News Release | Contact: | |
For Immediate Release | Anna Austin, EVP, Corporate Communications (636) 534-2271 Email: investor.relations@tlcvision.com |
TLCVisionReports First Quarter 2006 Financial Results;
On Target With Refractive Expansion Strategy
and Reaffirms Full Year Outlook
ST. LOUIS, MO, May 8, 2006: TLC Vision Corporation (NASDAQ:TLCV; TSX:TLC), North America’s premier eye care services company, today announced its financial results for the first quarter ended March 31, 2006. All dollar amounts are expressed in U.S. currency and results are reported in accordance with U.S. generally accepted accounting principles (U.S. GAAP) unless otherwise noted.
Editor’s Note: “Operating Business” (or “Operating”) is defined as TLCVision’s activities excluding the impact of the AMD segment, principally represented by our investment in OccuLogix, Inc. To provide maximum transparency for investors, Operating Business financial results are listed separately from consolidated results in this press release.
“TLCVision saw overall revenue growth and generated solid earnings in the first quarter,” said Jim Wachtman, President and Chief Executive Officer. “This was achieved despite a slowdown in the overall refractive industry and costs associated with our refractive expansion strategy, as previously guided. The quarter’s financial performance, including significant revenue growth in our Other Healthcare Services, and the progress achieved thus far in our refractive expansion, give us confidence that TLCVisionis delivering on our growth strategy. We are reaffirming our 2006 financial guidance.”
FIRST QUARTER HIGHLIGHTS:
• | Over 9% consolidated revenue growth, with additional benefit from LASIK Select and TruVision projected for the second quarter. |
• | Over 20% revenue growth in Other Healthcare Services, excluding the AMD segment. |
• | Solid earnings contribution, even during this period of expansion investment. |
• | Operating cash flow well above prior year, demonstrating continued strong cash generation and allowing us to fund our expansion strategy. |
• | Five LASIK Select centers opened in the quarter, as guided, with a sixth center announced in early May. |
• | TruVision integration progressing according to plan. |
• | With the sale of OccuLogix stock in early April, we accomplished our long stated goal of reducing our ownership below 50%. |
REVENUES
TLCVision’sfirst quarter consolidated net revenues were $77.6 million, an increase of over 9% from 2005, with revenues from the Operating Business up $7 million or 10%.
• | Total refractive revenues were up 7% to $58.9 million reflecting higher average selling prices in the centers business and the benefit of 2005 acquisitions. Total refractive procedures of 56,100 were down 4% overall and down 1% in our centers business, as demand softened across the entire industry compared to a strong first quarter in 2005. Center revenues were 10% higher during the quarter, while access revenues were down by 4% due to lower demand in both the mobile and fixed site businesses. |
• | Other Healthcare Services revenues (excluding AMD) increased 21% to $18.7 million, with strong growth in our cataract business of 24%. Vision Source grew by 18% over the same period in 2005. |
EARNINGS
Consolidated: Net income for the first quarter was $2.7 million, including the OccuLogix loss from operations of $2.8 million.
Operating Business: Net income from the Operating Business before AMD was $5.5 million or $0.08 per share. These results compare with a 2005 pro forma net income of $7.0 million or $0.10 per share (after adjusting reported 2005 results for the book tax rate of 38% and stock compensation expense). Net income decreased from the prior year in large part due to the previously guided investments in its new value priced strategy and selected marketing at premium centers of $1.2 million during the quarter.
STRONG CASH GENERATION
Consolidated: Consolidated operating cash flow was $9.0 million ($0.13 per share) for the first quarter, and ending cash and short-term investments totaled $75.6 million.
Operating Business: Operating cash flow from the Operating Business before AMD in the first quarter was $13.8 million ($0.20 per share), up $2.1 million or 17% for the same period in 2005. The Company continues to maintain a strong financial position, with cash and short-term investments for the Operating Business totaling $39.1 million.
“We are very pleased with the continued strong cash flow generated from our businesses, which combined with our strong balance sheet, positions the Company to fund its growth strategy,” said Jim Wachtman.
