CINCINNATI, July 29 OH-LCA-Vision-ern
CINCINNATI, July 29 /PRNewswire-FirstCall/ -- LCA-Vision Inc. (Nasdaq:
LCAV), a leading provider of laser vision correction services under the
LasikPlus(R) brand, today announced financial and operational results for the
three months and six months ended June 30, 2008.
Second Quarter 2008 Financial & Operational Results (all comparisons are
versus the second quarter of 2007)
-- Revenue was $54.2 million compared with $69.7 million; adjusted revenue
was $49.2 million compared with $70.6 million.
-- Procedure volume was 30,086 compared with 48,668.
-- Same-store revenue decreased 28%; adjusted same-store revenue decreased
36%. There were 65 vision centers included in same-store revenue.
-- Operating loss was $3.0 million compared with operating income of $10.0
million; the adjusted operating loss was $7.4 million compared with operating
income of $10.9 million.
-- Net loss was $573,000 or $0.03 per diluted share, compared with net
income of $7.4 million or $0.36 per diluted share.
Year-to-Date 2008 Financial & Operational Results (all comparisons are
versus the first six months of 2007)
-- Revenue was $133.7 million compared with $148.3 million; adjusted
revenue was $123.2 million compared with $154.9 million.
-- Procedure volume was 74,245 compared with 107,769.
-- Operating income was $7.5 million compared with $25.6 million; the
adjusted operating loss was $2.0 million compared with operating income of
$31.5 million.
-- Net income was $6.3 million or $0.34 per diluted share, compared with
net income of $18.3 million or $0.90 per diluted share.
LCA-Vision is providing adjusted revenue and operating income as a means
of measuring performance that adjusts for the non-cash impact of the
accounting for separately priced extended warranties. A reconciliation of
revenue and operating income as reported in accordance with Generally Accepted
Accounting Principles (GAAP) is provided on the last page of this news
release. Management believes the adjusted information is more reflective of
operating performance and therefore, more meaningful to investors.
"As anticipated and previously announced, total procedure volume declined
38% from last year's second quarter due to the slowing rate of LasikPlus(R)
pre-operative appointments booked by prospective patients and disappointing
show rates," said Steven C. Straus, Chief Executive Officer of LCA-Vision.
"Our quarterly adjusted revenue declined 30% as a result of lower procedure
volume; however, it was partially offset by a greater contribution from
IntraLase(R), which is now available in 74 of our 77 LasikPlus(R) vision
centers, and in June was utilized in 70% of our total procedures.
"We are committed to our strategic and operating plans, as well as
building on positive patient experiences, exceptional clinical outcomes,
advanced diagnostic and surgical technology, and our LasikPlus(R) brand
reputation, which are the foundations behind our achievement of the
significant milestone we announced earlier this month -- our one-millionth
procedure," added Mr. Straus. "We are facing substantial business challenges
as eroding consumer confidence continues to impact discretionary spending. Our
management team, Medical and Optometric Advisory Boards, LasikPlus(R) surgeons
and patient-care teams are working collaboratively and diligently to make
decisions aimed at increasing procedure volumes in this weak economic
environment. As stated in June, we are taking a more grassroots approach to
operations in recognition that all healthcare is delivered locally and our
success will be achieved at the local LasikPlus(R) vision center level. Among
our revenue-generating initiatives:
-- We delegated more decision-making to the local level, including setting
market-specific hours of operations and allocating funds to support local
marketing and sales efforts.
-- Effective July 1, we implemented a simplified market-specific pricing
structure based on the results of testing conducted in multiple markets
earlier in the year. We established local price points that reflect our value
proposition and accounts for local market competition and other factors.
Toward the end of the second quarter, we began to realize a slightly lower
average price per procedure, which we believe will positively impact procedure
volume.
-- We completed the first phase of our well-received employee service
excellence and conversion training program at all LasikPlus(R) vision centers
and in our national call center. While the sustainability of these trends is
not yet certain, during June we began to see modest improvement in pre-
operative exam show rates, patient conversion, and treatment show rates over
the lower levels we experienced earlier in the year.
-- Effective June 1, we modified our center-level incentive compensation
plan to create further incentive for our patient care teams to achieve monthly
center-level growth objectives.
-- We continue to enhance our www.lasikplus.com website with additional
functionality tools and educational information for our current and
prospective patients."
LCA-Vision's Interim Chief Financial Officer Michael Celebrezze commented
on the net loss for the quarter, stating, "We have taken additional measures
to reduce costs and minimize our use of cash. Among these initiatives:
-- We continue to more closely align our staffing levels with anticipated
procedure volume. Staffing decisions are based on a careful and thorough
analysis of company-wide operations that place patient experience and surgical
outcomes at the forefront. Earlier this year we announced that we reduced our
workforce by 16% and during the past few months have further reduced our
workforce by 25%. We expect to record a one time severance charge of
approximately $700,000 during the third quarter ended September 30, 2008. The
year-to-date staff reduction is expected to reduce our annualized labor
expenses by approximately $14.2 million. In addition to the staff reductions,
we have initiated a company-wide freeze on salaries and have eliminated a
number of open positions following a careful analysis of our needs for the
remainder of this year based on expected procedure volumes.
