Exhibit 99.1
![(LCA-VISION LETTERHEAD)](https://capedge.com/proxy/8-K/0000950152-06-006056/l21510al2151030.gif)
News Release
LCA-Vision Increases Earnings Per Share 42% and Grows Revenues 35%
Procedure Volume Increases 31% and Same-Store Revenue Grows 21%
Company Raises Full-Year 2006 Earnings Guidance to $1.80 — $1.90
Procedure Volume Increases 31% and Same-Store Revenue Grows 21%
Company Raises Full-Year 2006 Earnings Guidance to $1.80 — $1.90
Cincinnati, July 25, 2006 — LCA-Vision Inc. (Nasdaq: LCAV), a leading provider of laser vision correction services under the LasikPlusbrand, today announced financial and operational results for the three months and six months ended June 30, 2006.
Second Quarter 2006 Highlights
• | Earnings per share increased 42% to $0.51 from $0.36. | |
• | Revenues grew 35% to approximately $65.5 million from approximately $48.4 million. | |
• | Procedure volume rose 31% to 47,308 from 36,010. | |
• | Same-store revenues in the U.S. grew 21%, which includes 40 vision centers. | |
• | Successfully opened three new LasikPlusvision centers in Paramus, New Jersey; Grand Rapids, Michigan; and Seattle, Washington. LasikPlusvision centers are now located in 40 markets in 27 states. |
“We are pleased with our second quarter and year-to-date financial and operational results,” said Craig Joffe, LCA-Vision’s Interim Chief Executive Officer and Chief Operating Officer. “We continue to deliver industry-leading growth based on strong performance from both new and existing LasikPlus vision centers.”
“Our operational and financial results demonstrate the soundness of our business model and our ability to consistently execute our strategy to capture market share and grow at a rate significantly faster than the industry. In the second quarter of 2006 we grew earnings per share 42% and revenues 35%, with same-store revenues increasing 21%.”
“We successfully opened three new LasikPlusvision centers during the second quarter, and last week announced the opening of a second location in the Houston market. Year-to-date, we have opened four new vision centers and now own and operate 53 LasikPlusvision centers in the United States. We remain on track to meet our goal of opening a total of 10 to 12 vision centers this year.”
“Laser vision correction is one of the nation’s most widely performed elective surgical procedures. Growing positive consumer acceptance of this life-enhancing procedure coupled with strong word-of-mouth referrals and our ability to satisfy our patients with the right combination of advanced technology, experience, and exceptional quality of care at an affordable price continues to fuel our business and grow our market share in both new and existing markets.”
-1-
![(LCA-VISION LETTERHEAD)](https://capedge.com/proxy/8-K/0000950152-06-006056/l21510al2151031.gif)
Net Income & Earnings Per Share
Second quarter 2006 net income increased 39% to approximately $10.9 million from approximately $7.8 million in the second quarter of 2005. Second quarter 2006 earnings per diluted share increased 42% to $0.51 from $0.36 in the second quarter of 2005. Included in net income for the second quarter of 2006 was the after-tax cost of approximately $1,251,000, or $0.06 per diluted share, for the expensing of equity-based compensation as a result of the adoption of FAS 123(R) that became effective January 1, 2006.
Revenues & Operating Income
Revenues grew 35% to approximately $65.5 million in 2006’s second quarter from approximately $48.4 million in 2005’s second quarter. Procedure volume increased 31% in 2006’s second quarter to 47,308 from 36,010 procedures performed in 2005’s second quarter. Operating income increased 32% to approximately $17.0 million in 2006’s second quarter from approximately $12.9 million in 2005’s second quarter. Second quarter 2006 operating income was reduced by approximately $1,603,000 as a result of the expensing of equity-based compensation.
Cash Position
Cash provided by operations grew 37% to approximately $32.9 million for the six months ended June 30, 2006 from approximately $24.1 million for the six months ended June 30, 2005. Cash and cash equivalents increased to approximately $131.1 million as of June 30, 2006 from approximately $111.0 million as of December 31, 2005.
Year-to-Date Results
For the six months ended June 30, 2006, net income increased 40% to approximately $24.0 million from approximately $17.1 million for the six months ended June 30, 2005, and earnings per diluted share increased 40% to $1.12 from $0.80. Included in net income for the first six months of 2006 was the after-tax cost of approximately $2,287,000, or $0.11 per diluted share, for the expensing of equity-based compensation.
For the six months ended June 30, 2006, revenues grew 41% to approximately $138.8 million from approximately $98.6 million for the six months ended June 30, 2005. Procedure volume increased 37% to 100,680 procedures from 73,588 procedures. Operating income increased 33% to approximately $37.7 million from approximately $28.3 million. Operating income in the first six months of 2006 was reduced by approximately $2,852,000 as a result of the expensing of equity-based compensation.
