Provides Business Update and Near-term Financial Outlook
CINCINNATI, Feb. 9 /PRNewswire-FirstCall/ -- 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 12 month periods ended December
31, 2009. Fourth Quarter 2009 Operational and Financial Results
(all comparisons are with the fourth quarter of 2008) -- Revenues
were $22.0 million compared with $34.0 million; adjusted revenues
were $20.1 million compared with $30.3 million. -- Procedure volume
was 11,718 compared with 19,424. -- Same-store revenues (71 vision
centers) decreased 33.3%; adjusted same-store revenues decreased
31.1%. -- Operating loss was $10.1 million compared with operating
loss of $9.6 million; adjusted operating loss was $11.8 million
compared with adjusted operating loss of $13.0 million. Operating
loss and adjusted operating loss for the fourth quarters of 2009
and 2008 included restructuring and impairment charges of $1.2
million and $2.1 million, respectively. -- Net loss was $3.6
million, or $0.19 per share, compared with net loss of $8.2
million, or $0.44 per share. The decrease in net loss resulted
primarily from charges taken in the fourth quarter of 2008 of $2.1
million for other-than-temporary impairment of investments and a
decrease of $930,000 in restructuring and fixed asset impairment
charges. Full Year 2009 Operational and Financial Results (all
comparisons are with the full year 2008) -- Revenues were $129.2
million compared with $205.2 million; adjusted revenues were $120.1
million compared with $186.5 million. -- Procedure volume was
72,776 compared with 115,153. -- Operating loss was $36.5 million
compared with operating loss of $8.2 million; adjusted operating
loss was $44.7 million compared with adjusted operating loss of
$25.1 million. Operating loss and adjusted operating loss for 2009
included $8.1 million in restructuring and impairment charges and
$0.8 million in consent revocation solicitation charges; operating
loss and adjusted operating loss for 2008 included $3.5 million in
restructuring and impairment charges. -- Net cash provided by
operations was $1.4 million compared with $6.9 million. -- Net loss
was $33.2 million, or $1.79 per share, compared with net loss of
$6.6 million, or $0.36 per share. The 2009 net loss included a
$12.2 million, or $0.66 per share, valuation allowance for deferred
tax assets. -- Cash and investments totaled $54.6 million as of
December 31, 2009, compared with $59.5 million as of December 31,
2008. Since the first quarter of 2007, LCA-Vision has provided both
adjusted revenues and operating losses 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 losses 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
better reflects operating performance and, therefore, is more
meaningful to investors. "We are balancing cash conservation in the
current challenging economic environment against our longer-term
objective of managing to profitability and growth when the economy
improves," said LCA-Vision Chief Financial Officer Michael J.
Celebrezze. "Our combined cash conservation and expense reduction
measures last year included closing 12 underperforming vision
centers, reducing marketing expense by $18.6 million, reducing our
headcount by 19%, and renegotiating our equipment contracts. The
payroll and equipment cost reductions resulted in an annual savings
of approximately $11 million. We ended 2009 with more than $54
million in cash and investments and currently operate a network of
62 LasikPlus® vision centers." Chief Operating Officer David L.
Thomas commented, "Our decision to reduce fourth quarter marketing
and advertising spending to less than $6 million in an effort to
align marketing expenses with perceived consumer demand resulted in
less than desired procedure volume. We are increasing marketing and
advertising spending in the first quarter of 2010 to $9 million.
Consumer marketing is critical to driving procedure volume and, in
the past several months, we have conducted an extensive analytical
evaluation of all marketing drivers with the objective of taking a
more comprehensive data-driven approach to marketing. With the
support of a top-line, full-service advertising agency, we are
refining our branding to better differentiate LCA-Vision /
LasikPlus® from others in our category and developing more
compelling messages. We also are changing our focus toward
competing with individual surgeon practices, which control nearly
two-thirds of our market. Early this year we hired a Vice President
of Marketing with considerable senior-level experience in
customer-centric organizations who is now leading our marketing
initiatives. "During the fourth quarter, we expanded our Advanced
Eye Health Analysis, or AEHA, program to 14 LasikPlus® vision
centers. We also decided to offer the exam free of charge to
prospective LASIK patients after determining that fees for the
stand-alone procedure were negatively impacting appointment show
rates. We expect to complete an evaluation of this program in the
second quarter of 2010." Near-term Financial Outlook LCA-Vision
intends to continue to manage cash flow conservatively in 2010. The
Company's plans and outlook for 2010 include: -- The company does
not plan to open any new vision centers in the near term.
