LCAV (MM)

LCA Vision Grows Revenues 53% and Increases Operating Income 106% Procedure Volume Grows 49%; Same Store Revenues Up 39% CINCINNATI, July 26 /PRNewswire-FirstCall/ -- LCA-Vision Inc. (NASDAQ:LCAV), a leading provider of laser vision correction services under the LasikPlus brand, announced today financial results for second quarter and six months ended June 30, 2005. Second Quarter 2005 Financial & Operational Highlights * Revenues grew 53% to approximately $48.4 million from approximately $31.6 million in last year's second quarter. * Procedure volume rose 49% to 36,010 procedures compared with 24,093 procedures performed in last year's second quarter. * Same-store revenues increased 39% at vision centers open at least 12 months. * Opened two new LasikPlus vision centers in Norfolk, Virginia and Hartford, Connecticut. Net Income & Earnings Per Share Net income was approximately $7.8 million and earnings per diluted share were $0.36 in 2005's second quarter, compared with net income of approximately $10.8 million and earnings per diluted share of $0.52 in 2004's second quarter. Included in 2004's second quarter financial results was the reversal and usage of the valuation allowance against deferred tax assets of approximately $7.1 million related to federal and state net operating loss carryforwards generated in prior years. Excluding the change in the valuation allowance against deferred tax assets, second quarter 2004 earnings per diluted share would have been $0.18. Management believes that excluding the change in the valuation allowance against deferred tax assets is a meaningful disclosure as it allows for year-over-year comparisons of financial results on a consistent basis. Procedure Demand Continues to Drive Revenue Growth Revenues grew 53% to approximately $48.4 million in 2005's second quarter from approximately $31.6 million in 2004's second quarter. Procedure volume increased 49% in 2005's second quarter to 36,010 from 24,093 procedures performed in 2004's second quarter. Revenue per procedure increased 3% to $1,344 in the second quarter of 2005 from $1,310 in the second quarter of 2004. Operating income increased 106% to approximately $12.9 million in 2005's second quarter from approximately $6.3 million in 2004's second quarter. The operating margin was 26.7% in the second quarter of 2005 compared with 19.9% in the second quarter of 2004. "We are pleased to report another quarter of solid financial and operational results," remarked Stephen N. Joffe, LCA-Vision's Chairman and Chief Executive Officer. "Revenues, procedure volumes, and operating income grew year-over-year reflecting continued execution of our business plan. Excluding the change in the valuation allowance against deferred tax assets recorded in last year's second quarter, earnings per diluted share doubled from $0.18 to $0.36." Solid Cash Position Cash provided by operations in the first six months of 2005 grew to approximately $24.1 million from approximately $15.0 million in the first six months of 2004. Cash and cash equivalents increased to approximately $107.3 million as of June 30, 2005, from approximately $100.1 million as of March 31, 2005 and approximately $79.6 million as of June 30, 2004. Year-To-Date Results In the first half of 2005, revenues grew 56% to approximately $98.6 million from approximately $63.2 million in the first half of 2004. Procedure volume in the first half of 2005 increased 52% to approximately 73,600 procedures from approximately 48,400 procedures performed in the first half of 2004. Operating income increased 117% to approximately $28.3 million in 2005's second half from approximately $13.0 million in 2004's second half, and the operating margin was 28.7% compared with 20.6%. For the six months ended June 30, 2005, the company reported net income of approximately $17.1 million, or $0.80 per diluted share, compared with net income of approximately $23.6 or $1.14 per diluted share for the six months ended June 30, 2004. Excluding the change in the valuation allowance against deferred tax assets of approximately $15.7 million recorded in the first half of 2004, earnings per diluted share more than doubled from $0.38 to $0.80. Management believes that excluding the