LCA-Vision Reports Second Quarter Financial Results

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.

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LCA-Vision Inc.
Effect of the Change in Accounting for Deferred Revenues on Financial Results
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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:

 

 

SOURCE LCA-Vision Inc.