), a leading provider of laser vision correction
services under the LasikPlus(R) brand, today announced financial
and operating results for the three months ended March 31, 2009.
First Quarter 2009 Results (all comparisons are versus the first
quarter of 2008) -- Revenue was $47.9 million compared with $79.6
million; adjusted revenue was $44.9 million compared with $74.0
million. -- Procedure volume was 27,859 compared with 44,159. Rate
of procedure volume decline was 37%, an improvement from
year-over-year declines of 51% in the 2008 fourth quarter and of
52% in the 2008 third quarter. -- Same-store revenue (71 vision
centers) decreased 40.7%; adjusted same-store revenue decreased
40.4%. -- Operating loss was $4.2 million compared with operating
income of $10.5 million; adjusted operating loss was $6.9 million
compared with adjusted operating income of $5.4 million. Operating
loss and adjusted operating loss included $0.9 million in
restructuring expense and $0.8 million in consent revocation
expenses; operating income and adjusted operating income in the
first quarter of 2008 included restructuring expense of $0.5
million. -- Net loss was $2.8 million, or $0.15 per share, compared
with net income of $6.9 million, or $0.37 per diluted share. First
Quarter 2009 Operational and Financial Highlights -- Increased
estimated market share to 13.0% of total industry procedure volume,
based on independent market researcher Market Scope(R), LLC's
projected industry procedure volume of 213,500 for the period.
LCA-Vision reported market share of 11.9% in the 2008 fourth
quarter and 10.5% in the 2008 third quarter. -- Total procedure
volume grew 43% from the 2008 fourth quarter, which compares
favorably with the 11% increase in the 2008 first quarter from the
2007 fourth quarter. -- Net cash provided by operating activities
was $7.3 million. Capital expenditures were minimized to $0.2
million. -- Cash and investments totaled $64.5 million as of March
31, 2009, an increase of $5.0 million from December 31, 2008.
LCA-Vision is providing both adjusted revenue and operating income
as a means of measuring performance that adjusts for the non-cash
impact of accounting for separately priced extended warranties. A
reconciliation of revenue and operating income (loss) as reported
in accordance with U.S. Generally Accepted Accounting Principles
(GAAP) is provided at the end of this news release. Management
believes the adjusted information is more reflective of operating
performance and, therefore, more meaningful to investors. "Although
our business and our industry continue to be affected adversely by
the recession, we are pleased to report a second consecutive
quarter of market-share gains," said Steven C. Straus, Chief
Executive Officer of LCA-Vision. "We attribute our ability to gain
share to our business and marketing initiatives, and the support
and dedication of our Medical Advisory Board, Optometric Advisory
Board, surgeons and optometrists, and the full staff at LCA-Vision
and LasikPlus(R) vision centers. "We are making measurable progress
on our new, methodical approach to marketing that is designed to
produce results, while conforming with our cash-conscious and
cash-conservative strategy," Straus added. "We are now delivering
integrated marketing messages within all markets served by
LasikPlus(R) vision centers, following testing of this program in
selected LasikPlus(R) markets in the fourth quarter. We also have
completed comprehensive market research that included a marketing
segmentation analysis to identify a target audience who represent
our highest opportunity to purchase surgical services during the
next year and focus group interviews with members of this audience
to gain insights into their decision-making process. Based on this
research, we have developed and are in the process of refining
marketing messages to maximize their impact in the marketplace."