Outlook
LCA-Vision is increasing earnings guidance for the full-year of 2006. Earnings per diluted share are now expected to be in the range of $1.80 to $1.90, compared with prior guidance of $1.75 to $1.85. The company continues to expect revenue growth of at least 30% to 40% for the balance of 2006. Guidance reflects an effective tax rate of approximately 41% to 42% for all periods, and also includes the expected full-year impact of approximately $0.20 to $0.22 per diluted share for the expensing of stock options and other share-based compensation that became effective January 1, 2006.
-2-
![(LCA-VISION LETTERHEAD)](https://capedge.com/proxy/8-K/0000950152-06-006056/l21510al2151031.gif)
Conference Call & Webcast
As previously announced, a conference call and webcast will be held today, Tuesday, July 25, 2006 at 10:00 a.m. (ET). To access the conference call, dial 866-322-1352 (within the United States and Canada), or 706-758-1564 (international callers). The webcast and presentation 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 (within the United States and Canada), or 706-645-9291 (international callers) and enter the conference ID number: 233 81 22.
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 2006, 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 economic, political and sociological conditions; market acceptance of our services; the successful execution of marketing strategies to cost effectively drive patients to our vision centers; 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; operational and management instability; 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 53 LasikPlusfixed-site laser vision correction centers in the United States and a joint venture in Canada. Additional information is available at our corporate websites:www.lca-vision.com andwww.lasikplus.com.It’s Not Just LASIK. It’s LasikPlus!
For Additional Information
Patricia Forsythe
V.P. Investor Relations
513-792-5629
pforsythe@lca.com
Patricia Forsythe
V.P. Investor Relations
513-792-5629
pforsythe@lca.com
![(LCA-VISION)](https://capedge.com/proxy/8-K/0000950152-06-006056/l21510al2151032.gif)
Corporate Websites:http://www.lca-vision.com • http://www.lasikplus.com
Corporate Headquarters: 7840 Montgomery Road• Cincinnati OH 45236
Corporate Headquarters: 7840 Montgomery Road• Cincinnati OH 45236
-3-
![(LCA-VISION LETTERHEAD)](https://capedge.com/proxy/8-K/0000950152-06-006056/l21510al2151031.gif)
LCA-Vision Inc.
Condensed Consolidated Statements of Income
(Dollars in thousands except per share data)
Condensed Consolidated Statements of Income
(Dollars in thousands except per share data)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Revenues — Laser refractive surgery | $ | 65,453 | $ | 48,391 | $ | 138,849 | $ | 98,581 | ||||||||
Operating costs and expenses | ||||||||||||||||
Medical professional and license fees | 11,312 | 8,745 | 24,890 | 18,264 | ||||||||||||
Direct costs of services | 18,259 | 13,577 | 39,174 | 26,924 | ||||||||||||
General and administrative expenses | 5,312 | 3,111 | 10,241 | 6,563 | ||||||||||||
Marketing and advertising | 11,421 | 8,030 | 22,768 | 14,803 | ||||||||||||
Depreciation | 2,107 | 2,006 | 4,042 | 3,756 | ||||||||||||
Operating income | 17,042 | 12,922 | 37,734 | 28,271 | ||||||||||||
�� | ||||||||||||||||
Equity in earnings from unconsolidated businesses | 185 | — | 323 | 24 | ||||||||||||
Minority equity interest | (7 | ) | (237 | ) | (15 | ) | (411 | ) | ||||||||
Interest expense | (64 | ) | (36 | ) | (125 | ) | (49 | ) | ||||||||
Interest income | 1,403 | 779 | 2,841 | 1,289 | ||||||||||||
Dividend income | 75 | 23 | 140 | 42 | ||||||||||||
Income before taxes on income | 18,634 | 13,451 | 40,898 | 29,166 | ||||||||||||
Income tax expense | 7,757 | 5,623 | 16,929 | 12,028 | ||||||||||||
Net income | $ | 10,877 | $ | 7,828 | $ | 23,969 | $ | 17,138 | ||||||||
Income per common share | ||||||||||||||||
Basic | $ | 0.52 | $ | 0.38 | $ | 1.15 | $ | 0.84 | ||||||||
Diluted | $ | 0.51 | $ | 0.36 | $ | 1.12 | $ | 0.80 | ||||||||
Dividends declared per share | $ | 0.12 | $ | 0.08 | $ | 0.24 | $ | 0.16 | ||||||||
Weighted average shares outstanding | ||||||||||||||||
Basic | 20,836 | 20,429 | 20,791 | 20,333 | ||||||||||||
Diluted | 21,474 | 21,548 | 21,469 | 21,390 |
-4-
![(LCA-VISION LETTERHEAD)](https://capedge.com/proxy/8-K/0000950152-06-006056/l21510al2151031.gif)
LCA-Vision Inc.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
