Anna Austin, EVP, Corporate Communications (636) 534-2271 Email: investor.relations@tlcvision.com
TLCVisionReports Third Quarter Financial Results And Accelerates Consumer-Focused Refractive Strategy
ST. LOUIS, MO, November 8, 2006 — TLC Vision Corporation (NASDAQ:TLCV; TSX:TLC), North America’s premier eye care services company, today announced its financial results for the third quarter and nine months ended September 30, 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.
The Company also announced, based on positive indicators from current initiatives, that it is aggressively expanding its consumer-focused refractive strategy across a majority of its wholly-owned refractive centers. With the acceleration of this strategy, the Company now combines the most successful elements of the current medical referral model with a direct-to-consumer approach, creating a unique and competitive position for TLCVisionas the only company to leverage these two key patient sources.
“Promising trends from our recent initiatives suggest that a more value-oriented pricing strategy, supported by increased advertising and our optometric co-management philosophy, will be a compelling combination,” said Jim Wachtman, President and Chief Executive Officer. “TLCVisionis responding to consumer trends, while leveraging the expertise we have developed over 13 years of leadership in this industry, to accelerate our long-term growth strategy.
Editor’s Note: “Operating Business” (or “Operating”) is defined as TLCVision’s activities excluding the impact of the AMD segment, representing 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.
REVENUES
TLCVision’sthird quarter revenues were $64.5 million, an increase of 6% from 2005 excluding AMD.
•
Total refractive revenues were up 2.5% to $43.9 million, as higher average selling prices offset slightly lower overall procedure volumes (41,900). Total center revenues were 1% higher during the quarter, with same store center revenues up 4%. Refractive center procedure volume (including LECC) was 26,900, down 1% from prior year, consistent with economic-driven softness in the overall industry. Access revenues were up 8%, as slightly lower procedures volumes (15,000) were bolstered by a pricing increase to cover rising fuel costs.
•
Other Healthcare Services revenues (excluding AMD) increased 13% to $20.6 million, with strong growth at Vision Source (+20%) and the surgical businesses, fueled in part by acquisitions in 2005. Total surgical procedures of 18,500 were 1% below prior year, but revenues were up 7% due to better mix overall and higher average selling prices in our mobile cataract business.
EARNINGS
Consolidated: Net income for the third quarter was $0.3 million, including the AMD net loss of $1.5 million.
Operating Business: Net income for the quarter was $1.8 million (or $0.03 per fully diluted share), including $0.2 million of stock compensation expense. Comparable amounts for 2005 were $1.9 million (or $0.03 per share) on an as-reported basis. After adjusting both periods to remove stock compensation and to apply current year income tax rates, pro forma 2006 net income of $2.3 million trailed 2005 by $0.2 million or 8%.
STRONG CASH GENERATION
Operating cash flow for the third quarter was $7.7 million, or $0.11 per fully diluted share. The Company continues to maintain a strong financial position, with cash and short-term investments totaling $47.1 million.
YEAR-TO-DATE RESULTS
For the nine months ended September 30, 2006, revenues (excluding AMD) grew 10% to $218.3 million from $197.9 million for the prior year period. Total refractive revenues increased 7% to $156.2 million, and total refractive procedure volume (including LECC) was 147,500. Other Healthcare Services revenues (excluding AMD) increased 19% to $62.1 million.
For the nine months ended September 30, 2006, consolidated net income was $13.9 million (or $0.20 per share) including a $4.7 million net loss from the AMD segment. Net income for the Operating Business was $18.6 million or $0.27 per share, an increase of $3.0 million or $0.05 per share on an as reported basis.
Consolidated operating cash flow for the nine month period was $30.5 million. Operating cash flow for the Operating Business was $35.3 million or $0.51 per share.
2006 OPERATING BUSINESS FINANCIAL GUIDANCE
Reflecting the financial results for the first nine months of the year, as well as factoring in the revised refractive industry growth rates for 2006, we are updating our 2006 guidance for the Operating Business as follows:
•
Net revenues are now anticipated to be between $280 million and $285 million, or a growth of between 8% and 10% from full year 2005 results.
•
Fully-taxed earnings per share are now anticipated to be between $0.28 to $0.30 per fully diluted share.
•
Operating cash flow per fully-diluted share is expected to be between $0.55 and $0.57.
ACCELERATING REFRACTIVE BUSINESS GROWTH WITH A UNIQUE AND COMPETITIVE APPROACH
Over the past 12 months, TLCVisionhas undertaken several initiatives to determine the best combination of elements to maximize its competitive position in the refractive industry, and early indicators are promising. Consumers have been responsive to a more affordable, value-priced model and to upgrades based on legitimate technology options. In several TLC Laser Eye Center ® (TLC) locations, the Company has seen significant volume growth by combining this value-priced model with increased advertising to support its already strong optometric co-management network. This more consumer-focused approach not only makes it easier for the Company’s affiliated optometrists to recommend the procedure, but has been shown to increase the number who are referring overall.
