LCA-VISION INC. 
By CINCINNATI, Feb. 18, 2014 /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 12 months ended December 31, 2013.
Fourth Quarter 2013 Financial and Operating Highlights (all comparisons are with the fourth quarter of 2012)
-- Revenues increased 2.1% to $20.6 million from $20.2 million; adjusted
revenues increased 4.0% to $20.5 million from $19.7 million.
-- Procedure volume increased 3.6% to 12,033 from 11,613.
-- Medical professional and license fees remained unchanged at $4.6
million. Medical professional and license fees for the 2013 fourth
quarter included higher fees due to an increase in procedure volume,
offset by lower license fees related to renegotiated costs.
-- Vision center direct costs decreased by $1.2 million to $9.7 million
from $10.9 million. The decrease was a result of favorable insurance
experience, lower employee-related costs, lower financing fees from
finance plan mix and renegotiated rates for third-party financing plans.
These reductions were partially offset by higher variable operating
expenses associated with higher procedure volumes, including laser
maintenance costs, as well as higher professional services and other
operating expense.
-- General and administrative expense decreased by $0.5 million to $2.8
million from $3.3 million, due primarily to reductions in
employee-related costs as a result of restructuring initiatives
implemented early in 2013.
-- Marketing expense remained unchanged at $4.7 million. Marketing cost per
eye was $392, compared with $411.
-- Depreciation expense decreased by $0.5 million to $0.5 million from $1.0
million.
-- Operating loss was $1.7 million, a $4.3 million improvement from an
operating loss of $6.0 million; adjusted operating loss was $1.8
million, a $4.6 million improvement from an adjusted operating loss of
$6.4 million. Operating loss in the fourth quarter of 2012 included
restructuring charges of $1.1 million and impairment charges of $0.6
million.
-- Net loss narrowed to $1.5 million, or $0.08 per share, a $4.1 million
improvement from a net loss of $5.6 million, or $0.30 per share.
2013 Financial and Operating Highlights (all comparisons are with 2012)
-- Revenues were $92.2 million compared with $101.5 million; adjusted
revenues were $91.3 million compared with $99.0 million.
-- Procedure volume was 53,231 compared with 58,525.
-- Medical professional and license fees decreased by $3.6 million to $20.1
million from $23.7 million. The decrease resulted from lower procedure
volume coupled with the impact of renegotiated license fees and lower
enhancement costs.
-- Vision center direct costs decreased by $5.2 million to $39.1 million
from $44.3 million. The decrease was a result of lower variable costs
associated with procedure volume combined with other cost savings. These
savings primarily included lower financing fees from renegotiated rates
and a shift in portfolio mix, reductions in employee-related costs and
lower insurance costs from favorable claims experience.
-- General and administrative expense decreased by $1.7 million to $11.7
million from $13.4 million, due primarily to reductions in
employee-related costs and rent from the relocation of the company's
call center as a result of restructuring initiatives implemented in
early 2013, and reductions in travel and telecommunications expenses.
-- Marketing expense decreased by $1.5 million to $21.6 million from $23.1
million. Marketing cost per eye was $406 compared with $394.
-- Depreciation expense decreased by $2.6 million to $2.1 million from $4.7
million, due primarily to lower capital expenditures in recent years.
-- Restructuring charges of $0.2 million resulted primarily from the
relocation of the company's call center during the first quarter of
2013.
-- Operating loss was $2.4 million, a $6.9 million improvement from an
operating loss of $9.3 million; adjusted operating loss was $3.2
million, an $8.4 million improvement from an adjusted operating loss of
$11.6 million.
-- Net loss was $1.4 million, or $0.07 per share, a $7.1 million
improvement from a net loss of $8.5 million, or $0.45 per share.
