CINCINNATI, July 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 and six months ended June 30, 2009.
Second Quarter 2009 Operational and Financial Results (all comparisons are versus the second quarter of 2008)
Year-to-date 2009 Operational and Financial Highlights (all comparisons are versus the first six months of 2008)
Since the first quarter of 2007, LCA-Vision has provided both adjusted revenue and operating income (loss) 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.
"As unemployment rates continue to rise and consumer confidence levels remain low, independent surveys and our own research indicate reluctance on the part of Americans to spend on elective, self-pay surgical procedures, resulting in further volume declines at our LasikPlus((R)) vision centers and throughout our industry. We anticipate continued volume softness throughout the remainder of 2009; however, as the economic downturn in 2008 had a greater impact on the second half of that year, we expect an improvement in year-over-year volume declines in the coming quarters," said Steven C. Straus, Chief Executive Officer of LCA-Vision. "We have been able to increase our average per-procedure price, excluding deferred revenue, by $87 over the past two quarters, following testing late last year that indicated some inelasticity of pricing.
"We are actively adapting to the current economic reality by becoming more nimble and flexible in our operations and have established company-wide business priorities in an effort to improve procedure volume, reduce costs and conserve cash," Straus added. "For example, we are implementing strategies to increase patient acquisition through partnering programs such as our new marketing relationship with one of the world's largest airlines, which will announce our partnership next week, joining the International Health, Racquet & Sportsclub Association, or IHRSA, as an associate member with its 9,750 member facilities, and by capitalizing on our relationships with health and vision plans that reduce the out-of-pocket cost to the patient - a leading factor in the decision-making process. We also are addressing patient candidacy through our internally developed second-opinion screening tools approved by our Medical Advisory Board, and are energizing our LCA-Vision/LasikPlus(R) staff to become more results-oriented through training and increasing accountability.
"Given the current economic environment, we plan to reduce marketing spending in the third quarter to approximately $6 million. Among our specific programs, we intend to use our segmentation research and integrated media programs in 14 top-producing LasikPlus((R)) markets. We also are working to upgrade our LasikPlus((R)) website through improved navigation and better integration with local center websites to allow for easier appointment scheduling and other patient-friendly capabilities. In addition to Internet and more traditional advertising, we will be expanding into various forms of social media in test markets in the third quarter, which include endorsements and ambassadors that will help to better establish our LasikPlus((R)) brand," he added.
LCA-Vision's Chief Financial Officer Michael Celebrezze commented, "We have taken multiple recent actions to improve cash flow and better align our expenses with procedure volume." Those actions include:
"Our financial results for the second quarter include $1.6 million in restructuring and impairment charges, yet we benefited from a $6 million tax refund related to the utilization of net operating losses generated in 2008. We generated $5.2 million in cash from operations during the quarter," Celebrezze added.
Advanced Vision Analysis
"We are ready to begin testing of our Advanced Vision Analysis (AVA) program, the first initiative in our Lifetime Vision model," said Straus. "We have integrated the advanced diagnostic equipment into our systems in the first of 13 test markets and expect to perform our initial procedure within the next few weeks. AVA constitutes a comprehensive eye analysis using new diagnostic tools to determine a patient's candidacy for laser vision correction and other refractive surgical procedures, as well as to screen for various eye diseases and irregularities. During the test, we intend to charge an AVA fee that will be credited toward the purchase of laser vision correction at our LasikPlus((R)) vision centers. AVA will allow us to more fully utilize our skilled surgeons, optometrists and staff with minimal capital expenditure. We intend to market this program through our website, in-center merchandising and by phone and email out-reach to former LasikPlus(R) patients in our test markets."
Near-Term Financial Outlook
LCA-Vision affirmed its intent to continue to manage cash and investments conservatively in 2009.
Comparing 2009 (the first full year of benefit from cost reductions) with 2007 (prior to cost reductions), the company expects monthly breakeven eyes per vision center to decline to 105 in 2009 from 125 in 2007, and expects the number of procedures per year required company-wide for breakeven cash flow from operations to decline to approximately 110,000 from 170,000. With the recent cost reductions, the company projects it has sufficient cash and investments to last beyond 2011 at 80,000 procedures annually.
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 (United States and Canada) or 706-643-6246 (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: 174 595 66.
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. In addition to the risk factors discussed in our Form 10-K, there are a number of other risks and uncertainties associated with our business, including, without limitation, the successful execution of marketing strategies cost effectively to drive patients to our vision centers; the impact of low consumer confidence, competition in the laser vision correction industry; our ability to attract new patients; the possibility of long-term side effects and adverse publicity regarding laser vision correction; our ability to operate profitable vision centers and retain qualified personnel during periods of lower procedure volumes; 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.
Further, the FDA's advisory board on ophthalmic devices is currently reviewing concerns about post-Lasik quality of life matters and the advisory board may propose a major new study on Lasik outcomes. The FDA or another agency could take legal or regulatory action against us 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 such as IntraLase((R)) or Wavelight((R)) technologies, and our ability to implement successfully new technologies on a national basis, creates additional risk. 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 71 LasikPlus((R)) fixed-site laser vision correction centers in 31 states and 53 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.
