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Driving Growth &
Building Stockholder Value
February 2009
NASDAQ: LCAV
2
Forward-Looking Statements
This presentation contains forward-looking statements that are subject to risks and uncertainties including, but not limited to, the impact of competition and pricing, procedure demand and marketplace acceptance, and unforeseen fluctuations in operating results and other risks detailed from time to time in the company’s filings with the Securities and Exchange Commission, including but not limited to, the company’s Forms 10-K and 10-Q.
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Investor Highlights
Historical Perspective: Old Model, Old Times
Today’s Challenging Economic Environment
LCA Today: Transitioning to Sustainable Growth
Managing Cash to Survive and Thrive
A Plan to Rebuild Shareholder Value
Team in Place to Deliver Results
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Old Model, Old Times
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Old Model, Old Times
Historic model depended on high consumer confidence
Ineffective in a deteriorating macroeconomic environment
Operating performance more volatile than industry average
Based on swings in consumer confidence and discretionary spending
Patient financing made Company susceptible to economic decline
“Catch & release”
No repeat purchases
Model dependent upon new patients for each additional procedure
Very little investment was made in consumer research/insights
6
Old Model was not effective in last recession
LCA Poor Performance in Last Economic
Downswing
March 2001:
4 consecutive quarters of year-over-year revenue declines
Reported loss (excluding 1 time items) 5 of 6 consecutive quarters
Postponed new center openings / restructured operations
Closed 15% of the centers that were open as of January 1, 2001
Market share declined from 6.2% in 1Q01 to 3.8% in 4Q01
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Past Response:
Tactical Reaction
No major initiatives to change marketing strategy or consumer
messages
No major initiatives to strengthen field operations
Maintained sole dependence on elective, self-pay laser vision
correction services rather than diversifying the business model
Growth was opportunistic vs. strategic
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Stephen Joffe’s Past Actions Raise Questions
as to his Judgment & Motives
While serving as Chairman & CEO, Joffe divested virtually all of his LCA
holdings in 2004 & 2005
While negotiating with LCA BOD to increase his $600k base salary, Joffe
rejected a substantial compensation increase that included $750k base, up
to 150% bonus and up to 170,000 shares of common stock and abruptly
resigned as CEO with no succession plan in place
LCA BOD negotiated with Joffe to remain as Chairman and paid him $1M to
assist in transition for 1 year term
While still serving as Chairman, Joffe violated LCA’s code of business
ethics by purchasing $30M (7.7%) of competitor TLCV stock in 2006
Joffe refused to divest his TLCV shares; LCA’s BOD declined to re-
nominate him as a Director & asked him to step down as Chairman
Joffe told LCA BOD that there would be “unintended consequences” as a
result of his removal
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Stephen Joffe’s Past Actions Raise Questions
as to his Judgment & Motives
Joffe request to be named Executive Chairman/CEO of TLCV was rebuffed
by TLCV BOD
Joffe filed preliminary TLCV proxy materials to elect 3 Directors; then
withdrew from the process
After Joffe is rebuffed by TLCV, he attacks LCA Vision
Joffe’s past actions raise questions as to his judgment & motives
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Today’s Challenging Economic Environment
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Source: Consumer Confidence Index from University of Michigan/Reuters survey
Consumer Confidence
Consumer Confidence Drives LVC Industry
Volume
Consumer confidence level is at its lowest point ever
since February 1967 when the measurement began
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Source: Consumer Confidence Index from University of Michigan/Reuters survey
Consumer Confidence Directly Correlated to LCA Eye Volume
LCA Eye Volume Directly Correlated
to Consumer Confidence
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Everyone in the Industry Feels the Pain
2 Year Stock Price Comparison
LCAV, TLCV & EYE % Change
12/06
12/07
12/08
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LCA Today: Transitioning to Sustainable
Growth
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Management / leadership
development program initiated for
entire field management team
Replaced ineffective Area Vice
Presidents, Regional Directors, Center
Directors, Optometrists and Surgeons
Professional Leadership Drives Change
Actions Taken
Results
Reduced region and area
management staff by 38%
Consolidated Vision Center
management positions
Annual savings of $1,500,000
Certifying ophthalmic technician staff
increases professionalism and
quality in centers nationwide
Improved employee/surgeon
relations, better hires, better morale
Streamlined field leadership through
creation of multi-center directors
Clinical certification program for all
ophthalmic technicians
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Built new state-of-the-art data and
call centers
Full in-house system redundancy. New
system kept call center fully functional
during Hurricane Ike in 2008 with no
revenue loss
80% of procedures; generates
approximately $10 million in
annualized incremental revenue
Enhanced capability for data
management, reporting, analysis and
decision making. Provided access to
untapped intelligence on prospective
patients.
