LCA-Vision Reports Second Quarter Financial Results
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.
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:
-- Revenue was $31.7 million compared with $54.2 million; adjusted revenue was $29.4 million compared with $49.2 million. -- Procedure volume was 17,864 compared with 30,086. -- Same-store revenue (73 vision centers) decreased 41.5%; adjusted same-store revenue decreased 39.7%. -- Operating loss was $11.8 million compared with operating loss of $3.0 million; adjusted operating loss was $13.9 million compared with adjusted operating loss of $7.4 million. Operating loss and adjusted operating loss in the second quarter of 2009 included $1.6 million in restructuring and impairment charges. -- Net loss was $6.9 million or $0.37 per share, compared with net loss of $573,000 or $0.03 per share. -- Net cash provided by operating activities was $5.2 million. Compared with use of $3.1 million. -- Cash and investments totaled $67.1 million as of June 30, 2009, an increase of $2.7 million from March 31, 2009 and up $7.6 million from December 31, 2008.
SOURCE LCA-Vision Inc.
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