2006 OPERATING BUSINESS FINANCIAL GUIDANCE
• | 2006 net revenues of between $308 million and $318 million, or a growth of between 19% and 23% from full year 2005 results. |
• | Fully diluted pre-tax earnings per share of between $0.33 and $0.36, including an estimated $1.1 million impact from FAS 123R, and anticipated costs of $0.03 related to our rollout of LASIK Select. |
• | Fully-taxed earnings per share of between $0.20 to $0.22, reflecting a book income tax expense at a 40% effective rate. |
• | Operating cash flow per share of between $0.58 and $0.62. |
CONFERENCE CALL
TLCVisionis pleased to invite all interested parties to participate in a conference call during which these results will be discussed. The call will be held today, May 8, at 4:30 pm Eastern Time at 1-877-888-3490. The call will also be broadcast live and archived on the Company’s web site atwww.tlcv.com under the “Webcasts” link in the Investor Relations section. In addition, the live web cast will be available at various other popular portals and financial web sites.
About TLCVision
TLCVisionis North America’s premier eye care services company, providing eye doctors with the tools and technologies needed to deliver high-quality patient care. Through its centers management and technology access service models, and its managed care contracting strength, TLCVision maintains leading positions in Refractive, Cataract and Optometric Services markets. More information about TLCVisioncan be found on the website at .
Forward Looking Statements
This press release contains certain forward looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934, which statements can be identified by the use of forward looking terminology, such as “may”, “will”, “expect”, ”intend”, “anticipate”, “estimate”, “predict”, “plans” or “continue” or the negative thereof or other variations thereon or comparable terminology referring to future events or results. The Company’s actual results could differ materially from those anticipated in these forward looking statements as a result of numerous factors, including the timing of expenditures, effects of competition, changes to pricing, acquisitions and expansion opportunities, any of which could cause actual results to vary materially from current results or TLCVision’s anticipated future results. See the Company’s reports filed with the Canadian Securities Regulators and the U.S. Securities and Exchange Commission from time to time for cautionary statements identifying important factors with respect to such forward looking statements, including certain risks and uncertainties, that could cause actual results to differ materially from results referred to in forward looking statements. TLCVision assumes no obligation to update the information contained in this press release.
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TLC VISION CORPORATION | ||||||||||||||||||||||||||||
CONSOLIDATING STATEMENTS OF | ||||||||||||||||||||||||||||
OPERATIONS (UNAUDITED) | ||||||||||||||||||||||||||||
(In thousands except per | ||||||||||||||||||||||||||||
share amounts) | ||||||||||||||||||||||||||||
Three Months | ||||||||||||||||||||||||||||
EndedMarch 31, 2006 | Three Months Ended March 31, 2005 (As Restated) | |||||||||||||||||||||||||||
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Results Before AMD | ||||||||||||||||||||||||||||
Segment | AMD Segment | Total TLCVision | Results Before AMD Segment | AMD Segment | Total TLCVision | |||||||||||||||||||||||
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Revenues: | ||||||||||||||||||||||||||||
Refractive: | ||||||||||||||||||||||||||||
Centers | $ | 47,939 | $ | — | $ | 47,939 | $ | 43,765 | $ | — | $ | 43,765 | ||||||||||||||||
Access | 10,988 | — | 10,988 | 11,411 | — | 11,411 | ||||||||||||||||||||||
Other healthcare services | 18,654 | — | 18,654 | 15,442 | 431 | 15,873 | ||||||||||||||||||||||
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Total revenues | 77,581 | — | 77,581 | 70,618 | 431 | 71,049 | ||||||||||||||||||||||
