Exhibit 99.1
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News Release
LCA-Vision Grows Revenues 26% and Increases Procedure Volume 24%
Cincinnati, October 24, 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 nine months ended September 30, 2006.
Financial & Operational Highlights
• | Third quarter 2006 revenues grew 26% to approximately $59.3 million from approximately $47.0 million in the third quarter of 2005. | |
• | Third quarter 2006 same-store revenues at vision centers located in the Untied States increased 6% over the third quarter of 2005. | |
• | Third quarter 2006 procedure volume increased 24% to 42,539 from 34,187 in the third quarter of 2005. | |
• | Third quarter 2006 net income and earnings per share were approximately $7.2 million and $0.34 compared with approximately $7.9 million and $0.37, respectively, in the third quarter of 2005. | |
• | Cash provided by operations grew 48% to approximately $48.3 million for the nine months ended September 30, 2006 from approximately $32.6 million for the nine months ended September 30, 2005. | |
• | Successfully opened five new LasikPlusvision centers during the third quarter of 2006 in Sugar Land, Texas; Denver, Colorado; New Haven, Connecticut; Dallas, Texas; and Oakdale, Minnesota. LasikPlusvision centers are now located in 44 markets in 28 states. |
Craig Joffe, LCA-Vision’s Interim Chief Executive Officer and Chief Operating Officer commented, “Third quarter revenue growth was solid at 26% over the third quarter of 2005, in a market that has been flat to down for the past four quarters. Although we were able to generate strong year-over-year increases in both revenue and procedure volume, we did not achieve the higher level of same-store revenue growth that we have been accustomed to delivering over the last three years. Driven primarily by less effective direct-to-consumer marketing, the softening in our same-store growth was most pronounced in a number of our older markets.”
Mr. Joffe continued, “While we made changes to our marketing plan throughout the third quarter, the changes did not yield the improvements we expected to realize later in the quarter. We have since identified a number of opportunities in our direct-to-consumer marketing strategies, and are working diligently to adjust the media mix and enhance the message we are delivering to our consumers based on our learnings.”
“We successfully opened five new LasikPlusvision centers during the third quarter, and last week announced the opening of a LasikPlusvision center in Lexington, Kentucky,” added Mr. Joffe. “Year-to-date, we have opened nine new vision centers, and now own and operate 58 LasikPlusvision centers in the United States. The vision centers opened over the past year are performing well and continue to exceed our expectations. Our business model is sound, and we are on track to meet our goal of opening a total of 10 to 12 vision centers this year. Looking ahead, we expect to open at least 12 to 15 vision centers throughout 2007. We remain focused on strategically expanding the LasikPlusfootprint through the United States, while continuing to deliver high-quality results to our patients at an affordable price.”
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3Q-06 Earnings Release
Revenues & Operating Income
Revenues grew 26% to approximately $59.3 million in 2006’s third quarter from approximately $47.0 million in 2005’s third quarter. Third quarter 2006 same-store revenues at vision centers located in the Untied States increased 6% over the third quarter of 2005. 44 vision centers were included in the same-store revenue count. Procedure volume increased 24% in 2006’s third quarter to 42,539 from 34,187 procedures performed in 2005’s third quarter. Operating income was approximately $9.9 million in 2006’s third quarter compared with approximately $12.0 million in 2005’s third quarter. Third quarter 2006 operating income was reduced by approximately $1.5 million as a result of the expensing of equity-based compensation.
Net Income & Earnings Per Share
Third quarter 2006 net income and earnings per share were approximately $7.2 million and $0.34 compared with approximately $7.9 million and $0.37, respectively, in the third quarter of 2005. Included in net income for the third quarter of 2006 was the after-tax cost of approximately $1.2 million, or $0.06 per diluted share, for the expensing of equity-based compensation.
Cash Position
Cash provided by operations grew 48% to approximately $48.3 million for the nine months ended September 30, 2006 from approximately $32.6 million for the nine months ended September 30, 2005. Cash equivalents and short-term investments increased to approximately $130.0 million as of September 30, 2006 from approximately $110.5 million as of December 31, 2005.
Share Repurchase
In May 2005, LCA-Vision announced that it had been authorized by its Board of Directors to purchase up to 1,000,000 shares of its common stock. During the third quarter of 2006, the company purchased 250,000 shares of common stock at an average price of approximately $42.30 per share, bringing the total number of shares purchased under the authorization to 446,500 at an average price of approximately $42.62 per share.
