Founders & Former Executive Management Team of LCA-Vision Seek Change to Rescue Company
November 21 2008 - 2:33PM
PR Newswire (US)
11.4% Shareholders Intend To Vigorously Protect Investment And
Restore Shareholder Value CINCINNATI, Nov. 21
/PRNewswire-USNewswire/ -- Dr. Stephen Joffe, Craig Joffe, and Alan
Buckey today filed an amendment to their Schedule 13D with the U.S.
Securities and Exchange Commission. The group previously filed a
13D disclosing ownership of 11.4% of LCA-Vision, Inc.
(NASDAQ:LCAV), which operates 77 LasikPlus fixed-site laser vision
correction centers in 33 states in the United States. Dr. Joffe is
the founder and former Chairman and CEO of LCAV. Craig Joffe, Dr.
Joffe's son, is the former Chief Operating Officer and General
Counsel of LCAV, and served as its Interim CEO from March-November
2006. Alan Buckey is the former Executive Vice President of Finance
and Chief Financial Officer of the Company. The three of them
worked together as the executive management team of LCAV to grow
the market capitalization of the Company in excess of 1000% from
2003-2006. In addition, Stephen and Craig Joffe previously served
on the Company's Board of Directors. In their filing, the group
said they are considering actions to protect their investment and
help turn around the Company's flagging performance. The filing
also states that their actions were prompted by the systematic and
dramatic destruction of the shareholder, physician and employee
value the three of them worked together to create. LCAV's share
price has fallen over 90% in the two years since Steve Straus was
appointed CEO of LCAV by its Board of Directors. In a letter to the
Chairman of the Board of Directors dated November 21, 2008, and
filed earlier today with the amendment to their Schedule 13D, they
stated, "As the founders and former executive management team of
LCAV that led the Company to its past successes, we feel
financially, ethically, and reputationally compelled to help rescue
LCAV before it implodes. Having build LCAV into the industry leader
it once was, brick-by-painstaking-brick, we have unparalleled
insights and perspective into the disastrous mistakes that have led
the Company off course. More importantly, we have the unique
experience and know-how to help get the Company back on track." Dr.
Joffe emphasized the critical need in these challenging times to
have a Board of Directors and executive management team with the
insights, experience, and passion to lead the Company and better
serve its shareholders, physicians, employees, and patients. (The
full text of the letter appears below.) About Dr. Stephen N. Joffe
Stephen N. Joffe, M.D., FACS, age 65, is the founder and former
Chairman and Chief Executive Officer of LCA-Vision. He was the
founder of LCA-Vision's corporate predecessor, Laser Centers of
America, Inc., and served as its Chairman of the Board and Chief
Executive Officer from its formation in 1985 until its merger into
LCA-Vision in 1995. In 1983, Stephen Joffe also founded and served
as Chairman of Surgical Laser Technologies, Inc. until 1989. He is
presently the Chief Executive Officer of the Hearing Foundation,
Inc., a hearing company, and Co-Founder of Joffe Medicenter LLC, a
healthcare services company. In addition Dr. Joffe is an Esteemed
Quondum Professor of Surgery at the University of Cincinnati
Medical Center, an honor he has held since 1990. He has held other
medical faculty appointments at the Universities of London, Glasgow
and Cincinnati and fellowships in the American College of Surgeons
and the Royal College of Surgeons in Edinburgh and Glasgow. He has
published 170 articles in peer-reviewed and scientific journals and
authored 35 chapters for medical books as well as written and
edited several books on lasers and their application to medicine
and surgery. About Craig P.R. Joffe Craig P.R. Joffe, age 36, was
Interim Chief Executive Officer of LCA-Vision from March 2006
through November 2006. He was appointed Chief Operating Officer of
LCA-Vision in September 2005, a position he held through his
resignation in March 2008. He also served as Secretary of LCA
Vision from March 2003, when he joined the Company, until March
2008. He also served on the Board of Directors of LCA-Vision from
2004 through March 2008, and previously served as a Director from
1995 to 1997. Prior to joining LCA-Vision, Mr. Joffe served as
Assistant General Counsel of IAC/InterActiveCorp, a leading
publicly traded interactive commerce company, from September 2000
to February 2003. Previously, Mr. Joffe, a graduate of Harvard Law
School and Columbia University, was a general practice associate in
the New York and London offices of the law firm Sullivan &
Cromwell for over three years, where he concentrated his practice
on corporate finance transactions. Mr. Joffe is currently the Chief
Executive Officer and Co-Founder of Joffe MediCenter LLC, a
healthcare services company. About Alan H. Buckey Alan H. Buckey,
age 50, was Executive Vice President of Finance and Chief Financial
Officer for LCA-Vision from March 2000 to June 2008. He came to
LCA-Vision from Pease Industries, a manufacturing company based in
Fairfield, Ohio, where he served as Vice President, Finance from
1991 to February 2000. Prior to 1991, Mr. Buckey served as Chief
Financial Officer of the Hilltop Companies, a contract laboratory
research firm and as a senior manager with Ernst & Young's
Great Lakes Consulting Group. While at Ernst & Young, he served
as acting Chief Financial Officer of a start-up laser surgery
management company which was the predecessor of LCA-Vision. Mr.