LCA-Vision's Chief Financial Officer Michael Celebrezze commented,
"We benefited from cost reduction and cash conservation measures
that we began implementing early last year to better align our
expenses with procedure volume. Both our direct costs per vision
center and general and administrative costs were reduced compared
to the same quarter last year. Our financial results for this
year's first quarter were impacted negatively by $0.9 million in
costs associated with the previously announced closure of two
underperforming vision centers and $0.8 million related to our
successful consent revocation. "Following our announced decision in
March, we have reduced the number of excimer laser platforms from
three to two in 22 LasikPlus(R) vision centers so far and expect to
complete this program in all of our 75 vision centers in the third
quarter," he said. "When fully implemented, this program will
reduce our annual operating expenses in excess of $3 million, while
allowing us to achieve industry-leading clinical outcomes and to
retain our competitive advantage of offering prospective patients a
choice of state-of-the-art Abbott Medical Optics VISX Star S4 IR
and Alcon Laboratories ALLEGRETTO WAVE(R) Eye-Q 400Hz laser
platforms. In conjunction with this program, we entered into new
agreements with these manufacturers that will permit us to retire
$2.1 million of capital lease obligations and add cash to our
balance sheet over the next few quarters. "We also expect to
improve collections and to continue moving toward an increasing
part-time workforce to complement our core group of full-time
employees so as to continue to reduce compensation expenses
throughout 2009." "Lifetime Vision" Model "Among our priorities
this year is to institute a 'Lifetime Vision' model, which is
intended to allow us to more fully utilize the highly trained and
skilled ophthalmic surgeons and optometrists within the company,"
stated Straus. "The 'Lifetime Vision' model is based on the concept
that an individual should be a patient of LCA-Vision for life and
thereby become a repeat source of revenue. We are pursuing an
Advanced Ocular Exam procedure, which constitutes a comprehensive
eye exam using new diagnostic tools to screen for various eye
diseases and irregularities, as well as determining a patient's
candidacy for laser vision correction and other refractive surgical
procedures. This program fits our business strategy as it provides
a source of incremental revenue from our existing centers and
staff, it supports our laser vision correction business by becoming
a potential source of referrals and it requires a minimal capital
expenditure. We expect to begin testing the Advanced Ocular Exam
procedure later this year. We also are evaluating additional
opportunities including premium intraocular lens surgery."
Near-Term Financial Outlook LCA-Vision affirmed its intent to
continue to manage cash and investments conservatively in 2009. --
The company does not plan to open any new vision centers in 2009.
LCA-Vision plans to restart its successful de novo new center
opening program following improvements in the economy; -- The
company will continue to manage general and administrative expenses
aggressively, which it expects to remain relatively unchanged in
2009 compared with 2008; -- The company expects marketing
efficiency and effectiveness improvements; -- The company expects
center direct costs per center to decline in 2009; and -- The
company expects capital expenditures to be approximately $2.0
million in 2009, down significantly from $14.9 million in 2008.
Comparing 2009 (the first full year of benefit from cost
reductions) with 2007 (prior to cost reductions), the company
expects vision center breakeven eyes per month to decline to 105 in
2009 from 125 in 2007, and expects the number of procedures per
year required for its cash flow to be breakeven to decline to
approximately 110,000 from 170,000. Management has repositioned the
company to be cash-flow positive at 2008 procedure volume levels.
Management believes that its current cash and investment resources
provide it with significant staying power should the current
recession be prolonged. For example, the company believes that
current cash and investment resources are sufficient to fund
operations for more than three years even if annual procedure
volumes decline 22% from 2008 levels to 90,000 procedures annually.
Conference Call and Webcast As previously announced, a conference
call and webcast will be held today, Tuesday, April 28, 2009,
beginning at 10:00 a.m. Eastern time. To access the conference
call, dial 866-322-1352 (United States and Canada) or 706-634-1308
(international callers). The webcast will be available at the
investor relations section of LCA-Vision's website. A replay of the
call and webcast will begin approximately two hours after the live
