LCA-Vision First Quarter Results Feature EPS of $0.20

Revenues Increase 12%, Procedure Volume Up 11%

Apr 24, 2012, 07:00 ET from LCA-Vision Inc.

CINCINNATI, April 24, 2012 /PRNewswire/ -- LCA-Vision Inc. (NASDAQ: LCAV), a leading provider of laser vision correction services under the LasikPlus® brand, today announced financial and operating results for the three months ended March 31, 2012.

First Quarter 2012 Financial and Operating Highlights (all comparisons are with the first quarter of 2011)

  • Revenues increased 11.9% to $36.1 million from $32.3 million; adjusted revenues increased 13.9% to $35.3 million from $31.0 million.
  • Total procedure volume increased 11.3% to 20,987 procedures from 18,857 procedures.
  • Operating income increased to $3.8 million from $2.0 million; adjusted operating income increased to $3.0 million from $0.8 million. The improvement in operating income and adjusted operating income reflects higher procedure revenue offset partially by increases in variable costs, additional spending on marketing and advertising, and increases in general and administrative costs.
  • Marketing cost per eye decreased to $326 from $344.
  • Net income was $3.8 million, or $0.20 per share, compared with net income of $2.0 million, or $0.11 per share.
  • Net cash provided by operations was $4.5 million compared with $4.8 million. Although net income increased substantially for the first quarter of 2012, changes in working capital resulted in a reduction of cash from operations in the first quarter of 2012 compared with a source of cash in the prior year.
  • Cash and investments increased by $3.5 million to $48.3 million as of March 31, 2012, compared with $44.8 million as of December 31, 2011.

The company provides adjusted revenues 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 revenues and operating income as reported in accordance with U.S. Generally Accepted Accounting Principles (GAAP) is provided at the end of this news release. Management believes that the adjusted information better reflects operating performance and, therefore, is more meaningful to investors.

"We are pleased to report a profitable quarter, which reflects seasonally strong procedure volume as patients take advantage of flexible spending programs in the first quarter," said LCA-Vision Chief Financial Officer Michael J. Celebrezze. "Additionally, we benefited from a modest improvement in the Consumer Confidence Present Situation Index, which historically has correlated closely with our procedure volume.  However, we continue to believe the index remains below the level at which consumers are comfortable with discretionary spending on medical procedures.

"Importantly, we are reporting double-digit growth in revenues and procedure volume compared with the prior year and a 90%  increase in net income. Even with the $500 discount promotion we offered during most of the first quarter, average price per procedure of $1,683 was $38 higher than the first quarter of 2011 and was $25 above the price for the fourth quarter of 2011. In reviewing our operating metrics compared with the prior year, our preoperative appointment show rate was considerably higher." 

LCA-Vision Chief Operating Officer David L. Thomas said, "We are firmly focused on continued improvements in our laser vision correction services business. Currently, we are optimizing marketing activities at the local level and working to align staff with increases in preoperative exams in certain centers. We see ample opportunity for growth in our laser vision correction business as the economy gains momentum.  Our vision center staff and call center team are delivering a high level of patient satisfaction which results in word of mouth referrals to Lasik Plus®. 

"In addition to improving our core business, we have a well-defined, multi-part strategy to promote future growth and profitability. We are expanding our affiliate network of key eye-care professionals for LASIK and cataract patient referrals beyond our direct-to-consumer model, and we recently hired a vice president to oversee this function. We also are implementing a marketing and operational plan to support a successful expansion into cataract and premium intraocular lens (IOL) surgery under our new Visium Eye Institute™ brand. We are on track to have this offering available in 10 to 14 markets by the end of 2012. We see significant long-term opportunity with this offering as the cataract and premium IOL market is four times as large as laser vision correction, although, as previously announced, we expect to incur start-up losses associated with our business expansion." 