-- In an effort to transition to a more variable cost structure, we are
evolving toward a flexible workforce by adding part-time personnel to replace
open full-time positions where possible. As of June 30, 2008 we had 109 part-
time employees, compared with 51 part-time employees as of June 30, 2007.
-- In the third quarter, we are further reducing our national and local
media expenditures. We expect to spend between $9.0 million and $10.5 million,
which represents a reduction of approximately 40% to 45% from last year's
third quarter. We believe this reduction correlates with the current
tightening we are seeing in discretionary consumer spending.
-- Capital expenditures are being reduced by halting 2008 new center
openings after the third quarter, reducing the number of center relocations
planned for this year from five to three centers, and limiting new laser
purchases by moving under-utilized excimer lasers to centers opening in the
third quarter. For the remainder of 2008, we do not anticipate the need for
any additional investment in clinical or information technology. Working
capital is also being managed to minimize our use of cash.
-- Additionally, our board of directors has decided to suspend payment of
quarterly dividends."
Mr. Straus said, "We are announcing the departure of our Chief Marketing
Officer, Jim Brenner, and we wish him well in his future endeavors. We plan to
immediately conduct a search to fill this position.
"We continue to expand our market presence and the LasikPlus(R) brand," he
added. "A few weeks ago, we announced the opening of our 77th LasikPlus(R)
vision center in Nashville, Tennessee, which is a new market for LCA-Vision,
and we have plans to open our 78th LasikPlus(R) vision center late in the
third quarter, which will bring our 2008 new center openings to six. We
continue to carefully analyze the performance of each LasikPlus(R) vision
center in every market we serve. As previously stated, we are committed to
success at each LasikPlus(R) vision center and we have no plans at this time
to close any facility."
Cash & Investments
Net cash provided by operating activities in the first six months of 2008
was $6.3 million. Cash and investments totaled $67.9 million at June 30, 2008.
In late April, the company borrowed $19.2 million to finance the majority of
its IntraLase(R) lasers with monthly payments over a five-year period at a
fixed interest rate of 4.96%. At June 30, 2008 the loan balance was $18.6
million.
Share Repurchase
LCA-Vision did not repurchase any shares of its common stock during the
first six months of 2008 under the $50 million share repurchase plan that the
Board of Directors authorized in August 2007. Approximately $40 million
remains available for repurchase under this plan.
Conference Call and Webcast
As previously announced, a conference call and webcast will be held today,
Tuesday, July 29, 2008, beginning at 10:00 a.m. (ET). To access the conference
call, dial 866-322-1352 (United States and Canada) or 706-758-1564
(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: 554 52 303.
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. These 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 acceptance rate of new technology, and our
ability to successfully implement new technology on a national basis; market
acceptance of our services; the successful execution of marketing strategies
to cost-effectively drive patients to our vision centers; competition in the
laser vision correction industry; an inability to attract new patients; 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; our
ability to successfully open new vision centers, including our ability to
reach profitability targets for new vision centers within a specified time
period; the relatively high fixed cost structure of our business; 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 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 potentially 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 77 LasikPlus(R) fixed-site laser vision
correction centers in 34 states and 60 markets in the United States and a
joint venture in Canada. Additional company information is available at
www.lca-vision.com and www.lasikplus.com
Earning Trust Every Moment.
Transforming Lives Every Day.
For Additional Information
Patricia Forsythe
V.P. Investor Relations
513-792-5629
pforsythe@lca.com
LCA-Vision Inc.