Expected to improve candidacy by
9% or 10,000 eyes annually
Actions Taken
Results
Infrastructure for Growth
Installed IntraLase Femtosecond
laser in every center
Enhanced customer relationship
management system (CRM)
Patient chart sharing system
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Implemented annual budget process
Identified spending trends to better
predict and manage expenses
Actions Taken
Results
Decentralized Authority & Accountability
Developed levels of authority for
spending at all levels of management
Monthly operational business review
meetings with field leadership
Monthly review of all cost line-items
at every Vision Center with
benchmarking against standards
Improved working capital
management
Information sharing and
benchmarking drove changes in
poor performing Vision Centers
Increased accounts payable
days from approximately 15 to
30 generating $3 million in cash
flow
Increased field accountability
Field Management better trained
on financial matters
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Strong Partner Relationships
Improved Contracts With All Major Suppliers
Vendor
Start Date
Term
Alcon – Wavelight
11/1/07
1 year, with renewal
AMO/IntraLase
04/01/07
5 years
AMO/VISX
10/24/07
5 years
Bausch & Lomb
04/01/07
3 1/2 years
Corporate Express
05/01/07
3 years
GE/Care Credit
10/30/07
2 years
Professional Image
03/01/08
1 year
TraveLeaders
02/15/07
2 years
United Health Care
01/01/07
1 year, with renewal
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Managing Cash to Survive and Thrive
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Cash + Cost Reduction = Staying Power
Current Situation
Contrast to the Past
Nearly $60M in cash and
investments as of 12/31/08
Company repositioned to be cash
flow positive in 2009 if it can
maintain 2008 procedure volume
Current cash resources are
sufficient to support business for in
excess of 3 YEARS even if
procedures decline 22% in 2009 to
90,000
Vision Center Break-Even Eyes - per month
Company Cash Flow – Break-Even Procedures - Annual
Excludes Stock Buy-backs in 2007
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Aggressive Cost Reduction
Annual labor cost impact is $14 million
Full Time Equivalents Reduced 35%
Labor Cost Reductions
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Aggressive Cost Reduction
Capital Expenditures Reduced
$ in $000s
Average #
Centers
($ in $000s)
G&A Costs
($ in $000s)
Center
Direct (1)
(Per
Center)
Center
Direct
2007
65.5
$ 22,657
$97,423
$1,487
2009B
75.0
$ 20,489
$76,951
$1,013
% Change
16%
-10%
-21%
-32%
(1) Center Direct costs are partially variable based upon procedure
volume so amounts are subject to change
G&A and Operating Costs Reduced
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Aggressive Cash Management
Capital Expenditures Reduced
($ in $000s)
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Uncontrollable Market, Controllable Costs
Many industry analysts have commented on the
impact of consumer confidence, including Maxim
Group analyst Anthony Vendetti in a report dated
October 28, 2008:
“…“We believe that it is too soon to call a bottom in the
refractive market due to continued erosion in many key
economic indicators, particularly rising unemployment and
declining consumer spending…On the expense side of the
equation, we applaud management’s effort to rein in
expenditures across all operations during the present
softening market conditions.”