The acceleration of this strategy allows TLCVisionto capitalize on these positive trends and its core strengths, as well as respond to changing consumer dynamics in the industry overall. With a more consistent and standardized offering, the Company will leverage all centers under the widely recognized TLC brand, which has performed more procedures than any company in the world. The majority of wholly-owned TLC centers will be repositioned between late 2006 and the end of 2007. In addition, LASIK Select centers will be re-branded to TLC, and the Company plans to expand by five to seven new TLC locations in 2007.
“TLCVisionis making these investments to reinvigorate the refractive business,” said Jim Wachtman. “We are doing so from a position of strength, with a highly-skilled team committed to growing the business. Our strong cash flow generation combined with our solid balance sheet gives us the flexibility to drive this change and create long-term shareholder value.”
ANALYST DAY
TLCVisionplans to host an Analyst Day for research analysts and shareholders in the first quarter of 2007. At that time, executive management and key business leaders will present a detailed outline of the entire company strategic plan, including this accelerated consumer-focused strategy and capital structure initiatives. More information will be released as it becomes available.
CONFERENCE CALL
TLCVisionis pleased to invite all interested parties to participate in a conference call during which time the strategic repositioning and financial results will be discussed. The call will be held today, November 8, at 10:30 am Eastern Time at 1-877-888-4605.
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. A replay will be available until November 22 by dialing 1-888-509-0081 and entering pass code 631525.
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 corporate websitewww.tlcv.com. Go towww.tlcvision.com for information on refractive surgery.
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.
TLC VISION CORPORATION
(In thousands except per share amounts)
Three Months Ended September 30, 2006
Three Months Ended September 30, 2005 (As Restated)
Results Before AMD Segment
AMD Segment
Total TLCVision
Results Before AMD Segment
AMD Segment
Total TLCVision
Revenues:
Refractive:
Centers
$
35,422
$
—
$
35,422
$
34,968
$
—
$
34,968
Access
8,449
—
8,449
7,846
—
7,846
Other healthcare services
20,618
—
20,618
18,190
635
18,825
Total revenues
64,489
—
64,489
61,004
635
61,639
Cost of revenues:
Refractive:
Centers
26,260
—
26,260
26,147
—
26,147
Access
6,655
—
6,655
6,319
—
6,319
Other healthcare services
12,617
—
12,617
11,289
363
11,652
Total cost of revenues
45,532
—
45,532
43,755
363
44,118
Gross profit
18,957
—
18,957
17,249
272
17,521
General and administrative
8,066
—
8,066
6,695
1,994
8,689
Marketing and sales
6,649
—
6,649
5,279
119
5,398
Research and development, clinical and regulatory
—
—
—
—
1,140
1,140
Amortization of intangibles
873
—
873
1,047
—
1,047
Other expenses (income), net
(230
)
—
(230
)
198
(166
)
32
-
—
Total operating costs
15,358
—
15,358
13,219
3,087
16,306
Operating income (loss)
3,599
—
3,599
4,030
(2,815
)
1,215
Interest income
568
—
568
660
411
1,071
Interest expense
(387
)
—
(387
)
(435
)
—
(435
)
Minority interests
(2,210
)
—
(2,210
)
(1,867
)
1,258
(609
)
Earnings (losses) from equity investments
849
(1,453
)
(604
)
487
—
487
-
Income (loss) before income taxes
2,419
(1,453
)
966
2,875
(1,146
)
1,729
Income tax benefit (expense)
(665
)
—
(665
)
(947
)
(3
)
(950
)
-
Net income (loss)
$
1,754
$
(1,453
)
$
301
$
1,928
$
(1,149
)
$
779
Earnings (loss) per share — diluted
$
0.03
$
(0.03
)
$
0.00
$
0.03
$
(0.02
)
$
0.01
Weighted average number of common shares outstanding — diluted
69,737
69,737
69,737
71,524
71,524
71,524
Note: The AMD segment includes the Company’s interest in OccuLogix, Inc.
