LCA-Vision Reports Second Quarter Financial Results

Marks Fourth Consecutive Quarter of Year-over-Year Revenue and Procedure Volume Growth

Retires All Outstanding Debt

Jul 31, 2012, 07:00 ET from LCA-Vision Inc.

CINCINNATI, July 31, 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 and six months ended June 30, 2012.

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

  • Revenues increased 3.0% to $25.2 million from $24.4 million; adjusted revenues increased 5.2% to $24.5 million from $23.3 million.
  • Procedure volume increased 2.4% to 14,415 procedures from 14,081 procedures.
  • Operating loss was $3.3 million compared with $2.8 million; adjusted operating loss was $3.9 million compared with $3.8 million. The increased operating loss and adjusted operating loss reflected an increase in direct costs of services, higher spending on marketing and advertising, and costs incurred in connection with developing the company's cataract services business.
  • Marketing cost per eye was $460 compared with $421.
  • Net loss was $3.2 million, or $0.17 per share, compared with a net loss of $2.8 million, or $0.15 per share.

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

  • Revenues increased 8.1% to $61.3 million from $56.7 million; adjusted revenues increased 10.1% to $59.8 million from $54.3 million.
  • Procedure volume increased 7.5% to 35,402 procedures from 32,938 procedures.
  • Operating income was $0.4 million, a $1.2 million improvement from an operating loss of $0.8 million; adjusted operating loss was $0.9 million, a $2.1 million improvement from an adjusted operating loss of $3.0 million. The improvement reflected higher procedure revenue offset partially by increases in variable costs, higher general and administrative costs and costs incurred in connection with developing the company's cataract services business.
  • Marketing cost per eye was $381 compared with $377.
  • Net income was $0.7 million, or $0.03 per share, a $1.4 million improvement from a net loss of $0.7 million, or $0.04 per share.
  • Cash and investments totaled $40.4 million as of June 30, 2012, compared with $44.8 million as of December 31, 2011. Much of the reduction in cash and investments resulted from the company's decision to prepay all outstanding debt obligations of $3.3 million in June 2012.

The company provides adjusted revenues and operating income and loss 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 and loss 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 our fourth consecutive quarter of growth in revenues and procedure volume," said LCA-Vision Chief Financial Officer Michael J. Celebrezze. "Our procedure volume gain was not as robust as in recent quarters as consumer concerns about the economic recovery affected discretionary spending. However, discussions with industry sources lead us to believe that we gained market share for the fourth consecutive quarter as the industry contracted slightly. In addition to outpacing industry volume, we increased our average price per procedure compared with both the prior year and the prior quarter, despite a discount promotion. We attribute this improvement to a comprehensive market-by-market review of competitive pricing and price sensitivity that allowed us to adjust our procedure price in many LasikPlus® markets. 

"We achieved positive operating and net income for the first half of this year, which is in keeping with our focus on returning to sustained profitability. We also took the opportunity during the second quarter to retire our debt obligation. We saw this as a practical move based on our strong cash position and the absence of any impending liquidity concerns," Celebrezze added.

LCA-Vision Chief Operating Officer David L. Thomas said, "We continue to make improvements in our core laser vision correction business, and we are committed to growth. We also are building the infrastructure for our expansion into cataract surgery, which should help to mitigate the impact of future economic downturns while allowing us to capitalize on our multi-site infrastructure. Our revised expectation is to operate eight to 10 Visium Eye Institute™ vision centers by the end of this year as we focus on developing awareness for the brand, and optimizing patient experiences, which is a hallmark of LCA-Vision's brands.

"We are establishing an affiliate network of eye-health professionals to augment care for both our LASIK and cataract patients. Earlier this year we hired a vice president to oversee this operation and recently added three area managers. This channel is particularly important for establishing our cataract business," Thomas added.

Near-term Financial Outlook

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

  • The company does not plan to open any new vision centers in the near term.
  • The company anticipates an improvement in price per procedure from the 2011 average of $1,655.
  • The company revised its expectations for capital expenditures for cataract-related equipment and other capital needs to be between $1.5 million and $2.0 million from prior guidance of $2.0 million to $2.5 million.
  • For the third quarter of 2012, the company expects marketing and advertising expenses of between $5.5 million and $6.0 million.

The company estimates that the number of procedures companywide required for its laser vision correction business to achieve breakeven free cash flow is approximately 68,000 per year. The company expects to incur start-up losses and capital investment during the expansion phase for its cataract 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:  91667083.