Source: Maxim Group Report; October 28, 2008
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LCA Today: A Solid Foundation
75 vision centers in 32 states
92.6% of LasikPlus patients would recommend LasikPlus to a friend1
Company has a strong balance sheet with nearly $60 million of
cash and investments at December 31, 2008
Cash flow positive for 2009 if Company can achieve 2008
procedure levels and three-year cash reserves at 90,000 annual
procedures
Continues to lead the industry in managed care relationships and
agreements; exclusive or preferred agreements with 7 of top 8 vision
plans
1 Source: LCA Internal Database, Patient Satisfaction Surveys, 2008
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A Plan to Rebuild Shareholder Value
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Recreating & Sustaining
Shareholder Value
Continue
conservative
cash and
expense
management
Expand
into the
top US
markets
Maintain
position
as
Industry
innovator
and
thought
leader
Increase
market
share in a
fragmented
industry
Strengthen
the
business
model
Leadership
in place to
deliver
results
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Aggressive Expense Control & Cash
Management
Continue to manage labor costs
Improve marketing efficiency
Finalize excimer laser negotiation
Improve collection results of internally financed patients
Limit capital expenditures
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Increase Market Share in a Fragmented Industry
Segmentation Study: High opportunity consumer segments
identified & pursued
Clear Brand Positioning: Differentiate LasikPlus from competition
Execution: New marketing campaigns, including integration of
segmentation findings and positioning will be rolled out in March
Media Channels: Efficiency
Build Brand Awareness: Integrate all marketing materials with
same look, feel and message
Right Message at the Right Time to the Right Audience
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Increase Market Share in a Fragmented Industry
Local market pricing (ASP):
Price sensitivity
Most efficient cost to reach
consumer
Focus on local surgeon’s
expertise
Disciplined approach to
individual market planning and
budgeting
A clear, transparent dialogue
with surgeons
Local Marketing & Advertising
Increase Market Share in a Fragmented Industry
Near-Term Lasik Prospect
Long-Term Lasik Prospect
Source: Segmentation Study, January 2009
Hot Prospect Segments Have Been Identified
Segment 1
Segment 2
Segment 6
Segment 5
Segment 4
Segment 3
Segment 1
Segment 2
Segment 3
Segment 4
Segment 5
Segment 6
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Increase Market Share in a Fragmented Industry
Control Time Period= 4 Weeks (10/13/08, 10/20/08, 10/27/08, 11/3/08)
Test Time Period= 3 Weeks (11/10/08, 11/17/08, 12/1/08)
Control Markets, n=46
Test Markets, n=13
Source: LCA Vision Internal Database, 1/21/2009
0%
34%
X%
= Difference between Control Time Period and Test Time Period
Preliminary Results: Eye procedures performed in test
markets grew 34% more than control markets
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As the Economy Improves, Expand into
Top US Markets
Restart successful
de novo expansion
when economy
improves
Expand into top US
markets
Capitalize on pent-up
demand
Leverage
infrastructure and
purchasing power
Note: Vision for the future is for illustrative purposes only and is subject to change
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Lifetime Vision
Test & Expand the New Business Model
Current Model: “Catch & Release”
Limits revenue per patient
High acquisition costs per procedure
Expanded Model: Lifetime Vision and Visual Acuity
Providing medical and surgical care for the health and visual acuity of
the eye from age 20 and beyond
Continuum of eye care including Intra Ocular lens replacement (IOL) at
$7,000 - $8,000 per patient
Employer of choice: increase MD/OD income, retention and job
satisfaction
Incremental Revenue potential: > $30 million per year
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Network provider for new Insured LASIK program
First-of-its-kind benefit in the 13-year-old industry
Partially funded LASIK insurance coverage
$300 - $600 insurance reimbursement
Underwritten by Standard Security Life Insurance Company of New
York
Now available to vision and healthcare plans, employer groups and
labor unions
Leverage our long-standing managed care relationships to expand
market share
Strengthen the Business Model
Funded LASIK (2009): This is the first insured LASIK program.
The first contract with this program, which is with National
Vision Administrators, was announced in Feb. 2009.
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Industry Innovator & Thought Leader
Medical Advisory Board tests all new technology
Medical and Optometric Advisory Boards create forum for idea
exchange among LCA’s 120 doctors
Management brings close relationships to manufacturers
Managed care programs link LCA’s clinical operations with health
benefit providers
Patient financing provides flexibility
Marketing partners bring expert outside perspective
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Leadership in Place to Deliver Results
Steven C. Straus
CEO
President, COO and CDO, MSO Medical; CDO, Titan Health
Corp; VP, General Manager, OR Partners, Division, TLC Vision;
President, Health Care Products, Jordan Industry; SVP,
Columbia/HCA and Medical Care, Inc.; Various management
positions, Baxter Healthcare and American Hospital Supply Corp
Michael J. Celebrezze
Senior VP, Finance;
CFO and Treasurer
CFO, First Transit, Inc; Exec.VP, CFO, APCOA/Standard
Parking
Stephen M. Jones
Sr. VP Human
Resources
VP, Talent Management, The Kroger Company; Principle and
Practice Leader, Mercer Consulting
David L. Thomas
Sr. VP Operations