Condensed Consolidated Balance Sheets
(Dollars in thousands)
June 30, 2006 | December 31, 2005 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 131,051 | $ | 111,031 | ||||
Accounts receivable, net of allowance for doubtful accounts of $2,600 and $2,641 | 11,387 | 10,520 | ||||||
Receivables from vendors | 3,795 | 3,207 | ||||||
Prepaid expenses, inventory and other | 10,097 | 4,031 | ||||||
Income taxes receivable | — | 2,875 | ||||||
Deferred tax assets | 3,561 | 3,542 | ||||||
Total current assets | 159,891 | 135,206 | ||||||
Property and equipment | 68,641 | 63,026 | ||||||
Accumulated depreciation and amortization | (42,428 | ) | (38,342 | ) | ||||
Property and equipment, net | 26,213 | 24,684 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $508 and $504 | 1,296 | 1,132 | ||||||
Deferred compensation plan assets | 3,230 | 2,569 | ||||||
Investment in unconsolidated businesses | 481 | 158 | ||||||
Deferred tax assets | 2,064 | 2,064 | ||||||
Other assets | 1,066 | 1,039 | ||||||
Total Assets | $ | 194,241 | $ | 166,852 | ||||
Liabilities and Stockholders’ Investment | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 2,920 | $ | 3,800 | ||||
Accrued liabilities and other | 11,419 | 8,910 | ||||||
Debt maturing in one year | 2,581 | 2,122 | ||||||
Total current liabilities | 16,920 | 14,832 | ||||||
Capital lease obligations | 1,457 | 1,434 | ||||||
Deferred compensation liability | 3,230 | 2,569 | ||||||
Insurance reserve | 5,402 | 3,840 | ||||||
Minority equity interest | 37 | 41 | ||||||
Stockholders’ investment | ||||||||
Common stock ($0.001 par value; 24,685,172 and 24,368,992 shares and 20,937,878 and 20,768,198 shares issued and outstanding, respectively) | 25 | 24 | ||||||
Contributed capital | 155,619 | 145,262 | ||||||
Common stock in treasury, at cost (3,747,294 shares and 3,600,794 shares) | (23,919 | ) | (17,671 | ) | ||||
Retained earnings | 35,449 | 16,514 | ||||||
Accumulated other comprehensive income | 21 | 7 | ||||||
Total stockholders’ investment | 167,195 | 144,136 | ||||||
Total Liabilities and Stockholders’ Investment | $ | 194,241 | $ | 166,852 | ||||
-5-
![(LCA-VISION LETTERHEAD)](https://capedge.com/proxy/8-K/0000950152-06-006056/l21510al2151031.gif)
LCA-Vision Inc.
Condensed Consolidated Statements of Cash Flow
(Dollars in thousands)
Condensed Consolidated Statements of Cash Flow
(Dollars in thousands)
Six Months Ended June 30, | ||||||||
2006 | 2005 | |||||||
Cash flow from operating activities: | ||||||||
Net income | $ | 23,969 | $ | 17,138 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 4,042 | 3,756 | ||||||
Provision for loss on doubtful accounts | (37 | ) | 626 | |||||
Deferred income taxes | (19 | ) | 3,517 | |||||
Tax benefit on disqualified disposition of stock option | 3,303 | — | ||||||
Stock-based compensation | 2,852 | — | ||||||
Deferred compensation | 661 | 527 | ||||||
Insurance reserve | 1,562 | 1,038 | ||||||
Equity in earnings of unconsolidated affiliates | (323 | ) | (24 | ) | ||||
Changes in working capital: | ||||||||
Accounts receivable | (994 | ) | (3,421 | ) | ||||
Receivables from vendors | (588 | ) | (503 | ) | ||||
Prepaid expenses, inventory and other | (6,066 | ) | 182 | |||||
Income taxes receivable | 2,875 | — | ||||||
Accounts payable | (880 | ) | (3,059 | ) | ||||
Income taxes payable | — | 3,616 | ||||||
Accrued liabilities and other | 2,502 | 727 | ||||||
Net cash provided by operations | $ | 32,859 | $ | 24,120 | ||||
Cash flow from investing activities: | ||||||||
Purchase of property and equipment | (3,856 | ) | (4,667 | ) | ||||
Distribution from minority equity investees | — | 187 | ||||||
Deferred compensation plan | (661 | ) | (555 | ) | ||||
Other, net | (17 | ) | 414 | |||||
Net cash used in investing activities | $ | (4,534 | ) | $ | (4,621 | ) | ||
Cash flow from financing activities: | ||||||||
Principal payments of long-term notes, debt and capital lease obligations | (1,226 | ) | (424 | ) | ||||
Shares repurchased for treasury stock | (6,248 | ) | — | |||||
Exercise of stock options | 4,203 | 4,870 | ||||||
Dividends paid to stockholders | (5,034 | ) | (3,256 | ) | ||||
Net cash (used in) provided by financing activities | (8,305 | ) | 1,190 | |||||
Increase in cash and cash equivalents | 20,020 | 20,689 | ||||||
Cash and cash equivalents at beginning of period | 111,031 | 86,588 | ||||||
Cash and cash equivalents at end of period | $ | 131,051 | $ | 107,277 | ||||
-6-