Near-term Financial Outlook

LCA-Vision intends to continue to manage expenses conservatively in 2012; its plans and outlook for the year include:

  • The company does not plan to open any new vision centers in the near term. LCA-Vision will consider restarting its de novo vision center opening program when market conditions improve and the company moves closer to sustained profitability in its core laser vision correction services business. 
  • The company anticipates a modest improvement in price per procedure from the 2011 average of $1,655.
  • The company expects marketing and advertising expenses for the 2012 second quarter to be between $6.8 million and $7.3 million.
  • The company expects capital expenditures in 2012 to be between $2.0 million and $2.5 million for cataract-related equipment and other capital needs.

The company affirms that the number of procedures companywide required for its laser vision correction business to achieve breakeven cash flow, after capital expenditures and debt service, remains approximately 70,000 per year. The company expects to incur start-up losses and capital investment during the expansion phase for its cataract and IOL business.

Conference Call and Webcast

As previously announced, a conference call and webcast will be held today beginning at 10:00 a.m. Eastern time. To access the conference call, dial 866-322-1352 (U.S. and Canada) or 706-643-6246 (international callers). The webcast will also be available in 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 855-859-2056 (U.S. and Canada) or 404-537-3406 (international callers) and enter the conference ID number:  59649604.

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 the company as of the date hereof. Actual results could differ materially from those stated or implied in the forward-looking statements due to risks and uncertainties associated with its business.  In addition to the risk factors discussed in the company's Form 10-K and other filings with the Securities and Exchange Commission, there are a number of other risks and uncertainties associated with its business including, without limitation, the successful execution of cost effective marketing strategies to drive patients to its vision centers; the impact of low consumer confidence and discretionary spending; competition in the laser vision correction industry; the company's ability to attract patients; the possibility of adverse outcomes or long-term side effects of laser vision correction and negative publicity regarding laser vision correction; the company's ability to operate profitable vision centers and retain qualified personnel during periods of lower procedure volumes; the company's success in expanding its services into the cataract and IOL market; the continued availability of non-recourse third-party financing for its patients on terms similar to what it has paid historically; and the future value of revenues financed by the company and its ability to collect on such financings, which will in turn depend on a number of factors, including the consumer credit environment and the company's ability to manage credit risk related to consumer debt, bankruptcies and other credit trends.

Further, the Food and Drug Administration's (FDA) advisory board on ophthalmic devices currently is reviewing concerns about post-LASIK quality of life matters, and the FDA has undertaken a study on LASIK outcomes and quality of life that is expected to end in 2012.  The FDA or another regulatory body could take legal or regulatory action against the company or others in the laser vision correction industry.  The outcome of this review or legal or regulatory action could potentially impact negatively the acceptance of LASIK.  In addition, the acceptance rate of new technologies and our ability to implement successfully new technologies on a national basis create additional risk. 

Except to the extent required under the federal securities laws and the rules and regulations promulgated by the Securities and Exchange Commission, the company assumes 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®

LCA-Vision Inc., a leading provider of laser vision correction services under the LasikPlus® brand, operates 52 LasikPlus® fixed-site laser vision centers in 26 states and 41 markets in the United States. 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

Company Contact:                                     

Investor Relations Contact:

Barb Kise                                                      

Jody Cain

LCA-Vision Inc.                                            

 LHA

513-792-9292                                                 

310-691-7100 – jcain@lhai.com

 @LHA_IR_PR

LCA-Vision Inc.

Condensed Consolidated Balance Sheets  (Unaudited)

(Dollars in thousands)

March 31, 2012

December 31, 2011

Assets

Current assets

   Cash and cash equivalents

$                      22,914

$                     18,568

   Short-term investments

24,520

25,311

   Patient receivables, net of allowances of $1,002 and $1,035

2,895

2,366

   Other accounts receivable, net

2,945

1,974

   Prepaid expenses and other

3,714

4,254

Total current assets

56,988

52,473

Property and equipment, net

9,389

10,637

Long-term investments

882

902

Patient receivables, net of allowances of $719 and $634

1,099

769

Other assets

1,349

1,652

Total assets

$                      69,707

$                     66,433

Liabilities and Stockholders' Investment

Current liabilities

   Accounts payable

$                        9,534

$                       8,103

   Accrued liabilities and other

12,129

12,175

   Deferred revenue

2,064

2,516

   Debt obligations maturing within one year

3,015

2,978

Total current liabilities

26,742

25,772

Long-term insurance reserves, less current portion

6,183

6,264

Long-term debt obligations, less current portion

258

1,026

Other long-term liabilities

6,124

7,106

Stockholders' investment

   Common stock ($.001 par value; 25,291,637 shares issued and

      18,972,134 and 18,858,147 shares outstanding, respectively)

