Exhibit 99.1
LCA-VISION THIRD QUARTER EPS RISES 86% TO $0.26, REVENUES UP 53% TO $31.2 MILLION
Marks fifth consecutive quarter of revenue growth exceeding 50% and same-store growth of at least 38%
Company raises financial guidance for 2004, reaffirms 2005 growth rates
CINCINNATI (October 26, 2004) – LCA-Vision Inc. (NASDAQ NM: LCAV),a leading provider of fixed-site laser vision correction services at its LasikPlusvision centers, today reported financial results for the third quarter of 2004. Highlights of the three months ended September 30, 2004 include:
• | Earnings per diluted share up 86% to $0.26 with a 41% effective tax rate, compared with earnings per diluted share of $0.14 with a 5% effective tax rate in the third quarter of 2003 |
• | Revenues up 53% to approximately $31.2 million, compared with revenues of approximately $20.5 million in the third quarter of 2003, marking the fifth consecutive quarter of revenue growth exceeding 50% |
• | Revenue growth of 38% at vision centers open at least 12 months, compared with the third quarter of 2003, marking the fifth consecutive quarter of strong same-store revenue growth of at least 38% |
• | Procedure volume up 46% to 23,248, from 15,965 procedures in the third quarter of 2003 |
• | Revenue per procedure up 5% to $1,342, from $1,281 in the third quarter of 2003 |
• | Operating margin of 17.7%, compared with 7.2% in the third quarter of 2003 |
• | For the first nine months of 2004, net cash provided by operations of approximately $20.6 million, up significantly from approximately $8.4 million in the first nine months of 2003 |
Net income for the third quarter of 2004 rose 137% to approximately $3.6 million with a 41% effective tax rate, compared with net income for the third quarter of 2003 of approximately $1.5 million with a 5% effective tax rate. Earnings per diluted share for the third quarter of 2004 rose 86% to $0.26, compared with earnings per diluted share of $0.14 for the third quarter of 2003.
Revenues for the 2004 third quarter increased 53% to approximately $31.2 million, compared with revenues of approximately $20.5 million for the 2003 third quarter. The Company reported that revenues at vision centers open at least 12 months increased 38% during the third quarter of 2004. Third quarter 2004 procedure volume rose 46% to 23,248, and average price per procedure increased 5% to $1,342, both compared with the third quarter of 2003.
Net cash provided by operations in the first nine months of 2004 was approximately $20.6 million. As a result, cash and short-term investments were approximately $82.8 million as of September 30, 2004, up 28% from approximately $64.9 million as of December 31, 2003.
For the nine months ended September 30, 2004, the Company reported net income of approximately $27.2 million, or $1.96 per diluted share, compared with net income of approximately $5.1 million, or $0.47 per diluted share, for the nine months ended September 30, 2003. Revenues grew approximately 56% to approximately $94.4 million for the first nine months of 2004, compared with revenues of approximately $60.7 million for the comparable prior-year period.
“We generated exceptional financial performance during the quarter and achieved several significant milestones,” said Stephen N. Joffe, Chairman and CEO of LCA-Vision. “Third quarter results featured strong growth in revenues and net income, an increase in revenue per procedure and excellent procedure volume growth. With the opening of LasikPlusvision centers during the quarter in Jacksonville, Florida, St. Louis, Missouri and Kansas City, Kansas, we have already achieved our previously announced target for new laser vision center openings in 2004. Furthermore, same-store sales rose 38% year-over-year during the quarter, substantially outpacing projected industry growth and reflecting our continued ability to gain market share. Once again, net income grew even more rapidly than revenues, demonstrating the operating leverage and scalability of our business model.”
Mr. Joffe added, “We believe there remains tremendous opportunity going forward for LCA-Vision as we post robust same-store sales growth at a multiple of industry growth rates and open new LasikPlusvision centers, including plans to open 10-12 vision centers during 2005. Based on our confidence in continued strong performance, we are again raising our revenues and earnings guidance for 2004, and are reaffirming our projected 2005 revenues and income before taxes growth rates based upon these higher 2004 numbers.”
Company Raises 2004 Guidance, Reaffirms 2005 Growth Rates
Based upon third quarter financial results and management’s outlook for the remainder of the year, LCA-Vision increased full-year 2004 revenues and earnings guidance as follows:
• | Revenues in the range of $124 million to $125 million, up from prior guidance of $121 million to $123 million |
• | Earnings per diluted share in the range of $2.12 to $2.17, up from prior guidance of $2.05 to $2.15. Both the new and previous guidance include a $0.76 per diluted share benefit recorded in the first half of 2004 for the reversal of the deferred tax valuation allowance and also reflect a presumed 41% tax rate for the fourth quarter of 2004 |
For 2005, LCA-Vision reaffirmed expectations for revenues to increase 30-40% and income before taxes to increase 40-50%, resulting in diluted EPS of $1.45 to $1.55 for 2005. If the Company had recorded an effective tax rate of 41% for all of 2004, we project fully diluted EPS for 2004 to be $1.01 to $1.06. Management feels that this proforma calculation for 2004 is a meaningful disclosure as it facilitates investors comparing 2004 and 2005 projected results on a consistent basis.