Cost of revenues: | ||||||||||||||||||||||||||||
Refractive: | ||||||||||||||||||||||||||||
Centers | 31,888 | — | 31,888 | 28,529 | — | 28,529 | ||||||||||||||||||||||
Access | 7,515 | — | 7,515 | 7,410 | — | 7,410 | ||||||||||||||||||||||
Other healthcare services | 11,327 | 1,659 | 12,986 | 9,632 | 519 | 10,151 | ||||||||||||||||||||||
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Total cost of revenues | 50,730 | 1,659 | 52,389 | 45,571 | 519 | 46,090 | ||||||||||||||||||||||
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Gross profit (loss) | 26,851 | (1,659 | ) | 25,192 | 25,047 | (88 | ) | 24,959 | ||||||||||||||||||||
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General and administrative | 9,068 | 1,759 | 10,827 | 7,046 | 1,879 | 8,925 | ||||||||||||||||||||||
Marketing and sales | 6,802 | 169 | 6,971 | 4,812 | 185 | 4,997 | ||||||||||||||||||||||
Research and development, clinical and regulatory | — | 1,475 | 1,475 | — | 1,344 | 1,344 | ||||||||||||||||||||||
Amortization of intangibles | 864 | — | 864 | 1,011 | — | 1,011 | ||||||||||||||||||||||
Other | (357 | ) | 849 | 492 | (535 | ) | — | (535 | ) | |||||||||||||||||||
Total operating costs | 16,377 | 4,252 | 20,629 | 12,334 | 3,408 | 15,742 | ||||||||||||||||||||||
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Operating income (loss) | 10,474 | (5,911 | ) | 4,563 | 12,713 | (3,496 | ) | 9,217 | ||||||||||||||||||||
Interest income | 647 | 366 | 1,013 | 716 | 356 | 1,072 | ||||||||||||||||||||||
Interest expense | (538 | ) | — | (538 | ) | (457 | ) | (1 | ) | (458 | ) | |||||||||||||||||
Minority interests | (2,529 | ) | 2,715 | 186 | (2,185 | ) | 1,499 | (686 | ) | |||||||||||||||||||
Earnings from equity investments | 923 | — | 923 | 659 | — | 659 | ||||||||||||||||||||||
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Income (loss) before income taxes | 8,977 | (2,830 | ) | 6,147 | 11,446 | (1,642 | ) | 9,804 | ||||||||||||||||||||
Income tax expense | (3,435 | ) | — | (3,435 | ) | (3,077 | ) | — | (3,077 | ) | ||||||||||||||||||
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Net income (loss) | $ | 5,542 | $ | (2,830 | ) | $ | 2,712 | $ | 8,369 | $ | (1,642 | ) | $ | 6,727 | ||||||||||||||
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Earnings (loss) per share - diluted | $ | 0.08 | $ | (0.04 | ) | $ | 0.04 | $ | 0.12 | $ | (0.03 | ) | $ | 0.09 | ||||||||||||||
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Weighted average number of common shares outstanding - diluted | 69,550 | 69,550 | 69,550 | 72,045 | 72,045 | 72,045 | ||||||||||||||||||||||
Note: The AMD segment primarily includes the Company’s majority interest in OccuLogix, Inc. (formerly Vascular Sciences Corp.). | ||||||||||||||||||||||||||||
TLC VISION CORPORATION | ||||||||||||||||||||||||||||
CONSOLIDATING BALANCE SHEETS | ||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
March 31, 2006 | ||||||||||||||||||||||||||||
(Unaudited) | December 31, 2005 | |||||||||||||||||||||||||||
Results Before AMD | Results Before AMD Segment | AMD Segment | ||||||||||||||||||||||||||
Segment | AMD Segment | Total TLCVision | (Unaudited) | (Unaudited) | Total TLCVision | |||||||||||||||||||||||
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ASSETS | ||||||||||||||||||||||||||||
Current assets | ||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 30,911 | $ | 14,824 | $ | 45,735 | $ | 22,122 | $ | 9,607 | $ | 31,729 | ||||||||||||||||
Short-term investments | 8,200 | 21,712 | 29,912 | 6,550 | 31,663 | 38,213 | ||||||||||||||||||||||
Accounts receivable, net | 20,981 | 560 | 21,541 | 20,056 | 527 | 20,583 | ||||||||||||||||||||||
Prepaid expenses, inventory and other | 11,956 | 4,860 | 16,816 | 11,604 | 5,519 | 17,123 | ||||||||||||||||||||||
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Total current assets | 72,048 | 41,956 | 114,004 | 60,332 | 47,316 | 107,648 | ||||||||||||||||||||||
Intercompany | 1,717 | (1,717 | ) | — | 1,693 | (1,693 | ) | — | ||||||||||||||||||||