change in the valuation allowance against deferred tax assets is a meaningful disclosure as it allows for year- over-year comparisons of financial results on a consistent basis. Outlook The company is increasing its earnings guidance and now expects full-year 2005 earnings per diluted share to be between $1.25 and $1.30. Revenue growth for the second half of 2005 and for the full-year of 2006 is expected to be 30% to 40%. Mr. Joffe continued, "We continue to see strong demand for laser vision correction procedures at our LasikPlus vision centers and we believe our growth rates will continue to exceed market growth rates. Our leading indicators remain positive and we remain optimistic that the LasikPlus business model will continue to deliver solid financial and operational performance." Conference Call & Webcast A conference call and webcast to discuss the contents of this news release will be held today, Tuesday, July 26, 2005 at 10:00 a.m. (ET). To access the call, dial 866-322-1352 (within the United States and Canada), or 706-758-1564 (international callers). To access the replay, dial 800-642-1687 (within the United States and Canada), or 706-645-9291 (international callers) and enter the conference ID number: 759 22 94. To access both the live and archived webcast, go to the "Investor Relations" section of LCA-Vision's website at http://www.lca-vision.com/. 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. Forward-looking statements in this release, including statements regarding our belief that revenues and earnings will exhibit healthy year-over-year growth for fiscal 2005, among others, are based on information available to us as of the date hereof. Actual results could differ materially from those stated or implied in such forward-looking statements due to risks and uncertainties associated with our business, including, without limitation, those concerning global and local economic, political and sociological conditions; market acceptance of our services; the successful execution of marketing strategies; competition in the laser vision correction industry; an inability to attract new patients; the possibility of long-term side effects and adverse publicity regarding laser vision correction; adverse financial consequences in connection with the expensing of stock options or other equity-based compensation; regulatory action against us or others in the laser vision correction industry; and the relatively high fixed cost structure of our business. For a further discussion of the factors that may cause actual results to differ materially from current expectations, please review our filings with the Securities and Exchange Commission, including but not limited to our Forms 10-K and 10-Q. 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 LCA-Vision Inc. is a leading provider of laser vision correction services under the LasikPlus brand. We own and operate 44 LasikPlus fixed-site laser vision correction centers in the United States and a joint venture in Canada. LCA-Vision is one of the only publicly traded companies within the United States that focuses exclusively on laser vision correction services. We have performed nearly 500,000 laser vision correction procedures in our vision centers in the United States and Canada since 1991. LasikPlus laser vision correction centers are staffed with skilled ophthalmologists and optometrists and other healthcare professionals. Advanced diagnostic equipment and multiple laser brands are used to help correct nearsightedness, farsightedness and astigmatism. LasikPlus laser vision correction centers are generally located in major cities throughout the United States. Additional information is available at our corporate websites: http://www.lca-vision.com/ and http://www.lasikplus.com/. It's Not Just LASIK. It's LasikPlus! For Additional Information Patricia Forsythe V.P. Investor Relations 513-792-5629 LCA-Vision Inc. Condensed Consolidated Statements of Income (Dollars in thousands except per share data) Three Months Ended Six Months Ended June 30, June 30, 2005 2004 2005 2004 Revenues -- Laser refractive surgery $48,391 $31,554 $98,581 $63,204 Operating costs and expenses Medical professional and license fees 8,745 5,891 18,264 