Conference Call
LCA-Vision has scheduled an investor conference call beginning at 10:00 a.m. Eastern Time today. To participate in the call, please dial 888-803-7404 toll-free within the U.S. and Canada, or 706-634-1308 for international callers. A telephone replay will be available for 48 hours by dialing 800-642-1687 toll-free within the U.S. and Canada, or 706-645-9291 for international callers. Enter reservation number 1376360.
Individual investors are invited to listen to the conference call live over the Internet by going to the “Investors” section of the Company’s Web site at www.lasikplus.com. A replay of the call will be available for 30 days.
About LCA-Vision
LCA-Vision currently operates 44 laser vision correction centers, including 40 wholly owned LasikPlusvision centers located in large metropolitan markets throughout the United States, three joint ventures in Canada and one joint venture in Europe.
This news release contains forward-looking statements based on current expectations, forecasts and assumptions of the Company that are subject to risks and uncertainties. Forward-looking statements in this release, including statements regarding the Company’s belief that revenues, income and earnings will exhibit healthy year-over-year growth and projections for the remainder of fiscal 2004 and for fiscal 2005, among others, are based on information available to the Company as of the date hereof. The Company’s actual results could differ materially from those stated or implied in such forward-looking statements due to risks and uncertainties associated with the Company’s 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, regulatory action against us or others in the laser vision correction industry, the relatively high fixed cost structure of our business, the outcome of litigation, and the Company’s success in the process of management testing and auditor attestation of internal controls, as required under the Sarbanes-Oxley Act of 2002, among other factors. For a further discussion of the factors that may cause actual results to differ materially from current expectations, please review the Company’s filings with the Securities and Exchange Commission, including but not limited to its Forms 10-K and 10-Q. The Company assumes no obligation to update the information included in this press release, whether as a result of new information, future events or otherwise.
[Tables to Follow]
LCA-Vision Inc.
Condensed Consolidated Statements of Income
(Dollars in thousands except per share data)
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Revenues — Laser refractive surgery | $ | 31,203 | $ | 20,455 | $ | 94,406 | $ | 60,661 | ||||||||
Operating costs and expenses | ||||||||||||||||
Medical professional and license fees | 5,733 | 3,873 | 18,090 | 11,846 | ||||||||||||
Direct costs of services | 10,526 | 8,365 | 30,506 | 23,982 | ||||||||||||
General and administrative expenses | 2,232 | 2,062 | 6,827 | 6,073 | ||||||||||||
Marketing and advertising | 5,400 | 3,034 | 15,180 | 9,164 | ||||||||||||
Depreciation and amortization | 1,775 | 1,653 | 5,233 | 4,692 | ||||||||||||
Operating income | 5,537 | 1,468 | 18,570 | 4,904 | ||||||||||||
Equity in earnings from unconsolidated businesses | 99 | 39 | 284 | 245 | ||||||||||||
Minority equity interest | (150 | ) | (64 | ) | (455 | ) | (215 | ) | ||||||||
Net interest | 627 | 155 | 1,491 | 263 | ||||||||||||
Other income | 17 | — | 25 | 52 | ||||||||||||
Income before taxes on income | 6,130 | 1,598 | 19,915 | 5,249 | ||||||||||||
Income tax expense (benefit) | 2,535 | 81 | (7,258 | ) | 181 | |||||||||||
Net income | $ | 3,595 | $ | 1,517 | $ | 27,173 | $ | 5,068 | ||||||||
Income (loss) per common share | ||||||||||||||||
Basic | $ | 0.27 | $ | 0.14 | $ | 2.03 | $ | 0.47 | ||||||||
Diluted | $ | 0.26 | $ | 0.14 | $ | 1.96 | $ | 0.47 | ||||||||
Dividends declared per share | $ | 0.08 | — | $ | 0.08 | — | ||||||||||
Weighted average shares outstanding | ||||||||||||||||
Basic | 13,432 | 10,771 | 13,379 | 10,753 | ||||||||||||
Diluted | 13,868 | 11,044 | 13,832 | 10,856 |