TLC VISION CORPORATION
CONSOLIDATING STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands except per share amounts)
Nine Months Ended September 30, 2006
Nine Months Ended September 30, 2005 (As Restated)
Results Before AMD Segment
AMD Segment
Total TLCVision
Results Before AMD Segment
AMD Segment
Total TLCVision
Revenues:
Refractive:
Centers
$
126,959
$
—
$
126,959
$
116,743
$
—
$
116,743
Access
29,208
—
29,208
29,085
—
29,085
Other healthcare services
62,118
—
62,118
52,045
1,635
53,680
Total revenues
218,285
—
218,285
197,873
1,635
199,508
Cost of revenues:
Refractive:
Centers
88,056
—
88,056
80,597
—
80,597
Access
21,330
—
21,330
20,929
—
20,929
Other healthcare services
37,890
1,659
39,549
31,617
1,393
33,010
Total cost of revenues
147,276
1,659
148,935
133,143
1,393
134,536
Gross profit (loss)
71,009
(1,659
)
69,350
64,730
242
64,972
General and administrative
24,219
1,759
25,978
21,108
5,868
26,976
Marketing and sales
20,155
169
20,324
15,747
491
16,238
Research and development, clinical and regulatory
—
1,475
1,475
—
3,794
3,794
Amortization of intangibles
2,611
—
2,611
3,090
—
3,090
Other expenses (income), net
(756
)
849
93
(835
)
(166
)
(1,001
)
—
Total operating costs
46,229
4,252
50,481
39,110
9,987
49,097
Operating income (loss)
24,780
(5,911
)
18,869
25,620
(9,745)
15,875
Gain on sale of OccuLogix, Inc. stock
—
1,450
1,450
—
—
—
Interest income
1,437
366
1,803
2,174
1,187
3,361
Interest expense
(1,066
)
—
(1,066
)
(1,316
)
—
(1,316
)
Minority interests
(7,677
)
2,715
(4,962
)
(6,567
)
4,167
(2,400
)
Earnings (losses) from equity investments
2,723
(3,303
)
(580
)
1,826
—
1,826
-
Income (loss) before income taxes
20,197
(4,683
)
15,514
21,737
(4,391)
17,346
Income tax expense
(1,634
)
—
(1,634
)
(6,202
)
(3
)
(6,205
)
-
Net income (loss)
$
18,563
$
(4,683
)
$
13,880
$
15,535
$(4,394)
$
11,141
Earnings (loss) per share — diluted
$
0.27
$
(0.07
)
$
0.20
$
0.22
$(0.06)
$
0.16
Weighted average number of common shares outstanding — diluted
69,833
69,833
69,833
71,877
71,877
71,877
Note: The AMD segment includes the Company’s interest in OccuLogix, Inc.
TLC VISION CORPORATION
CONSOLIDATING BALANCE SHEETS
(In thousands)
September 30, 2006 (Unaudited)
December 31, 2005
Results Before AMD Segment
AMD Segment
Total TLCVision
Results Before AMD Segment (Unaudited)
AMD Segment (Unaudited)
Total TLCVision
ASSETS
Current assets
Cash and cash equivalents
$
37,047
$
10
$
37,057
$
22,122
$
9,607
$
31,729
Short-term investments
10,025
—
10,025
6,550
31,663
38,213
Accounts receivable, net
21,779
—
21,779
20,056
527
20,583
Prepaid expenses, inventory and other
12,140
—
12,140
11,604
5,519
17,123
Total current assets
80,991
10
81,001
60,332
47,316
107,648
Intercompany
(565
)
565
-
1,693
(1,693)
-
Restricted cash
1,035
—
1,035
975
—
975
Investments and other assets
22,465
16,825
39,290
19,838
—
19,838
Goodwill
98,062
—
98,062
99,402
—
99,402
Other intangible assets, net
21,376
—
21,376
23,886
135
24,021
Fixed assets, net
54,799
—
54,799
48,646
513
49,159
Total assets
$
278,163
$
17,400
$
295,563
$
254,772
$
46,271
$
301,043
LIABILITIES
Current liabilities
Accounts payable
$
12,570
$
—
$
12,570
$
10,517
$
514
$
11,031
Accrued liabilities
21,457
—
21,457
22,158
2,295
24,453
Current maturities of long-term debt
6,667
—
6,667
5,268
—
5,268
Total current liabilities
40,694
—
40,694
37,943
2,809
40,752
Long-term debt, less current maturities
15,791
—
15,791
12,665
—
12,665
Other long-term liabilities
3,053
—
3,053
3,427
—
3,427
Minority interests
14,937
—
14,937
14,284
21,510
35,794
Total liabilities
74,475
—
74,475
68,319
24,319
92,638
STOCKHOLDERS’ EQUITY
Common stock
418,656
30,898
449,554
419,936
30,767
450,703
Option and warrant equity
1,813
—
1,813
1,861
—
1,861
Accumulated deficit
(216,781
)
(13,498
)
(230,279
)
(235,344)
(8,815)
(244,159
)
Total stockholders’ equity
203,688
17,400
221,088
186,453
21,952
208,405
Total liabilities and stockholders’ equity
$
278,163
$
17,400
$
295,563
$
254,772
$
46,271
$
301,043
Note: The AMD segment includes the Company’s interest in OccuLogix, Inc.