12,356 Direct costs of services 13,577 10,350 26,924 19,981 General and administrative expenses 3,111 2,306 6,563 4,595 Marketing and advertising 8,030 4,991 14,803 9,780 Depreciation 2,006 1,743 3,756 3,458 Operating income 12,922 6,273 28,271 13,034 Equity in earnings from unconsolidated businesses - 113 24 185 Minority equity interest (237) (181) (411) (305) Interest expense (36) (1) (49) (1) Interest income 779 498 1,289 865 Dividend income 23 8 42 8 Income before taxes on income 13,451 6,710 29,166 13,786 Income tax expense(benefit) 5,623 (4,139) 12,028 (9,792) Net income $7,828 $10,849 $17,138 $23,578 Income per common share Basic $0.38 $0.54 $0.84 $1.18 Diluted $0.36 $0.52 $0.80 $1.14 Dividends declared per share $0.08 $- $0.16 $- Weighted average shares outstanding Basic 20,429 20,078 20,333 20,030 Diluted 21,548 20,806 21,390 20,723 LCA-Vision Inc. Condensed Consolidated Balance Sheets (Dollars in thousands) Assets June 30, 2005 Dec. 31, 2004 Current assets Cash and cash equivalents $107,277 $86,588 Accounts receivable, net of allowance for doubtful accounts of $2,839 and $2,260 11,221 8,662 Receivables from vendors 1,580 1,077 Prepaid expenses and other 2,238 2,420 Deferred tax assets 2,974 6,015 Total current assets 125,290 104,762 Property and equipment 55,862 50,374 Accumulated depreciation and amortization (35,474) (31,743) Property and equipment, net 20,388 18,631 Accounts receivable, net of allowance for doubtful accounts of $652 and $605 1,407 1,171 Goodwill 275 275 Deferred compensation plan assets 1,742 1,187 Investment in unconsolidated businesses 5 168 Deferred tax assets 2,117 2,593 Other assets 787 790 Total Assets $152,011 $129,577 Liabilities and Stockholders' Investment Current liabilities Accounts payable $1,905 $4,964 Accrued liabilities and other 8,202 7,474 Income Taxes Payable 3,716 100 Debt maturing in one year 867 542 Total current liabilities 14,690 13,080 Capital lease obligations 495 376 Deferred compensation liability 1,742 1,215 Insurance reserve 3,606 2,568 Minority equity interest 912 501 Stockholders' investment Common stock ($0.001 par value; 24,093,084 and 23,767,353 shares and 20,542,290 and 20,216,559 shares issued and outstanding, respectively) 24 24 Contributed capital 139,578 134,708 Common stock in treasury, at cost (3,550,794 shares and 3,550,794 shares) (15,462) (15,462) Accumulated earnings(deficit) 6,150 (7,732) Accumulated other comprehensive income 276 299 Total stockholders' investment 130,566 111,837 Total Liabilities and Stockholders' Investment $152,011 $129,577 LCA-Vision Inc. Condensed Consolidated Statements of Cash Flow (Dollars in thousands) Six Months Ended June 30, 2005 2004 Cash flow from operating activities: Net income $17,138 $18,677 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 3,756 3,458 Provision for loss on doubtful accounts 626 762 Deferred income taxes 3,517 (5,900) Deferred compensation 527 280 Insurance reserve 1,038 737 Equity in earnings of unconsolidated affiliates (24) (113) Changes in working capital: Accounts receivable (3,421) (3,988) Receivables from vendors (503) (167) Prepaid expenses and other 182 804 Accounts payable (3,059) (2,040) Income taxes payable 3,616 38 Accrued liabilities and other 727 2,414 Net cash provided by operations 24,120 14,962 Cash flow from investing activities: Purchase of property and equipment (4,667) (1,746) Purchase of investments - equity - (300) Deferred compensation plan (555) (312) Other, net 414 258 Net cash used in investing activities (4,808) (2,100) Cash flow from financing activities: Principal payments of long-term notes, debt and capital lease obligations (424) - Dividends paid to Stockholders (3,256) - Exercise of stock options 4,870 1,718 Distribution from minority equity investees 187 78 Net cash provided by financing activities 1,377 1,796 Increase in cash and cash equivalents 20,689 14,658 Cash and cash equivalents at beginning of period 86,588 64,908 Cash and cash equivalents at end of period $107,277 $79,566 DATASOURCE: LCA-Vision Inc. CONTACT: Patricia Forsythe, V.P. Investor Relations of LCA-Vision Inc., +1-513-792-5629, or Web site: http://www.lca-vision.com/ http://www.lasikplus.com/

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