Restricted cash | 1,010 | — | 1,010 | 975 | — | 975 | ||||||||||||||||||||||
Investments and other assets | 20,110 | — | 20,110 | 19,838 | — | 19,838 | ||||||||||||||||||||||
Goodwill | 100,021 | — | 100,021 | 99,402 | — | 99,402 | ||||||||||||||||||||||
Other intangible assets, net | 23,102 | 205 | 23,307 | 23,886 | 135 | 24,021 | ||||||||||||||||||||||
Fixed assets, net | 49,337 | 438 | 49,775 | 48,646 | 513 | 49,159 | ||||||||||||||||||||||
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Total assets | $ | 267,345 | $ | 40,882 | $ | 308,227 | $ | 254,772 | $ | 46,271 | $ | 301,043 | ||||||||||||||||
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LIABILITIES | ||||||||||||||||||||||||||||
Current liabilities | ||||||||||||||||||||||||||||
Accounts payable | $ | 10,331 | $ | 92 | $ | 10,423 | $ | 10,517 | $ | 514 | $ | 11,031 | ||||||||||||||||
Accrued liabilities | 26,741 | 2,430 | 29,171 | 22,158 | 2,295 | 24,453 | ||||||||||||||||||||||
Current maturities of long-term debt | 6,099 | — | 6,099 | 5,268 | — | 5,268 | ||||||||||||||||||||||
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Total current liabilities | 43,171 | 2,522 | 45,693 | 37,943 | 2,809 | 40,752 | ||||||||||||||||||||||
Long-term debt, less current maturities | 12,115 | — | 12,115 | 12,665 | — | 12,665 | ||||||||||||||||||||||
Other long-term liabilities | 3,198 | — | 3,198 | 3,427 | — | 3,427 | ||||||||||||||||||||||
Minority interests | 14,512 | 19,107 | 33,619 | 14,284 | 21,510 | 35,794 | ||||||||||||||||||||||
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Total liabilities | 72,996 | 21,629 | 94,625 | 68,319 | 24,319 | 92,638 | ||||||||||||||||||||||
STOCKHOLDERS’ EQUITY | ||||||||||||||||||||||||||||
Common stock | 422,315 | 30,898 | 453,213 | 419,936 | 30,767 | 450,703 | ||||||||||||||||||||||
Option and warrant equity | 1,836 | — | 1,836 | 1,861 | — | 1,861 | ||||||||||||||||||||||
Accumulated deficit | (229,802 | ) | (11,645 | ) | (241,447 | ) | (235,344 | ) | (8,815 | ) | (244,159 | ) | ||||||||||||||||
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Total stockholders’ equity | 194,349 | 19,253 | 213,602 | 186,453 | 21,952 | 208,405 | ||||||||||||||||||||||
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Total liabilities and stockholders’ equity | $ | 267,345 | $ | 40,882 | $ | 308,227 | $ | 254,772 | $ | 46,271 | $ | 301,043 | ||||||||||||||||
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Note: The AMD segment primarily includes the Company’s majority interest in OccuLogix, Inc. (formerly Vascular Sciences Corp.). | ||||||||||||||||||||||||||||
TLC VISION CORPORATION | ||||||||||||||||||||||||||||
CONSOLIDATING STATEMENTS OF CASH FLOWS (UNAUDITED) | ||||||||||||||||||||||||||||
(In thousands except per share amounts) | ||||||||||||||||||||||||||||
Three Months Ended March 31, 2006 | Three Months Ended March 31, 2005 (As Restated) | |||||||||||||||||||||||||||
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Results Before AMD | ||||||||||||||||||||||||||||
Segment | AMD Segment | Total TLCVision | Results Before AMD Segment | AMD Segment | Total TLCVision | |||||||||||||||||||||||
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OPERATING ACTIVITIES | ||||||||||||||||||||||||||||
Net income (loss) | $ | 5,542 | $ | (2,830 | ) | $ | 2,712 | $ | 8,369 | $ | (1,642 | ) | $ | 6,727 | ||||||||||||||
Adjustments to reconcile net income (loss) to net cash from operating activities: | ||||||||||||||||||||||||||||
Depreciation and amortization | 3,758 | 34 | 3,792 | 3,971 | 46 | 4,017 | ||||||||||||||||||||||
Reimbursements from investments in research and development | ||||||||||||||||||||||||||||
arrangements | (300 | ) | — | (300 | ) | — | — | — | ||||||||||||||||||||
Minority interests | 2,529 | (2,715 | ) | (186 | ) | 2,185 | (1,499 | ) | 686 | |||||||||||||||||||
Earnings from equity investments | (923 | ) | — | (923 | ) | (659 | ) | — | (659 | ) | ||||||||||||||||||
Deferred taxes | 2,131 | — | 2,131 | 2,506 | — | 2,506 | ||||||||||||||||||||||