25

25

   Contributed capital

177,790

177,287

   Common stock in treasury, at cost (6,319,503 shares and 6,433,490 shares, respectively)

(112,047)

(112,910)

   Accumulated deficit 

(36,041)

(38,720)

   Accumulated other comprehensive income

673

583

Total stockholders' investment

30,400

26,265

Total liabilities and stockholders' investment

$                      69,707

$                     66,433

 

LCA-Vision Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)

(Amounts in thousands except per share data)

Three months ended March 31,

2012

2011

Revenues

$          36,138

$          32,282

Operating costs and expenses

Medical professional and license fees

8,682

7,983

Direct costs of services

11,911

11,020

General and administrative expenses

3,706

3,456

Marketing and advertising

6,851

6,496

Depreciation

1,312

1,454

Restructuring charges

-

56

32,462

30,465

Gain on sale of assets

78

163

Operating income

3,754

1,980

Net investment income and other

116

80

Income before taxes

3,870

2,060

Income tax expense

24

41

Net income

$            3,846

$            2,019

Earnings per common share

   Basic

$              0.20

$              0.11

   Diluted

$              0.20

$              0.11

Weighted average shares outstanding

   Basic

18,895

18,743

   Diluted

19,090

18,884

Comprehensive income

$            3,936

$            2,158

 

LCA-Vision Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)

Three months ended March 31,

2012

2011

Cash flows from operating activities:

Net income

$            3,846

$             2,019

Adjustments to reconcile net income to net cash provided by operating activities:

   Depreciation

1,312

1,454

   Provision for loss on doubtful accounts

243

155

   Loss (gain) on sale of investments, net

8

(10)

   Gain on sale of property and equipment

(78)

(163)

   Stock-based compensation

504

375

   Insurance reserves

(93)

(205)

   Changes in operating assets and liabilities:

     Patient accounts receivable

(1,097)

(290)

     Other accounts receivable

(975)

(370)

     Prepaid expenses and other

449

1,406

     Accounts payable

1,431

535

     Deferred revenue, net of professional fees

(738)

(1,142)

     Accrued liabilities and other

(319)

1,051

Net cash provided by operations

4,493

4,815

Cash flows from investing activities:

   Purchases of property and equipment

(67)

(634)

   Proceeds from sale of assets

127

570

   Purchases of investment securities

(32,203)

(40,061)

   Proceeds from sale of investment securities

32,929

42,267

   Other, net

-

8

Net cash provided by investing activities

786

2,150

Cash flows from financing activities:

   Principal payments of loan

(731)

(979)

   Shares repurchased for treasury stock

(357)

(288)

   Proceeds from exercise of stock options

52

23

Net cash used in financing activities

(1,036)

(1,244)

Net effect of exchange rate changes on cash and cash equivalents

103

131

Increase in cash and cash equivalents

4,346

5,852

Cash and cash equivalents at beginning of period

18,568

19,350

Cash and cash equivalents at end of period

$          22,914

$           25,202

LCA-Vision Inc. Effect of the Change in Accounting for Deferred Revenues on Financial Results (Dollars in thousands) (Unaudited)

To supplement its 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,

2012

2011

Revenues

     Reported U.S. GAAP

$            36,138

$            32,282

     Adjustments:

        Amortization of prior deferred revenue

(821)

(1,269)

     Adjusted revenues

$             35,317

$             31,013

Operating Income 

     Reported U.S. GAAP

$              3,754

$             1,980

     Adjustments:

        Amortization of prior deferred revenue

(821)

(1,269)

        Amortization of prior professional fees

82

127

     Adjusted operating income

$               3,015

$                  838

 

SOURCE LCA-Vision Inc.



RELATED LINKS

http://www.lca-vision.com