LCA-Vision Inc.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
September 30, 2004 | December 31, 2003 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 82,821 | $ | 64,908 | ||||
Accounts receivable, net of allowance for doubtful accounts of $2,142 and $1,480 | 6,601 | 3,255 | ||||||
Receivables from vendors | 834 | 802 | ||||||
Prepaid expenses, inventory and other | 907 | 1,422 | ||||||
Deferred tax asset | 9,101 | — | ||||||
Total current assets | 100,264 | 70,387 | ||||||
Property and equipment | 46,416 | 41,967 | ||||||
Accumulated depreciation and amortization | (29,866 | ) | (24,622 | ) | ||||
Property and equipment, net | 16,550 | 17,345 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $700 and $416 | 1,318 | 749 | ||||||
Goodwill | 275 | 275 | ||||||
Deferred compensation plan assets | 1,053 | 461 | ||||||
Investment in unconsolidated businesses | 519 | 385 | ||||||
Other assets | 764 | 435 | ||||||
Total assets | $ | 120,743 | $ | 90,037 | ||||
Liabilities and Stockholders’ Investment | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 1,963 | $ | 4,883 | ||||
Accrued liabilities and other | 6,874 | 4,518 | ||||||
Current portion of capital lease obligations | 352 | — | ||||||
Total current liabilities | 9,189 | 9,401 | ||||||
Capital lease obligations | 339 | — | ||||||
Deferred compensation liability | 1,047 | 457 | ||||||
Insurance reserve | 2,074 | 963 | ||||||
Minority equity interest | 869 | 414 | ||||||
Stockholders’ investment | ||||||||
Common stock ($0.001 par value; 15,811,872 and 15,643,561 shares and 13,444,676 and 13,276,364 shares issued and outstanding, respectively) | 16 | 16 | ||||||
Contributed capital | 133,464 | 131,203 | ||||||
Common stock in treasury, at cost (2,367,197 shares) | (15,462 | ) | (15,462 | ) | ||||
Accumulated deficit | (10,971 | ) | (37,069 | ) | ||||
Accumulated other comprehensive income | 178 | 114 | ||||||
Total stockholders’ investment | 107,225 | 78,802 | ||||||
Total liabilities and stockholders’ investment | $ | 120,743 | $ | 90,037 | ||||
LCA-Vision Inc.
Condensed Consolidated Statements of Cash Flow
(Dollars in thousands)
Nine Months Ended Sept. 30, | ||||||||
2004 | 2003 | |||||||
Cash flow from operating activities: | ||||||||
Net income | $ | 27,173 | $ | 5,068 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 5,233 | 4,692 | ||||||
Provision for loss on doubtful accounts | 946 | 1,155 | ||||||
Deferred income taxes | (9,101 | ) | — | |||||
Deferred compensation | 506 | 247 | ||||||
Insurance reserve | 1,111 | 1,329 | ||||||
Equity in earnings of unconsolidated affiliates | (284 | ) | (245 | ) | ||||
Other, Net | — | (2 | ) | |||||
Changes in working capital: | ||||||||
Accounts receivable | (4,861 | ) | (3,789 | ) | ||||
Receivables from vendors | (32 | ) | (169 | ) | ||||
Prepaid expenses, inventory and other | 515 | 450 | ||||||
Accounts payable | (2,920 | ) | (2,216 | ) | ||||
Accrued liabilities and other | 2,357 | 1,830 | ||||||
Net cash provided by operations | 20,643 | 8,350 | ||||||
Cash flow from investing activities: | ||||||||
Purchase of property and equipment | (3,745 | ) | (3,251 | ) | ||||
Deferred compensation plan | (508 | ) | (252 | ) | ||||
Loan payments made by shareholders | — | 1,329 | ||||||
Loans to shareholders | — | (22 | ) | |||||
Other, net | 187 | 378 | ||||||
Net cash used in investing activities | (4,066 | ) | (1,818 | ) | ||||
Cash flows from financing activities: | ||||||||
Principal payments of long-term notes, debt and capital lease obligations | — | (10 | ) | |||||
Exercise of stock options | 2,261 | 326 | ||||||
Dividends paid to shareholders | (1,075 | ) | — | |||||
Distribution of minority equity investees | 150 | 114 | ||||||
Net cash provided by financing activities | 1,336 | 430 | ||||||
Increase in cash and cash equivalents | 17,913 | 6,962 | ||||||
Cash and cash equivalents at beginning of period | 64,908 | 18,298 | ||||||
Cash and cash equivalents at end of period | $ | 82,821 | $ | 25,260 | ||||
Supplemental Information | ||||||||
Increase in capital lease obligations | $ | 691 | — |