call has ended. To access the replay, dial 800-642-1687 (United
States and Canada) or 706-645-9291 (international callers) and
enter the conference ID number: 926 47 070. Forward-Looking
Statements This news release contains forward-looking statements
based on current expectations, forecasts and assumptions of
LCA-Vision that are subject to risks and uncertainties. The
forward-looking statements in this release are based on information
available to us as of the date hereof. Actual results could differ
materially from those stated or implied in our forward-looking
statements due to risks and uncertainties associated with our
business, including, without limitation, those concerning economic,
political and sociological conditions; the successful execution of
marketing strategies to cost-effectively drive patients to our
vision centers; an inability to attract new patients; our ability
to profitably operate vision centers and retain qualified personnel
during periods of lower procedure volumes; the relatively high
fixed cost structure of our business; the acceptance rate of new
technology, and our ability to successfully implement new
technology on a national basis; market acceptance of our services;
competition in the laser vision correction industry; the
possibility of long-term side effects and adverse publicity
regarding laser vision correction; operational and management
instability; legal or regulatory action against us or others in the
laser vision correction industry; the continued availability of
non-recourse third-party financing for our patients on terms
similar to what we have paid historically; and the future value of
revenues financed by us and our ability to collect on such
financings, which will depend on a number of factors including the
worsening consumer credit environment and our ability to manage
credit risk related to consumer debt, bankruptcies and other credit
trends. In addition, an ongoing FDA study about post-Lasik
quality-of-life matters could impact negatively the acceptance of
LASIK. For a further discussion of the factors that may cause
actual results to differ materially from current expectations,
please review our filings with the Securities and Exchange
Commission, including but not limited to our reports on Forms 10-K,
10-Q and 8-K. Except to the extent required under the federal
securities laws and the rules and regulations promulgated by the
Securities and Exchange Commission, we assume no obligation to
update the information included in this news release, whether as a
result of new information, future events or circumstances, or
otherwise. About LCA-Vision Inc./LasikPlus(R) LCA-Vision Inc., a
leading provider of laser vision correction services under the
LasikPlus(R) brand, operates 75 LasikPlus(R) fixed-site laser
vision correction centers in 32 states and 57 markets in the United
States and a joint venture in Canada. Additional company
information is available at http://www.lca-vision.com/ and
http://www.lasikplus.com/. Earning Trust Every Moment. Transforming
Lives Every Day. For Additional Information Company Contact:
Investor Relations Contact: Barb Kise Jody Cain LCA-Vision Inc.
Lippert/Heilshorn & Associates 513-792-9292 310-691-7100
LCA-Vision Inc. Condensed Consolidated Statements of Operations
(Unaudited) (Amounts in thousands except per share data) Three
months ended March 31, ------------------ 2009 2008 ---- ----
Revenues - Laser refractive surgery $47,921 $79,568 Operating costs
and expenses Medical professional and license fees 10,776 14,761
Direct costs of services 17,816 24,451 General and administrative
expenses 4,418 5,191 Marketing and advertising 13,026 19,984
Depreciation 4,358 4,254 Consent revocation expenses 804 -
Restructuring expense 902 456 --- --- Operating (loss) income
(4,179) 10,471 Equity in earnings from unconsolidated businesses 27
56 Net investment (loss) income (177) 736 Other income, net 2 18 -
-- (Loss) income before taxes on income (4,327) 11,281 Income tax
(benefit) expense (1,483) 4,405 ------ ----- Net (loss) income
$(2,844) $6,876 ======= ====== (Loss) income per common share Basic
$(0.15) $0.37 Diluted $(0.15) $0.37 Dividends declared per share $-
$0.18 Weighted average shares outstanding Basic 18,561 18,495
Diluted 18,561 18,587 LCA-Vision Inc. Condensed Consolidated
Balance Sheets (Unaudited) (Dollars in thousands) Assets March 31,
2009 December 31, 2008 -------------- ----------------- Current
assets Cash and cash equivalents $29,214 $23,648 Short-term
investments 32,087 32,687 Patient receivables, net of allowance for
doubtful accounts of $1,186 and $1,465 8,625 9,678 Other accounts
receivable 3,842 2,515 Prepaid professional fees 776 911 Prepaid
income taxes 7,558 8,957 Deferred tax assets 4,385 4,708 Prepaid
expenses and other 5,371 5,299 ----- ----- Total current assets
91,858 88,403 Property and equipment 120,282 121,734 Accumulated