Year-to-Date Results
For the nine months ended September 30, 2006, net income increased 24% to approximately $31.2 million from approximately $25.1 million for the nine months ended September 30, 2005, and earnings per diluted share increased 25% to $1.46 from $1.17. Included in net income for the first nine months of 2006 was the after-tax cost of approximately $3.5 million or $0.16 per diluted share, for the expensing of equity-based compensation.
For the nine months ended September 30, 2006, revenues grew 36% to approximately $198.2 million from approximately $145.6 million for the nine months ended September 30, 2005. Procedure volume increased 33% to 143,219 procedures from 107,775 procedures. Operating income increased 18% to approximately $47.7 million from approximately $40.3 million. Operating income in the first nine months of 2006 was reduced by approximately $4.4 million as a result of the expensing of equity-based compensation.
Conference Call & Webcast
As previously announced, a conference call and webcast will be held today, Tuesday, October 24, 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: 747 75 62.
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3Q-06 Earnings Release
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, which recent results would indicate are no longer as effective as they have been in prior periods; 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, which we have recently experienced including at the executive management level; 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 58 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
Corporate Websites:http://www.lca-vision.com•http://www.lasikplus.com Corporate Headquarters: 7840 Montgomery Road• Cincinnati OH 45236 | ![]() |
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3Q-06 Earnings Release
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 | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Revenues — Laser refractive surgery | $ | 59,302 | $ | 47,031 | $ | 198,152 | $ | 145,612 | ||||||||
Operating costs and expenses | ||||||||||||||||
Medical professional and license fees | 10,026 | 8,629 | 34,916 | 26,893 | ||||||||||||
Direct costs of services | 18,840 | 13,049 | 58,014 | 39,973 | ||||||||||||
General and administrative expenses | 5,457 | 3,307 | 15,698 | 9,870 | ||||||||||||
Marketing and advertising | 12,896 | 7,995 | 35,663 | 22,797 | ||||||||||||
Depreciation | 2,150 | 2,023 | 6,193 | 5,779 | ||||||||||||
Operating income | 9,933 | 12,028 | 47,668 | 40,300 | ||||||||||||
Equity in earnings from unconsolidated businesses | 181 | 222 | 504 | 245 | ||||||||||||
Minority equity interest | (4 | ) | (4 | ) | (20 | ) | (415 | ) | ||||||||
Net investment income | 1,523 | 1,094 | 4,380 | 2,377 | ||||||||||||
Income before taxes on income | 11,633 | 13,340 | 52,532 | 42,507 | ||||||||||||
Income tax expense | 4,388 | 5,394 | 21,318 | 17,423 | ||||||||||||
Net income | $ | 7,245 | $ | 7,946 | $ | 31,214 | $ | 25,084 | ||||||||
Income per common share | ||||||||||||||||
Basic | $ | 0.35 | $ | 0.39 | $ | 1.50 | $ | 1.23 | ||||||||
Diluted | $ | 0.34 | $ | 0.37 | $ | 1.46 | $ | 1.17 | ||||||||
Dividends declared per share | $ | 0.12 | $ | 0.08 | $ | 0.36 | $ | 0.24 | ||||||||
Weighted average shares outstanding | ||||||||||||||||
Basic | 20,827 | 20,611 | 20,805 | 20,426 | ||||||||||||
Diluted | 21,279 | 21,576 | 21,405 | 21,453 |
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3Q-06 Earnings Release
LCA-Vision Inc.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
Condensed Consolidated Balance Sheets
(Dollars in thousands)
September 30, 2006 | December 31, 2005 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 53,662 | $ | 110,531 | ||||
Short-term investments | 76,377 | — | ||||||
Accounts receivable, net of allowance for doubtful accounts of $2,420 and $2,641 | 12,234 | 10,520 | ||||||
Receivables from vendors | 3,335 | 3,207 | ||||||
Prepaid expenses and other | 4,916 | 4,031 | ||||||
Prepaid income taxes | 2,172 | 2,875 | ||||||
Deferred tax assets | 3,501 | 3,542 | ||||||
Total current assets | 156,197 | 134,706 | ||||||
Property and equipment | 72,703 | 63,026 | ||||||