-- Cash and investments were $28.7 million as of December 31, 2013,
compared with $34.5 million as of December 31, 2012. Cash used in
operations included approximately $1.2 million of investment in
expansion efforts related to the company's refractive lens and cataract
business, $1.8 million of restructuring payments related to previously
announced actions, and additional working capital changes of $4.1
million primarily related to reductions in accounts payable and accrued
liabilities related to timing of payments, and increased accounts
receivable for self-financed patients, offset by positive earnings from
the core LASIK business.
The company provides adjusted revenues and operating 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 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 delighted that our core LASIK business returned to profitability in 2013, earning nearly $400,000, our first operating profit since 2007. This achievement followed a focused effort to right-size our cost structure and benefitted from improved procedure volumes in the second half of the year. Entering 2014, we were able to lower cash flow breakeven for our core LASIK business to 54,000 procedures annually, down from 56,000 procedures previously.
"As we reported earlier, the number of procedures we performed during the fourth quarter rose for the second consecutive quarter. Our financial results are particularly gratifying as fourth quarter procedures got off to a slow start due to uncertainty created in October by the shutdown of the federal government," said LCA-Vision Chief Executive Officer Michael J. Celebrezze. "We have been diligent in controlling expenses, including our patient-acquisition costs, and note that marketing costs per eye during the quarter was $392, down from $417 in the third quarter of 2013 and $411 a year ago. Our average adjusted revenue per procedure increased slightly to $1,704 from $1,698 in the fourth quarter of last year, but down from $1,718 in the third quarter of 2013 due to a promotion in the fourth quarter. In addition, based on input from industry sources, we believe that during the fourth quarter we again took market share from our competitors."
Mr. Celebrezze added, "We continue to increase the number of cataract and other intraocular procedures, and remain positive about the long-term prospects that this service brings to the company."
Near-Term Financial Outlook
LCA-Vision intends to continue to manage expenses conservatively throughout 2014; its plans and current outlook for the year include:
-- The company plans to open one satellite vision center in the first
quarter and one additional full-service vision center late in the third
quarter of 2014.
-- The company expects 2014 capital expenditures to be between $1.1 million
and $1.3 million.
-- For the first quarter of 2014, the company expects marketing and
advertising expenses to be between $6.4 million and $6.8 million.
"The first quarter of 2014 appointment bookings have been running behind last year due to a combination of factors. Due to the expiring promotion at the end of 2013 and to allow demand to rebuild, we delayed marketing spending and did not run a promotion in January 2014, compared to running a promotion that began in mid-January 2013. In addition, severe winter weather impacted January bookings and procedures, with 11 vision centers closing 16 days and 16 vision centers having 22 shortened days, including some in our largest markets. To compensate for these challenges, we began a promotion on February 3rd offering a $500-off-discount. We will also begin testing television advertising in six markets this week," Mr. Celebrezze concluded.
LCA-Vision is lowering its estimate for the annual number of procedures companywide necessary to reach cash-flow breakeven from its LASIK business to approximately 54,000, down from 56,000 previously. This cash-flow estimate does not include restructuring payments, debt service or start-up losses and capital expenditures for its refractive lens and cataract business. The company expects to continue to incur start-up costs for its business expansion initiatives.
Conference Call and Webcast
Following last week's announcement that the company has signed a definitive agreement to be acquired by PhotoMedex, Inc. for $5.37 per share in cash, the company is cancelling its conference call and webcast, which was to have been held this morning.