Excess tax benefits from stock-based compensation expense | (1,710 | ) | — | (1,710 | ) | — | — | — | ||||||||||||||||||||
Loss (gain) on sales and disposals of fixed assets | 32 | 29 | 61 | (96 | ) | — | (96 | ) | ||||||||||||||||||||
Write-down of OccuLogix, Inc. inventory | — | 1,625 | 1,625 | — | — | — | ||||||||||||||||||||||
Gain on sale of subsidiary | — | — | — | (319 | ) | — | (319 | ) | ||||||||||||||||||||
Non-cash compensation expense | 426 | 186 | 612 | 69 | — | 69 | ||||||||||||||||||||||
Other | — | 26 | 26 | — | — | — | ||||||||||||||||||||||
Changes in operating assets and liabilities, net of acquisitions and dispositions: | 2,344 | (1,225 | ) | 1,119 | (4,254 | ) | (2,872 | ) | (7,126 | ) | ||||||||||||||||||
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Cash from operating activities | 13,829 | (4,870 | ) | 8,959 | 11,772 | (5,967 | ) | 5,805 | ||||||||||||||||||||
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INVESTING ACTIVITIES | ||||||||||||||||||||||||||||
Purchases of fixed assets | (2,349 | ) | — | (2,349 | ) | (2,681 | ) | (46 | ) | (2,727 | ) | |||||||||||||||||
Proceeds from sales of fixed assets | 26 | — | 26 | 454 | — | 454 | ||||||||||||||||||||||
Proceeds from divestitures of investments and subsidiaries, net | — | — | — | 3,430 | — | 3,430 | ||||||||||||||||||||||
Distributions and loan payments received from equity investments | 1,333 | — | 1,333 | 556 | — | 556 | ||||||||||||||||||||||
Reimbursements from investments in research and development | ||||||||||||||||||||||||||||
arrangements | 300 | — | 300 | — | — | — | ||||||||||||||||||||||
Acquisitions and equity investments | (1,474 | ) | — | (1,474 | ) | (443 | ) | — | (443 | ) | ||||||||||||||||||
Proceeds from sales of short-term investments | — | 9,925 | 9,925 | 34,350 | 4,400 | 38,750 | ||||||||||||||||||||||
Purchases of short-term investments | (1,650 | ) | — | (1,650 | ) | (4,685 | ) | (9,561 | ) | (14,246 | ) | |||||||||||||||||
Other | 14 | (71 | ) | (57 | ) | (125 | ) | — | (125 | ) | ||||||||||||||||||
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Cash from investing activities | (3,800 | ) | 9,854 | 6,054 | 30,856 | (5,207 | ) | 25,649 | ||||||||||||||||||||
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FINANCING ACTIVITIES | ||||||||||||||||||||||||||||
Restricted cash movement | (35 | ) | — | (35 | ) | 23 | — | 23 | ||||||||||||||||||||
Principal payments of debt financing and capital leases | (1,071 | ) | — | (1,071 | ) | (4,219 | ) | — | (4,219 | ) | ||||||||||||||||||
Proceeds from debt financing | 83 | — | 83 | 1,117 | — | 1,117 | ||||||||||||||||||||||
Excess tax benefits from stock-based compensation expense | 1,710 | — | 1,710 | — | — | — | ||||||||||||||||||||||
Distributions to minority interests | (2,184 | ) | — | (2,184 | ) | (1,977 | ) | — | (1,977 | ) | ||||||||||||||||||
Proceeds from issuances of common stock | 257 | — | 257 | 1,077 | — | 1,077 | ||||||||||||||||||||||
Proceeds from issuances of OccuLogix, Inc. stock | — | 233 | 233 | — | 217 | 217 | ||||||||||||||||||||||
Cash from financing activities | (1,240 | ) | 233 | (1,007 | ) | (3,979 | ) | 217 | (3,762 | ) | ||||||||||||||||||
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Net increase (decrease) in cash and cash equivalents during the period | 8,789 | 5,217 | 14,006 | 38,649 | (10,957 | ) | 27,692 | |||||||||||||||||||||
Cash and cash equivalents, beginning of period | 22,122 | 9,607 | 31,729 | 15,847 | 17,588 | 33,435 | ||||||||||||||||||||||
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Cash and cash equivalents, end of period | $ | 30,911 | $ | 14,824 | $ | 45,735 | $ | 54,496 | $ | 6,631 | $ | 61,127 | ||||||||||||||||
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Operating cash flow per diluted share | $ | 0.20 | $ | (0.07 | ) | $ | 0.13 | $ | 0.16 | $ | (0.08 | ) | $ | 0.08 | ||||||||||||||
Note: The AMD segment primarily includes the Company’s majority interest in OccuLogix, Inc. (formerly Vascular Sciences Corp.). |
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