Accumulated depreciation and amortization | (44,594 | ) | (38,342 | ) | ||||
Property and equipment, net | 28,109 | 24,684 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $435 and $504 | 1,807 | 1,132 | ||||||
Deferred compensation plan assets | 3,489 | 2,569 | ||||||
Investment in unconsolidated businesses | 662 | 158 | ||||||
Deferred tax assets | 1,880 | 2,064 | ||||||
Other assets | 1,604 | 1,539 | ||||||
Total Assets | $ | 193,748 | $ | 166,852 | ||||
Liabilities and Stockholders’ Investment | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 4,267 | $ | 3,800 | ||||
Accrued liabilities and other | 10,359 | 8,910 | ||||||
Debt maturing in one year | 2,456 | 2,122 | ||||||
Total current liabilities | 17,082 | 14,832 | ||||||
Capital lease obligations | 2,081 | 1,434 | ||||||
Deferred compensation liability | 3,601 | 2,569 | ||||||
Insurance reserve | 6,020 | 3,840 | ||||||
Minority equity interest | 42 | 41 | ||||||
Stockholders’ investment | ||||||||
Common stock ($0.001 par value; 24,783,597 and 24,368,992 shares and 20,786,303 and 20,768,198 shares issued and outstanding, respectively) | 25 | 24 | ||||||
Contributed capital | 159,069 | 145,262 | ||||||
Common stock in treasury, at cost (3,997,294 shares and 3,600,794 shares) | (34,494 | ) | (17,671 | ) | ||||
Retained earnings | 40,244 | 16,514 | ||||||
Accumulated other comprehensive income | 78 | 7 | ||||||
Total stockholders’ investment | 164,922 | 144,136 | ||||||
Total Liabilities and Stockholders’ Investment | $ | 193,748 | $ | 166,852 | ||||
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3Q-06 Earnings Release
LCA-Vision Inc.
Condensed Consolidated Statements of Cash Flow
(Dollars in thousands)
Condensed Consolidated Statements of Cash Flow
(Dollars in thousands)
Nine Months Ended | ||||||||
September 30, | ||||||||
2006 | 2005 | |||||||
Cash flow from operating activities: | ||||||||
Net income | $ | 31,214 | $ | 25,084 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 6,193 | 5,779 | ||||||
(Reduction in) provision for loss on doubtful accounts | (290 | ) | 782 | |||||
Deferred income taxes | 213 | 2,946 | ||||||
Tax benefit on disqualified disposition of stock options | 4,352 | — | ||||||
Stock-based compensation | 4,383 | — | ||||||
Deferred compensation | 1,032 | 939 | ||||||
Insurance reserve | 2,180 | 1,279 | ||||||
Equity in earnings of unconsolidated affiliates | (504 | ) | (245 | ) | ||||
Changes in working capital: | ||||||||
Accounts receivable | (2,099 | ) | (4,185 | ) | ||||
Receivables from vendors | (128 | ) | (1,074 | ) | ||||
Prepaid expenses, inventory and other | (885 | ) | (230 | ) | ||||
Prepaid income taxes | 703 | — | ||||||
Accounts payable | 467 | (1,787 | ) | |||||
Income taxes payable | — | 1,546 | ||||||
Accrued liabilities and other | 1,470 | 1,720 | ||||||
Net cash provided by operations | 48,301 | 32,554 | ||||||
Cash flow from investing activities: | ||||||||
Purchase of property and equipment | (6,449 | ) | (6,796 | ) | ||||
Purchase of investment securities | (215,235 | ) | — | |||||
Proceeds from sale of investment securities | 138,868 | — | ||||||
Distribution from Minority Equity Investees | — | 186 | ||||||
Deferred compensation plan | (920 | ) | (967 | ) | ||||
Increase in investment of unconsolidated affiliate | — | (883 | ) | |||||
Other, net | 6 | 149 | ||||||
Net cash used in investing activities | (83,730 | ) | (8,311 | ) | ||||
Cash flow from financing activities: | ||||||||
Principal payments of long-term notes, debt and capital lease obligations | (2,187 | ) | (714 | ) | ||||
Shares repurchased for treasury stock | (16,823 | ) | (2,209 | ) | ||||
Exercise of stock options | 5,073 | 6,626 | ||||||
Distribution paid to minority equity investers | (19 | ) | — | |||||
Dividends paid to stockholders | (7,484 | ) | (4,911 | ) | ||||
Net cash used in financing activities | (21,440 | ) | (1,208 | ) | ||||
(Decrease) increase in cash and cash equivalents | (56,869 | ) | 23,035 | |||||
Cash and cash equivalents at beginning of period | 110,531 | 86,088 | ||||||
Cash and cash equivalents at end of period | $ | 53,662 | $ | 109,123 | ||||
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