Condensed Consolidated Statements of Income (Unaudited)
(dollars in thousands except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Revenue -- Laser refractive surgery $54,181 $69,685 $133,750 $148,348
Operating costs and expenses
Medical professional and license
fees 11,260 11,41926,02225,393
Direct costs of services 20,119 24,62944,84649,095
General and administrative
expenses 5,6745,39011,04510,588
Marketing and advertising 15,466 15,71435,44932,892
Depreciation4,6122,494 8,867 4,798
Operating (loss) income (2,950) 10,039 7,52125,582
Equity in earnings from
unconsolidated businesses 265 199 321 354
Net investment income8311,816 1,566 3,427
Other (expense) income, net- (21) 18 (31)
(Loss) income before taxes(1,854) 12,033 9,42629,332
Income tax (benefit) expense (1,281) 4,619 3,12310,992
Net (loss) income $(573) $7,414$6,303 $18,340
Income per common share
Basic $(0.03) $0.37 $0.34 $0.92
Diluted$(0.03) $0.36 $0.34 $0.90
Dividends declared per share $0.06$0.18 $0.24 $0.36
Weighted average shares outstanding
Basic 18,525 20,06918,51019,987
Diluted18,525 20,35418,57020,334
LCA-Vision Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands)
June 30, 2008 December 31, 2007
Assets(Unaudited)
Current assets
Cash and cash equivalents$22,941 $17,614
Short-term investments39,20542,534
Patient receivables, net of
allowance for doubtful accounts
of $2,984 and $2,987 12,90212,712
Other accounts receivable 4,942 5,941
Prepaid professional fees 1,353 1,872
Prepaid income taxes 1,655 6,391
Deferred tax assets3,441 3,450
Prepaid expenses and other 4,996 5,076
Total current assets 91,43595,590
Property and equipment 121,140 106,788
Accumulated depreciation and amortization (61,691) (52,872)
Property and equipment, net 59,44953,916
Long-term investments 5,727 2,250
Patient receivables, net of allowance
for doubtful accounts of $2,244 and
$2,130 4,533 4,556
Deferred compensation plan assets 3,425 5,540
Investment in unconsolidated businesses 1,141 590
Deferred tax assets 12,17813,561
Other assets 2,589 3,644
Total assets $180,477 $179,647
Liabilities and Stockholders' Investment
Current liabilities
Accounts payable $3,575 $10,396
Accrued liabilities and other 12,33513,219
Deferred revenue 13,52718,719
Income taxes payable 405 642
Debt obligations maturing in one year 7,904 3,941
Total current liabilities37,74646,917
Long-term debt obligations (less current
portion)16,676 2,012
Deferred compensation liability 3,431 5,516
Insurance reserve 9,563 8,493
Deferred revenue 17,75723,110
Stockholders' Investment
Common stock ($0.001 par value;
25,177,617 and 25,114,244 shares
issued and 18,531,168 and 18,482,658
shares outstanding as of June 30, 2008
and December 31, 2007, respectively) 2525
Contributed capital 173,194 172,965
Common stock in treasury, at cost
(6,646,449 and 6,631,586 shares at
June 30, 2008 and December 31, 2007) (114,632) (114,427)
Retained earnings 36,45334,597
Accumulated other comprehensive income 264 439
Total stockholders' investment 95,30493,599
Total liabilities and stockholders'
investment$180,477 $179,647
LCA-Vision Inc.
Condensed Consolidated Statements of Cash Flow (Unaudited)
(dollars in thousands)
Six Months Ended June 30,
2008 2007
Cash flow from operating activities:
Net income $6,303 $18,340
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 8,867 4,798
Provision for loss on doubtful accounts 3,325 3,156
Deferred income taxes 1,686 115
Stock based compensation612 2,780
Insurance reserve 1,070 1,296
Equity in earnings of unconsolidated
affiliates(321) (354)
Changes in operating assets and
liabilities
Patient receivables (3,492) (7,420)
Other accounts receivable999(2,581)
Prepaid income taxes 4,736(1,139)
Prepaid expenses and other80 2,120
Accounts payable (6,821)1,085
Deferred revenue, net of
professional fees(9,491)5,877
Income taxes payable(237)-
Accrued liabilities and other (993)2,308
Net cash provided by operations $6,323 $30,381
Cash flow from investing activities:
Purchase of property and equipment (12,590) (7,427)
Purchases of investment securities (171,849) (160,515)
Proceeds from sale of investment
securities 170,910 148,741
Other, net 787 (74)
Net cash used in investing activities $(12,742) $(19,275)
Cash flow from financing activities:
Principal payments of capital lease
obligations and debt(2,367) (2,249)
Proceeds from loan 19,184 -
Shares repurchased for treasury stock (205) (452)
Tax benefits related to stock-based
compensation (566)1,055
Exercise of stock options 147 3,112
Dividends paid to stockholders (4,447) (7,227)
Net cash provided by (used in) financing
activities 11,746(5,761)
Increase in cash and cash equivalents5,327 5,345
Cash and cash equivalents at beginning of
period 17,61424,431
Cash and cash equivalents at end of period $22,941 $29,776
LCA-Vision Inc.
Effect of the Change in Our Accounting for Deferred Revenue on Financial
Results (Unaudited)
(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 (loss)
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 differences between the non-GAAP
measures with the most directly comparable financial measures calculated
in accordance with GAAP follows:
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Revenue
Reported $54,181 $69,685 $133,750 $148,348
Adjustments
Warranty revenue deferred
into future - 7,937 - 20,054
Amortization of prior
deferred revenue(4,947) (7,030) (10,546) (13,525)
Adjusted revenue $49,234 $70,592 $123,204 $154,877
Operating (Loss) Income
Reported $(2,950) $10,039 $7,521$25,582
Adjustments
Impact of warranty revenue
deferral(4,947) 907(10,546) 6,529
Professional fees deferred
into future - (794) - (2,006)
Amortization of prior
professional fees 494 703 1,054 1,353
Adjusted operating (loss)
income$(7,403) $10,855$(1,971) $31,458
SOURCE LCA-Vision Inc.