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 potentially could 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 53 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)

June 30, 2012

December 31, 2011

Assets

Current assets

   Cash and cash equivalents

$              36,715

$              18,568

   Short-term investments

2,800

25,311

   Patient receivables, net of allowances of $1,081 and $1,035

3,074

2,366

   Other accounts receivable, net

2,131

1,974

   Prepaid expenses and other

3,600

4,254

Total current assets

48,320

52,473

Property and equipment, net

8,677

10,637

Long-term investments

923

902

Patient receivables, net of allowances of $739 and $634

1,181

769

Other assets

1,057

1,652

Total assets

$              60,158

$              66,433

Liabilities and Stockholders' Investment

Current liabilities

   Accounts payable

$                7,940

$                8,103

   Accrued liabilities and other

11,543

12,175

   Deferred revenue

1,631

2,516

   Debt obligations maturing within one year

-

2,978

Total current liabilities

21,114

25,772

Long-term insurance reserves, less current portion

6,351

6,264

Long-term debt obligations, less current portion

-

1,026

Other long-term liabilities

4,982

7,106

Stockholders' investment

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

      19,016,877 and 18,858,147 shares outstanding, respectively)

25

25

   Contributed capital

178,369

177,287

   Common stock in treasury, at cost (6,274,760 shares and 6,433,490 shares, respectively)

(111,713)

(112,910)

   Accumulated deficit 

(39,561)

(38,720)

   Accumulated other comprehensive income

591

583

Total stockholders' investment

27,711

26,265

Total liabilities and stockholders' investment

$              60,158

$              66,433

 

LCA-Vision Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)

(Amounts in thousands except per share data)

Three months ended June 30,

Six months ended June 30,

2012

2011

2012

2011

Revenues

$         25,152

$         24,416

$       61,289

$       56,698

Operating costs and expenses

Medical professional and license fees

5,809

6,072

14,491

14,055

Direct costs of services

11,500

10,451

23,410

21,470

General and administrative expenses

3,407

3,534

7,113

6,991

Marketing and advertising

6,628

5,929

13,479

12,425

Depreciation

1,209

1,434

2,521

2,888

Impairment and restructuring charges

37

-

37

56

28,590

27,420

61,051

57,885

Gain on sale of assets

110

237

188

400

Operating (loss) income

(3,328)

(2,767)

426

(787)

Net investment income and other

162

77

278

158

(Loss) income before taxes on income

(3,166)

(2,690)

704

(629)

Income tax expense 

24

75

48

116

Net (loss) income

$         (3,190)

$         (2,765)

$            656

$           (745)

(Loss) earnings per common share

   Basic

$           (0.17)

$           (0.15)

$           0.03

$          (0.04)

   Diluted

$           (0.17)

$           (0.15)

$           0.03

$          (0.04)

Weighted average shares outstanding

   Basic

18,991

18,813

18,943

18,778

   Diluted

18,991

18,813

19,129

18,778

Comprehensive (loss) income 

$         (3,272)

$         (2,837)

$            664

$           (679)

 

LCA-Vision Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)

Six months ended June 30,

2012

2011

Cash flow from operating activities:

Net income (loss)

$         656

$        (745)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

   Depreciation

2,521

2,888

   Provision for loss on doubtful accounts

518

316

   Loss (gain) on sale of investments

8

(5)

   Impairment charges

37

-

   Gain on sale of assets

(188)

(400)

   Stock-based compensation

1,082

827

   Insurance reserve

100

(271)

   Changes in operating assets and liabilities:

     Patient accounts receivable

(1,624)

(620)

     Other accounts receivable

(135)

30

     Prepaid expenses and other

520

485

     Accounts payable

(163)

(753)

     Deferred revenue, net of professional fees

(1,338)

(2,165)

     Accrued liabilities and other

(1,548)

1,053

Net cash provided by operations

446

640

Cash flow from investing activities:

   Purchases of property and equipment

(589)

(763)

   Proceeds from sale of assets

207

1,027

   Purchases of investment securities

(36,855)

(94,173)

   Proceeds from sale of investment securities

59,264

95,637

Net cash provided by investing activities

22,027

1,728

Cash flow from financing activities:

   Principal payments of loan

(4,004)

(1,697)

   Shares repurchased for treasury stock

(357)

(288)

   Proceeds from exercise of stock options

57

23

Net cash used in financing activities

(4,304)

(1,962)

Net effect of exchange rate changes on cash and cash equivalents

(22)

111

Increase in cash and cash equivalents

18,147

517

Cash and cash equivalents at beginning of period

18,568

19,350

Cash and cash equivalents at end of period

$    36,715

$    19,867

 

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 and loss.  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 June 30,

Six Months Ended June 30,

2012

2011

2012

2011

Revenues

     Reported U.S. GAAP

$           25,152

$           24,416

$          61,289

$          56,698

     Adjustments

        Amortization of prior deferred revenue

(666)

(1,137)

(1,487)

(2,406)

     Adjusted revenues

$           24,486

$           23,279

$          59,802

$          54,292

Operating Income (Loss)

     Reported U.S. GAAP

$           (3,328)

$           (2,767)

$               426

$             (787)

     Adjustments

        Amortization of prior deferred revenue

(666)

(1,137)

(1,487)

(2,406)

        Amortization of prior professional fees

67

114

149

241

     Adjusted operating loss

$           (3,927)

$           (3,790)

$             (912)

$          (2,952)

 

SOURCE LCA-Vision Inc.



RELATED LINKS

http://www.lca-vision.com