Sr. Manager, McDonalds Corp, COO, Boston Market
Byron R. Hill
Sr. VP Marketing
Embedded Marketing Consultant (Sr. VP) Marketing Cardinal
Health, Sr. VP TBresner Associates, Sr. Director Curative Health
Service
Marcello J. Celentano
AVP-Operations -
East
Managing Director,Int’l Sales and Operations, FedEx Kinkos;
Regional VP, Enterprise Rent-A-Car
Dr. Jason J. Schmit
AVP-Operations -
West
Owner / Optometrist, Advanced Eye Care Center; Optometrist,
Shopko Optical
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Experienced & Seasoned Board of Directors
CEO LCA-Vision; Previously President, COO and CDO, MSO Medical; CDO, Titan
Health Corp; VP, General Manager, OR Partners, Division, TLC Vision; President,
Health Care Products, Jordan Industry; SVP, Columbia/HCA and Medical Care, Inc.;
Various management positions, Baxter Healthcare and American Hospital Supply Corp
Steven C. Straus
Non-executive Chairman, Board of Directors, LCA-Vision Inc.; Chairman of Deaconess
Associations, Inc.; Previously President and CEO Deaconess Hospital
E. Anthony Woods
William F. Bahl
Co-founder and President, Bahl & Gaynor Investment Counsel; Previously SVP, Chief
Investment Officer, Northern Trust Company
John H. Gutfreund
President, Gutfreund & Co, Inc.; Previously Senior Advisor, Collins Stewart LLC and
Chairman and Chief Executive Officer Salomon Brothers
John C. Hassan
Consultant BSC Ventures; Previously President & CEO, Champion Printing and VP
Marketing, Drackett Company
Risk Metrics rated LCA corporate governance better than1 :
99.3% of the S&P 600
98.7% of health care equipment and services sector
1 Source: www.NASDAQ.net/aspx/CorporateGovernanceRating.aspx , January, 2009
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Surgeon Commentary
“Excellent call last night (12/8/08). Just wanted to send a short note to let you know
I am very impressed by the team you have assembled and the leadership you have
demonstrated. It has been a trying year, as we all know. You have my complete
respect, confidence, and support. I look forward to the future and believe LCA/LP
will be the dominant and finest provider of LVC for years to come. Let me know if
there is anything more I can do to help you and the Company.”
……..LCA surgeon 1
“The marketing meeting (12/16/08) was outstanding. Trudi and her team (Tbresner
Associates) have put together a truly extraordinary analysis of the market circa
2009, where LasikPlus stands, the wealth of information gleaned from focus group
and competitor research, and possibilities for our group going forward. It was one of
the most comprehensive LASIK marketing analyses I’ve ever seen – and portends
well for management making a well thought out and rational marketing plan going
forward.”
……..LCA surgeon 2
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Surgeon Commentary, continued
“….I want you to know that in my opinion you and your team are doing the best
possible job in this economic downswing and I appreciate your staying the course,
believing in and focusing on your goals for resolution and success. It is not easy to
make tough but appropriate decisions. It takes character, and I applaud you and
your team for that.
Once again, I appreciate your willingness and courage to make the necessary
decisions in which you believe as the eye care industry reorganizes, the ‘refractive
herd thins’ and laser vision correction flourishes, once again, out of this economic
slump to an even greater market share than before.” (1/28/09)
……..LCA surgeon 3
“The economy is the reason volumes/profits are down. End of story. You have
made the tough decisions and have done a commendable job in weathering the
storm and have kept our heads above water during these difficult times. Thank you
for that! …..You have the company poised for great success once the economy
recovers.” (1/28/09)
……..LCA surgeon 4
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1
2
3
4
5
Summary
The old model produces sub-optimal performance in the
current economic environment
Infrastructure, process and organizational improvements
better position the Company
Cost reduction and cash management programs provide
the resources to withstand the tough times
Expanded business model will deliver enhanced
stockholder value
Management and the Board are committed and prepared
to drive results
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VOTE GOLD
CONSENT
REVOCATION
CARD
MAKE A WISE CHOICE FOR LCA’S FUTURE
Disclaimer
In connection with a consent solicitation by certain stockholders to remove and
replace the Board of Directors of the Company, the Company has filed a
preliminary consent revocation statement solicitation with the Securities and
Exchange Commission.
THE COMPANY URGES INVESTORS TO READ THE CONSENT
REVOCATION STATEMENT (INCLUDING ANY SUPPLEMENTS THERETO)
AND ANY OTHER RELEVANT DOCUMENTS THAT THE COMPANY FILES
WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION.
LCA-Vision Inc. and its directors and certain executive officers may be deemed to
be participants in the solicitation of consent revocations from stockholders.
Information regarding the names of the Company’s directors and executive
officers and their respective interests in the Company by security holdings or
otherwise is set forth in the preliminary consent revocation statement.
Stockholders are able to obtain, free of charge, copies of the consent revocation
statement and any other documents filed by the Company with the SEC in
connection with the consent solicitation at the SEC’s website at
http://www.sec.gov and at the Company’s website at http://www.lasikplus.com, or
by contacting Georgeson, 199 Water Street, 26th Floor, New York, NY 10038 by
calling (212) 440-9800 (bankers and brokers) or toll-free (800) 457-0109 (all
others).
Driving Growth &
Building Stockholder Value
February 2009