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LCA-Vision Inc. Condensed Consolidated Statements of Operations (Dollars in thousands except per share data) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2009 2008 2009 2008 Revenues - Laser refractive surgery $31,681 $54,181 $79,602 $133,750 Operating costs and expenses Medical professional and license fees 6,987 11,260 17,762 26,022 Direct costs of services 17,269 20,045 35,085 44,496 General and administrative 4,452 5,671 8,869 10,862 Marketing and advertising 9,485 15,466 22,511 35,449 Depreciation 3,768 4,612 8,127 8,867 Consent revocation charges - - 804 - Restructuring and impairment charges 1,554 77 2,455 533 Operating (loss) income (11,834) (2,950) (16,011) 7,521 Equity in earnings from unconsolidated businesses 48 265 75 321 Net investment income 633 831 455 1,566 Other income, net 20 - 22 18 (Loss) income before income taxes (11,133) (1,854) (15,459) 9,426 Income tax (benefit) expense (4,246) (1,281) (5,728) 3,123 Net (loss) income $(6,887) $(573) $(9,731) $6,303 (Loss) earnings per common share Basic $(0.37) $ (0.03) $(0.52) $0.34 Diluted $(0.37) $ (0.03) $(0.52) $0.34 Dividends declared per share $ - $ 0.06 $- $0.24 Weighted average shares outstanding Basic 18,590 18,525 18,576 18,510 Diluted 18,590 18,525 18,576 18,570 LCA-Vision Inc. Condensed Consolidated Balance Sheets (Dollars in thousands) (Unaudited) Assets June 30, 2009 December 31, 2008 Current assets Cash and cash equivalents $ 31,267 $ 23,648 Short-term investments 32,744 32,687 Patient receivables, net of allowance for doubtful accounts of $1,397 and $1,465 7,295 9,678 Other accounts receivable 2,102 2,515 Prepaid professional fees 705 911 Prepaid income taxes 5,863 8,957 Deferred tax assets 3,177 4,708 Deferred compensation plan assets 2,427 - Prepaid expenses and other 5,475 5,299 Total current assets 91,055 88,403 Property and equipment 92,990 121,734 Accumulated depreciation and amortization (55,851) (70,235) Property and equipment, net 37,139 51,499 Long-term investments 3,108 3,126 Accounts receivables, net of allowance for doubtful accounts of $1,107 and $1,662 1,677 2,645 Deferred compensation plan assets - 2,196 Deferred tax assets 8,516 7,027 Other assets 5,715 2,586 Total assets $ 147,210 $ 157,482 Liabilities and Stockholders' Investment Current liabilities Accounts payable $ 8,315 $ 8,169 Accrued liabilities and other 11,872 8,608 Deferred revenue 7,049 9,107 Deferred compensation liability 2,427 - Debt and capital lease obligations maturing in one year 4,267 6,985 Total current liabilities 33,930 32,869 Long-term rent obligations 1,972 1,820 Long-term debt and capital lease obligations (less current portion) 11,601 14,120 Deferred compensation liability - 2,196 Insurance reserve 9,914 9,489 Deferred license fee 5,109 - Deferred revenue 10,708 14,003 Stockholders' investment Common stock ($0.001 par value; 25,229,336 and 25,199,734 shares and 18,603,824 and 18,552,985 shares issued and outstanding, respectively) 25 25 Contributed capital 174,281 174,206 Common stock in treasury, at cost (6,625,512 shares and 6,646,749 shares) (114,668) (114,632) Retained earnings 13,784 23,515 Accumulated other comprehensive income (loss) 554 (129) Total stockholders' investment 73,976 82,985 Total liabilities and stockholders' investment $ 147,210 $ 157,482 LCA-Vision Inc. Condensed Consolidated Statements of Cash Flows (Dollars in thousands) (Unaudited) Six Months Ended June 30, 2009 2008 Cash flow from operating activities Net (loss) income $ (9,731) $6,303 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 8,127 8,867 Provision for loss on doubtful accounts 1,957 3,325 Loss on investments 365 - Non cash restructuring charges 1,877 - Deferred income taxes (265) 1,686 Stock based compensation 568 612 Insurance reserve 425 1,070 Equity in earnings of unconsolidated affiliates (75) (321) Changes in operating assets and liabilities Patient receivables 1,394 (3,492) Other accounts receivable 413 999 Prepaid income taxes 3,094 4,736 Prepaid expenses and other 880 80 Accounts payable 146 (6,821) Deferred revenue, net of professional fees (4,818) (9,491) Accrued liabilities and other 8,165 (1,796) Net cash provided by operations $12,522 $5,757 Cash flow from investing activities Purchases of property and equipment (178) (12,590) Purchases of investment securities (153,617) (171,849) Proceeds from sale of investment securities 153,900 170,910 Other, net 263 787 Net cash provided by (used in) investing activities $ 368 $(12,742) Cash flow from financing activities Principal payments of debt and capital lease obligations and loan (5,237) (2,367) Proceeds from debt - 19,184 Shares repurchased for treasury stock (36) (205) Exercise of stock options 2 147 Dividends paid to stockholders - (4,447) Net cash (used in) provided by financing activities (5,271) 12,312 Increase in cash and cash equivalents 7,619 5,327 Cash and cash equivalents at beginning of period 23,648 17,614 Cash and cash equivalents at end of period $31,267 $22,941
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 Six Months Ended June 30, June 30, 2009 2008 2009 2008 Revenue Reported $ 31,681 $ 54,181 $79,602 $133,750 Adjustments Amortization of prior deferred revenue (2,294) (4,947) (5,353) (10,546) Adjusted revenue $ 29,387 $ 49,234 $74,249 $123,204 Operating (Loss) Income Reported $(11,834) $(2,950) $(16,011) $ 7,521 Adjustments Amortization of prior deferred revenue (2,294) (4,947) (5,353) (10,546) Amortization of prior professional fees 229 494 535 1,054 Adjusted operating (loss) income $(13,899) $ (7,403) $(20,829) $(1,971)
For Additional Information Company Contact: Investor Relations Contact: Barb Kise Jody Cain LCA-Vision Inc. Lippert/Heilshorn & Associates 513-792-9292 310-691-7100
|SOURCE LCA-Vision Inc.|
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