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 (SEC), there are a number of other risks and uncertainties associated with its business including, without limitation, PhotoMedex's ability to consummate the announced acquisition of the company, unexpected costs or unexpected liabilities that may arise from the announced acquisition and PhotoMedex's failure to realize the anticipated benefits of the announced acquisition, and the general risks associated with the businesses of PhotoMedex and LCA-Vision; the successful execution of cost-effective marketing strategies to attract patients to its vision centers; the impact of low consumer confidence and discretionary spending; the impact of changes in government regulations related to medical expenses; competition in the laser vision correction industry; 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 refractive lens and cataract market; additional regulatory requirements, such as for Medicare, related to cataract and other refractive procedures; the continued availability of non-recourse third-party financing for its patients on terms similar to what it has paid historically; the company's ability to achieve profitability in its developing business expansion initiatives; 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 U.S. 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 is conducting a three-phase study on LASIK outcomes and quality of life. The FDA or another regulatory body could take legal action against the company or others in the laser vision correction industry. The outcome of this review or legal action potentially could impact negatively the acceptance of LASIK. In addition, the acceptance rate of new technologies and the company's 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 SEC, 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 62 LasikPlus(®) vision centers in the U.S., including 52 full-service LasikPlus(®) fixed-site laser vision correction centers and 10 pre- and post-operative LasikPlus(®) satellite centers. LCA-Vision has performed more than 1.3 million procedures since FDA approval of photorefractive keratectomy (PRK) in late 1995.
Additional Information and Where to Find It
PhotoMedex, LCA-Vision and their respective directors and officers may be deemed to be participants in the solicitation of proxies for the special meeting of LCA-Vision stockholders to be held to approve the merger further discussed in the 8-K filed by the company on February 13, 2014. In connection with the proposed acquisition, LCA-Vision will file with the Securities and Exchange Commission a Proxy Statement. The stockholders of LCA-Vision are advised to read, when available, the Proxy Statement and other documents filed with the Securities and Exchange Commission in connection with the solicitation of proxies for the special meetings because these documents will contain important information. The proxy statement will be mailed to stockholders of LCA-Vision as of the record date to be established for voting on the acquisition. The preliminary proxy statement and definitive proxy statement, once available, can be obtained, without charge, at the Securities and Exchange Commission's website at www.sec.gov. In addition, the proxy statement (when available) and such other documents may be obtained free of charge by directing a request to LCA-Vision Inc., 7840 Montgomery Road, Cincinnati, Ohio 45236, Attn: Corporate Secretary, or (513)792-9292.
Earning Trust Every Moment; Transforming Lives Every Day.
For Additional Information
Company Contact: Investor Relations Contact:
LCA-Vision Inc. LHA
Barb Kise Kim Golodetz
513-792-5629 212-838-3777
kgolodetz@lhai.com
or
Bruce Voss
310-691-7100
bvoss@lhai.com
@LHA_IR_PR
LCA-Vision Inc.
Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)
At December 31,
---------------
2013 2012
---- ----
Assets
Current assets
Cash and cash equivalents $26,689 $31,653
Short-term investments 1,984 2,804
Patient receivables, net of allowances of $719 and $1,019 3,026 2,810
Other accounts receivable, net 950 443
Prepaid expenses and other 1,820 3,318
----- -----
Total current assets 34,469 41,028
Property and equipment 67,594 64,964
Accumulated depreciation (60,557) (58,584)
------- -------
Property and equipment, net 7,037 6,380
Patient receivables, net of allowances of $423 and $634 1,186 1,059
Other assets 223 501
--- ---
Total assets $42,915 $48,968
======= =======
Liabilities and Stockholders' Investment
Current liabilities
Accounts payable $7,218 $8,046
Accrued liabilities and other 6,868 11,930
Debt obligations maturing within one year 777 -
--- ---
Total current liabilities 14,863 19,976
Long-term insurance reserves, less current portion 5,714 5,741
Other long-term liabilities 2,127 3,454
Long-term debt obligations, less current portion 1,080 -
Stockholders' investment
Common stock ($.001 par value; 25,291,637 shares issued and
19,254,175 and 19,050,504 shares outstanding, respectively) 25 25
Contributed capital 180,790 179,543
Common stock in treasury, at cost (6,037,462 shares and 6,241,133 shares, respectively) (110,034) (111,395)
Accumulated deficit (52,013) (49,053)
Accumulated other comprehensive income 363 677
--- ---
Total stockholders' investment 19,131 19,797
------ ------
Total liabilities and stockholders' investment $42,915 $48,968
======= =======
LCA-Vision Inc.