depreciation and amortization (73,039) (70,235) ------- -------
Property and equipment, net 47,243 51,499 Long-term investments
3,155 3,126 Accounts receivable, net of allowance for doubtful
accounts of $1,394 and $1,662 2,237 2,645 Deferred compensation
plan assets 2,071 2,196 Investment in unconsolidated businesses 396
377 Deferred tax assets 7,407 7,027 Other assets 1,942 2,209 -----
----- Total assets $156,309 $157,482 ======== ======== Liabilities
and Stockholders' Investment Current liabilities Accounts payable
$9,278 $8,169 Accrued liabilities and other 11,839 8,608 Deferred
revenue 7,761 9,107 Debt obligations maturing in one year 6,171
6,985 ----- ----- Total current liabilities 35,049 32,869 Long-term
rent obligations 2,557 1,820 Long-term debt obligations (less
current portion) 13,081 14,120 Deferred compensation liability
2,071 2,196 Insurance reserve 9,656 9,489 Deferred revenue 12,290
14,003 Other liabilities 2,000 - Stockholders' investment Common
stock ($0.001 par value; 25,207,465 and 25,199,734 shares and
18,581,953 and 18,552,985 shares issued and outstanding,
respectively) 25 25 Contributed capital 173,668 174,206 Common
stock in treasury, at cost (6,625,512 shares and 6,646,749 shares)
(114,668) (114,632) Retained earnings 20,671 23,515 Accumulated
other comprehensive loss (91) (129) --- ---- Total stockholders'
investment 79,605 82,985 ------ ------ Total liabilities and
stockholders' investment $156,309 $157,482 ======== ========
LCA-Vision Inc. Condensed Consolidated Statements of Cash Flows
(Unaudited) (Dollars in thousands) Three months ended March 31,
---------------- 2009 2008 ---- ---- Cash flow from operating
activities: Net (loss) income $(2,844) $6,876 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation 4,358 4,254 Provision for loss on doubtful accounts
1,175 2,080 Loss on investments 365 - Restructuring expense 872 -
Deferred income taxes (136) 980 Stock based compensation (8) (101)
Insurance reserve 167 1,305 Equity in earnings of unconsolidated
affiliates (27) (56) Changes in operating assets and liabilities:
Patient accounts receivable 286 (3,796) Other accounts receivable
(1,327) (1,039) Prepaid income taxes 1,399 6,218 Prepaid expenses
and other (72) (2,944) Accounts payable 1,109 (2,003) Deferred
revenue, net of professional fees (2,753) (5,038) Income taxes
payable 11 2,827 Accrued liabilities and other 4,756 (674) -----
---- Net cash provided by operations 7,331 8,889 Cash flow from
investing activities: Purchases of property and equipment (157)
(9,330) Purchases of investment securities (81,478) (54,942)
Proceeds from sale of investment securities 81,841 67,287 Other,
net (82) 480 --- --- Net cash provided by investing activities 124
3,495 Cash flow from financing activities: Principal payments of
capital lease obligations and loan (1,853) (570) Shares repurchased
for treasury stock (36) (205) Exercise of stock options - 148
Dividends paid to stockholders - (3,335) --- ------ Net cash used
in financing activities (1,889) (3,962) ------ ------ Increase in
cash and cash equivalents 5,566 8,422 Cash and cash equivalents at
beginning of period 23,648 17,614 ------ ------ Cash and cash
equivalents at end of period $29,214 $26,036 ======= =======
LCA-VISION INC. EFFECT OF THE CHANGE IN OUR ACCOUNTING FOR DEFERRED
REVENUES ON FINANCIAL RESULTS (dollars in thousands) To supplement
its condensed consolidated financial statements presented in
accordance with accounting principles generally accepted in the
United States, LCA-Vision discusses adjusted revenues and operating
income. Management utilizes this information as a means of
measuring performance that adjusts for the non-cash impact of the
accounting for separately priced extended warranties and believes
that including this additional disclosure is meaningful to
investors for the same reason. Accordingly, this news release
contains non-GAAP financial measures within the meaning of
Regulation G promulgated by the Securities and Exchange Commission.
A reconciliation of the difference between the non-GAAP measures
with the most directly comparable financial measures calculated in
accordance with GAAP follows: Three Months Ended March 31, 2009
2008 Revenue Reported $47,921 $79,568 Adjustments Amortization of
prior deferred revenue (3,059) (5,599) ------ ------ Adjusted
revenue $44,862 $73,969 ======= ======= Operating (Loss) Income
Reported $(4,179) $10,471 Adjustments Impact of warranty revenue
deferral (3,059) (5,599) Amortization of prior professional fees
306 560 --- --- Adjusted operating (loss) income $(6,932) $5,432
======= ====== DATASOURCE: LCA-Vision Inc. CONTACT: Company, Barb
Kise of LCA-Vision Inc., +1-513-792-9292; Investor Relations, Jody
Cain of Lippert/Heilshorn & Associates, +1-310-691-7100 Web
Site: http://www.lca-vision.com/
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