LCA-Vision will consider restarting its de novo new center opening
program when market conditions improve. -- The company will
continue to manage general and administrative expenses
aggressively, which it expects will decline slightly in 2010 from
2009 levels, following a 19% decline in 2009 from 2008. -- The
company expects direct costs per center to decline slightly in 2010
from 2009, following an 18% decline in 2009 from 2008. -- The
company expects marketing and advertising spend for the 2010 first
quarter to be approximately $9.0 million. -- The company expects
capital expenditures of $1.2 million in 2010 for vision center
renovations and equipment replacement. As a result of aggressive
efforts to reduce costs, the number of procedures per vision center
required to reach breakeven has declined to 95 per month.
LCA-Vision estimates the number of procedures companywide required
for breakeven cash flow, after capital expenditures and debt
service, to be approximately 95,000 per year. The company believes
that it has sufficient cash and investments to fund its business
beyond 2012 if it performs at least 65,000 procedures annually.
Procedure volume for 2009 was 72,776. 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: 493 358 95. 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 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 and other filings with the Securities and Exchange Commission,
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 and discretionary spending; competition in the laser
vision correction industry; our ability to attract new patients;
the possibility of adverse outcomes or long-term side effects of
laser vision correction; negative 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 in turn
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 FDA has
planned a major new study on Lasik outcomes and quality of life
that is expected to end in 2012. 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. 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., a
leading provider of laser vision correction services under the
LasikPlus® brand, operates 62 LasikPlus® fixed-site laser vision
correction centers in 29 states and 45 markets in the United States
and a joint venture in Canada. Additional company information is
available at http://www.lca-vision.com/ and
http://www.lasikplus.com/. Earning Trust Every Moment; Building
Relationships for a Lifetime. For Additional Information Company
Contact: Investor Relations Contact: Barb Kise Jody Cain
Lippert/Heilshorn & LCA-Vision Inc. Associates 513-792-9292
310-691-7100 LCA-Vision Inc. Consolidated Statements of Operations
(Dollars in thousands except per share data) (Unaudited) Three
Months Twelve Months Ended Ended December 31, December 31,
------------- -------------- 2009 2008 2009 2008 ---- ---- ----
---- Revenues - Laser refractive surgery $21,965 $34,030 $129,213
$205,176 Operating costs and expenses Medical professional and
license fees 5,097 7,575 28,746 41,797 Direct costs of services
13,288 15,505 63,579 77,474 General and administrative 3,926 5,126
16,501 20,262 Marketing and advertising 5,775 8,685 33,784 52,429
Depreciation 2,778 4,597 14,198 17,972 Consent revocation
solicitation charges (24) - 780 - Impairment charges (190) 1,672
5,414 1,672 Restructuring charges 1,422 465 2,696 1,804 ----- ---
----- ----- Operating loss (10,107) (9,595) (36,485) (8,234) Equity
in (loss) earnings from unconsolidated businesses (6) 24 122 477
Net investment income (loss) 673 (2,376) 1,785 (1,524) Other
income, net 359 15 385 23 --- -- --- -- Loss before income taxes
(9,081) (11,932) (34,193) (9,258) Income tax benefit (5,471)
(3,712) (949) (2,623) ------ ------ ---- ------ Net loss $(3,610)
$(8,220) $(33,244) $(6,635) ======= ======= ======== ======= Loss
per common share Basic $(0.19) $(0.44) $(1.79) $(0.36) Diluted
$(0.19) $(0.44) $(1.79) $(0.36) Weighted average shares outstanding
Basic 18,614 18,548 18,594 18,526 Diluted 18,614 18,548 18,594
18,526 LCA-VISION INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands) (Unaudited) At December 31, ----------------
2009 2008 ---- ---- Assets Current assets Cash and cash equivalents
$24,049 $23,648 Short-term investments 28,455 32,687 Patient
receivables, net of allowance for doubtful accounts of $1,645 and
$1,465 4,562 9,678 Other accounts receivable 2,002 2,515 Assets
held for sale 1,031 - Prepaid professional fees 615 911 Prepaid
income taxes 12,270 8,957 Deferred tax assets - 4,708 Deferred