Buckey holds a B.S. in Applied Science from Miami University and
holds an M.B.A in Finance from the Wharton School, University of
Pennsylvania. He is a Certified Public Accountant. The following is
the letter submitted to Tony Woods: Stephen N. Joffe Craig P. Joffe
Alan H. Buckey 9560 Montgomery Road Cincinnati, OH 45242 VIA EMAIL
& CERTIFIED MAIL November 21, 2008 Mr. E. Anthony Woods,
Chairman of the Board LCA-Vision Inc. c/o LCA-Vision Inc. 7840
Montgomery Road Cincinnati, Ohio 45236 Dear Tony: Thank you and
William Bahl for taking the time to further talk to us about the
current state of LCA-Vision, Inc. (LCAV). We must admit that the
apparent lack of understanding among the Board of Directors
regarding the gravity of the situation LCAV currently faces is
astounding, and quite sad. From where we stand today, we have no
choice but to seriously question whether LCAV has the right
strategy, the right Board of Directors, or the right executive
management team to execute the strategy. That the Board appears
willing to blindly ignore the perils the Company currently faces,
particularly in today's challenging environment, raises troubling
concerns. We do not dispute that macroeconomic, industry and
consumer challenges have created a headwind for the Company. At the
same time, we have absolutely no doubt that much of that dramatic
loss in shareholder value is self-inflicted -- a result of, and
attributable to, lack of strategic direction, poor decision-making,
and even poorer execution by LCAV's Board of Directors and
executive management team. We have significant experience in the
laser vision correction industry. As the founders and former
executive management team of LCAV, we grew the Company to become
the industry leader. Shareholder value grew approximately well in
excess of 1,000% from 2003-2006. In the process, not only did our
shareholders profit handsomely, so too did our physician partners
and our employees. In fact, in 2006 LCAV was named one of the top
Small Cap Growth companies in the United States by Fortune and one
of the "Hot Growth Companies" by Business Week. Today, these prior
successes feel like a distant memory of a bygone era. LCAV's call
center now stands eerily quiet, its LasikPlus vision centers have
neither many patients nor sufficient staff to take care of them.
And in the homes of the poor shareholders who stood resolute by the
Company as it fumbled and flummoxed about over the last couple of
years, there is only despair and disbelief. It is indeed shocking
to us all how "successful" the Company has been in destroying so
much value, in so little time. The failures of the Company over the
last two years are numerous and noteworthy. LCAV's shares have
decreased over 90% from $32.71 to $2.73 since Steve Straus was
hired as CEO by the Board of Directors in November 2006. This
represents a staggering loss in value to the Company's shareholders
of hundreds of millions of dollars of market capitalization. In
fact, whether it be the Company's market capitalization, same store
revenues, procedural volume, marketing costs, cash on the balance
sheet, or employee attrition and morale, the story of abysmal
performance is the same, regardless of the metric or indicator one
looks at. While the macroeconomic and consumer environment have
created challenges, at the same time the Company has openly
admitted it has lost industry market share. In the last three
quarters the Company has lost almost one third of the market share
it used to command. In the fourth quarter of 2007 national market
share was just under 15% and in the third quarter of 2008 national
market share was a little over 10%. Since announcing our
significant stock position in the Company, we have had the
opportunity to speak to a number of LCAV's shareholders and
analysts. Needless to say, we are not the only ones unhappy with
the Company's performance. We are also not the only shareholders
who question the correlation between the Company's dismal
performance and the management team's lack of relevant experience
in health care, let alone LASIK. From hamburgers and fast food
chicken, to parking lot operators and rental car agencies, there is
indeed diversity of experience among the ranks of LCAV's senior
management team. Yet, somehow the fact that LCAV is fundamentally a
health care provider of a highly specialized surgical procedure has
been lost on everyone -- everyone except LCAV's shareholders,
physicians, optometrists, employees, and ever-diminishing pool of
patients. As experienced LASIK executives and significant
shareholders, for us the massive destruction in shareholder value
in such a short period of time was a wake up call for change. Yet,
despite (or maybe because of) our experience, we have not been
asked to help rescue the Company as it recklessly plunges down a
path to self-destruction. We are scratching our heads why the alarm
bells aren't ringing loudly for the Board of Directors as to the
crisis unfolding before their very eyes. With a burn rate of
approximately $2 million of cash per month, it shouldn't take 20/20
vision to see where the Company is going without a fundamental
change in strategic direction and leadership. As a group, the three
of us own 11.4% of the Company's shares. In contrast, the entire
Board of Directors owns less than 1% collectively. And of the
Board's ownership, approximately half of the shares held by the
Board were granted by the Company as compensation to the Board for
their service. In fact, 3 of the 4 independent directors of the
Board are currently out of compliance with the Company's own policy
regarding minimal stock ownership in the Company, a policy they put
in place. The litany of questionable acts and disastrous decisions
at the Company is long, and telling. Golden parachutes granted to
Steve Straus, the Company's CEO, within the very week the Company
announced disastrous operational results. The Board granting
themselves more protective indemnification agreements to insulate
themselves from their own decision-making "to the fullest extent of
the law." Jim Brenner, the Chief Marketing Officer, abruptly
terminated within one month of getting a new employment agreement,
replete with a comfortable severance package and golden parachute.
Shareholders could hear their money jingle in his pockets as he
walked away. As the founders and former executive management team
of LCAV that led the Company to its past successes, we feel
financially, ethically, and reputationally compelled to help rescue
LCAV before it implodes. Having built LCAV into the industry leader
it once was, brick-by-painstaking-brick, we have unparalleled
insights and perspective into the disastrous mistakes that have led
the Company off course. More importantly, we have the unique
experience and know-how to help get the Company back on track.
DATASOURCE: Stephen N. Joffe CONTACT: Lisa Blaker, +1-513-659 2001,
for Stephen N. Joffe
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