TLC VISION CORPORATION
CONSOLIDATING STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands except per share amounts)
Nine Months Ended September 30, 2006
Nine Months Ended September 30, 2005 (As Restated)
Results Before AMD Segment
AMD Segment
Total TLCVision
Results Before AMD Segment
AMD Segment
Total TLCVision
OPERATING ACTIVITIES
Net income (loss)
$
18,563
$
(4,683
)
$
13,880
$
15,535
$(4,394)
$
11,141
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization
11,764
34
11,798
11,931
88
12,019
Reimbursements from investments in research and development
arrangements
(300
)
—
(300
)
(300
)
—
(300
)
Minority interests
7,677
(2,715
)
4,962
6,567
(4,167)
2,400
(Earnings) losses from equity investments
(2,723
)
3,303
580
(1,826
)
—
(1,826
)
Deferred taxes
2,744
—
2,744
4,806
—
4,806
Loss (gain) on sales and disposals of fixed assets
(12
)
29
17
(38
)
(166
)
(204
)
Gain on sale of OccuLogix, Inc. stock
—
(1,450
)
(1,450
)
—
—
—
Write-down of OccuLogix, Inc. inventory
—
1,625
1,625
—
—
—
Gain on sale of subsidiary
(188
)
—
(188
)
(319
)
—
(319
)
Non-cash compensation expense
1,120
186
1,306
69
216
285
Other
—
26
26
—
135
135
Changes in operating assets and liabilities, net of acquisitions and
dispositions:
(3,310
)
(1,225
)
(4,535
)
(2,725
)
(6,286)
(9,011
)
Cash from operating activities
35,335
(4,870
)
30,465
33,700
(14,574)
19,126
INVESTING ACTIVITIES
Purchases of fixed assets
(8,140
)
—
(8,140
)
(6,526
)
(138
)
(6,664
)
Proceeds from sales of fixed assets
635
—
635
966
284
1,250
Proceeds from divestitures of investments and subsidiaries, net
-
-
-
3,430
-
3,430
Proceeds from sale of OccuLogix, Inc. stock, net
—
2,226
2,226
—
—
—
OccuLogix, Inc. cash balance at time of deconsolidation
-
(14,814
)
(14,814
)
-
-
-
Distributions and loan payments received from equity investments
2,662
-
2,662
1,828
-
1,828
Reimbursements from investments in research and development
arrangements
300
—
300
300
—
300
Acquisitions and equity investments
(4,859
)
—
(4,859
)
(42,119
)
—
(42,119
)
Proceeds from sales of short-term investments
300
9,925
10,225
78,025
20,550
98,575
Purchases of short-term investments
(3,775
)
-
(3,775
)
(27,710
)
(10,585)
(38,295
)
Other
80
(71
)
9
48
(15
)
33
—
-
—
—
Cash from investing activities
(12,797
)
(2,734
)
(15,531
)
8,242
10,096
18,338
FINANCING ACTIVITIES
Restricted cash movement
(60
)
—
(60
)
(208
)
—
(208
)
Transfer proceeds from sale of OccuLogix, Inc. stock, net
2,226
(2,226
)
-
-
-
-
Principal payments of debt financing and capital leases
(4,019
)
-
(4,019
)
(7,500
)
-
(7,500
)
Proceeds from debt financing
441
—
441
1,489
—
1,489
Distributions to minority interests
(6,668
)
—
(6,668
)
(6,024
)
—
(6,024
)
Purchases of treasury stock
—
—
—
(10,031
)
—
(10,031
)
Proceeds from issuances of common stock
467
—
467
1,748
—
1,748
Proceeds from issuances of OccuLogix, Inc. stock
—
233
233
—
284
284
Cash from financing activities
(7,613
)
(1,993
)
(9,606
)
(20,526
)
284
(20,242
)
Net increase (decrease) in cash and cash equivalents during the period
14,925
(9,597
)
5,328
21,416
(4,194)
17,222
Cash and cash equivalents, beginning of period
22,122
9,607
31,729
15,847
17,588
33,435
Cash and cash equivalents, end of period
$
37,047
$
10
$
37,057
$
37,263
$
13,394
$
50,657
Operating cash flow per diluted share
$
0.51
$
(0.07
)
$
0.44
$
0.47
$(0.20)
$
0.27
Note: The AMD segment includes the Company’s interest in OccuLogix, Inc.
We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.