compensation plan assets 400 - Prepaid expenses and other 5,582
5,299 ----- ----- Total current assets 78,966 88,403 Property and
equipment 81,477 121,734 Accumulated depreciation and amortization
(55,479) (70,235) ------- ------- Property and equipment, net
25,998 51,499 Long-term investments 2,090 3,126 Accounts
receivables, net of allowance for doubtful accounts of $674 and
$1,662 854 2,645 Deferred compensation plan assets - 2,196
Investment in unconsolidated businesses 137 377 Deferred tax assets
- 7,027 Other assets 4,590 2,209 ----- ----- Total assets $112,635
$157,482 ======== ======== Liabilities and Stockholders' Investment
Current liabilities Accounts payable $6,504 $8,169 Accrued
liabilities and other 11,581 8,608 Deferred revenue 6,151 9,107
Deferred compensation liability 400 - Debt obligations maturing in
one year 3,998 6,985 ----- ----- Total current liabilities 28,634
32,869 Long-term rent obligations and other 2,395 1,820 Long-term
debt obligations (less current portion) 9,145 14,120 Deferred
compensation liability - 2,196 Insurance reserve 9,154 9,489
Deferred license fee 4,428 - Deferred revenue 7,852 14,003 Total
stockholders' investment 51,027 82,985 ------ ------ Total
liabilities and stockholders' investment $112,635 $157,482 ========
======== LCA-VISION INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands) (Unaudited) Year Ended December 31,
---------------- 2009 2008 ---- ---- Cash flow from operating
activities: Net loss $(33,244) $(6,635) Adjustments to reconcile
net loss to net cash provided by operating activities: Depreciation
14,198 17,972 Provision for loss on doubtful accounts 3,320 5,355
(Gain) loss on investments (48) 3,115 Impairment 5,414 1,672 (Gain)
loss on sale of property and equipment (385) 2 Deferred income
taxes 10,943 4,965 Stock-based compensation 741 1,878 Insurance
reserve (335) 996 Equity in earnings from unconsolidated affiliates
(122) (477) Distributions from unconsolidated affiliates 362 690
Changes in operating assets and liabilities Patient receivable
3,587 (410) Other accounts receivable 513 3,426 Prepaid income
taxes (3,313) (2,566) Prepaid expenses and other 773 (223) Accounts
payable (1,665) (2,227) Deferred revenue, net of professional fees
(8,196) (16,847) Accrued liabilities and other 8,858 (3,755) -----
------ Net cash provided by operations 1,401 6,931 Cash flows from
investing activities: Purchases of property and equipment (240)
(14,869) Proceeds from sale of property and equipment 466 18
Purchases of investment securities (327,367) (391,026) Proceeds
from sale of investment securities 333,438 396,674 Other, net 683
(9) --- -- Net cash provided by (used in) investing activities
6,980 (9,212) Cash flows from financing activities: Principal
payments of capital lease obligations and loan (7,962) (6,410)
Proceeds from loan - 19,184 Shares repurchased for treasury stock
(36) (205) Tax benefits related to stock-based compensation - -
Exercise of stock options 18 193 Dividends paid to stockholders -
(4,447) - ------ Net cash (used in) provided by financing
activities (7,980) 8,315 ------ ----- Increase in cash and cash
equivalents 401 6,034 Cash and cash equivalents at beginning of
year 23,648 17,614 ------ ------ Cash and cash equivalents at end
of year $24,049 $23,648 ======= ======= LCA-VISION INC. Effect of
the Change in Accounting for Deferred Revenues on Financial Results
(Dollars in thousands) (Unaudited) 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 Twelve Months Ended December 31,
December 31, ------------------ ------------------- 2009 2008 2009
2008 ---- ---- ---- ---- Revenues Reported U.S. GAAP $21,965
$34,030 $129,213 $205,176 Adjustments Amortization of prior
deferred revenue (1,827) (3,770) (9,107) (18,719) ------ ------
------ ------- Adjusted revenues $20,138 $30,260 $120,106 $186,457
======= ======= ======== ======== Operating Loss Reported U.S. GAAP
$(10,107) $(9,595) $(36,485) $(8,234) Adjustments Impact of
warranty revenue deferral (1,827) (3,770) (9,107) (18,719)
Amortization of prior professional fees 183 377 911 1,872 --- ---
--- ----- Adjusted operating loss $(11,751) $(12,988) $(44,681)
$(25,081) ======== ======== ======== ======== DATASOURCE:
LCA-Vision Inc. CONTACT: Barb Kise, LCA-Vision Inc.,
+1-513-792-9292; or Investor Relations: Jody Cain,
Lippert/Heilshorn & Associates, +1-310-691-7100 Web Site:
http://www.lca-vision.com/
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