Consolidated Statement of Operations
(Amounts in thousands except per share data)
(Unaudited)
Three Months Ended December 31, Twelve Months Ended December 31,
2013 2012 2013 2012
---- ---- ---- ----
Revenues $20,616 $20,195 $92,185 $101,493
Operating costs and expenses
Medical professional and license fees 4,573 4,576 20,091 23,715
Direct costs of services 9,716 10,870 39,092 44,348
General and administrative 2,838 3,292 11,684 13,442
Marketing and advertising 4,715 4,773 21,635 23,055
Depreciation 495 992 2,050 4,736
Impairment charges - 580 - 617
Restructuring charges - 1,120 214 1,130
22,337 26,203 94,766 111,043
Gain on sale of assets 18 18 198 239
--- --- --- ---
Operating loss (1,703) (5,990) (2,383) (9,311)
Net investment income and other 214 158 890 656
Loss before income taxes (1,489) (5,832) (1,493) (8,655)
Income tax benefit (14) (208) (125) (138)
--- ---- ---- ----
Net loss $(1,475) $(5,624) $(1,368) $(8,517)
======= ======= ======= =======
Loss per common share
Basic and Diluted $(0.08) $(0.30) $(0.07) $(0.45)
Weighted average shares outstanding
Basic and Diluted 19,248 19,024 19,199 18,982
LCA-Vision Inc.
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
For the Years Ended December 31,
2013 2012
---- ----
Cash flows from operating activities:
Net loss $(1,368) $(8,517)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 2,050 4,736
Provision for loss on doubtful accounts 416 914
Loss on investments - 68
Gain on sale of property and equipment (198) (239)
Impairment charges - 617
Stock-based compensation 1,247 2,060
Insurance reserves (31) (604)
Changes in operating assets and liabilities:
Patient accounts receivable (782) (1,610)
Other accounts receivable (496) 1,522
Prepaid expenses and other 437 793
Accounts payable (828) (57)
Deferred revenue, net of professional fees (783) (2,264)
Accrued liabilities and other (3,952) (2,507)
------ ------
Net cash used in operations (4,288) (5,088)
Cash flows from investing activities:
Purchases of property and equipment (700) (1,160)
Proceeds from sale of assets 240 305
Purchases of investment securities (1,984) (39,656)
Proceeds from sale of investment securities 2,804 62,883
Net cash provided by investing activities 360 22,372
Cash flows from financing activities:
Principal payments on loan (491) (4,004)
Shares repurchased for treasury stock (231) (357)
Proceeds from exercise of stock options - 57
--- ---
Net cash used in financing activities (722) (4,304)
Net effect of exchange rate changes on cash and cash equivalents (314) 105
---- ---
(Decrease) increase in cash and cash equivalents (4,964) 13,085
Cash and cash equivalents at beginning of year 31,653 18,568
------ ------
Cash and cash equivalents at end of year $26,689 $31,653
======= =======
LCA-Vision Inc.
Effect of the Change in Accounting for Deferred Revenues on Financial Results
(Dollars in thousands)
(Unaudited)
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 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:
Three Months Ended December 31, Twelve Months Ended December 31,
2013 2012 2013 2012
---- ---- ---- ----
Revenues
Reported U.S. GAAP $20,616 $20,195 $92,185 $101,493
Adjustments
Amortization of prior deferred revenue (114) (473) (870) (2,516)
---- ---- ---- ------
Adjusted revenues $20,502 $19,722 $91,315 $98,977
======= ======= ======= =======
Operating Loss
Reported U.S. GAAP $(1,703) $(5,990) $(2,383) $(9,311)
Adjustments
Amortization of prior deferred revenue (114) (473) (870) (2,516)
Amortization of prior professional fees 11 47 87 252
--- --- --- ---
Adjusted operating loss $(1,806) $(6,416) $(3,166) $(11,575)
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SOURCE LCA-Vision Inc.
