LCA-Vision Inc. (LCAV) Q3 2010 Earnings Conference Call October 26, 2010 10:00 am ET Executives Mike Celebrezze - CFO, SVP Dave Thomas - COO, SVP Analysts Josh Jennings - Jefferies & Company Anthony Vendetti - Maxim Group Steve Willoughby - Cleveland Research Company Andy O’Hare – William Blair Presentation Operator
Now, I’d like to turn the call over to Mike Celebrezze. Mike?Michael Celebrezze Thanks Jody. Good morning everyone and thank you for joining us. Demand for laser vision correction surgery has historically been soft during the third quarter due to summer holidays and vacations. This year our Q3 procedure volume also was adversely affected by a decline in consumer confidence which reached its lowest level since the second quarter of 2009. Although the economic environment continues to be highly challenging, we are benefiting from sustained improvements in our ability to divert pre-operative scheduled appointments to completed procedures. Dave Thomas will provide more details on these improvements in a few minutes. We continued to take numerous actions under our company wide priorities of cash conservation, patient acquisition and retention and organizational effectiveness. This includes evaluating all aspects of our operations with the objective of managing our business effectively while providing a highest level of patient care and customer service. At the Vision Center level, this translates into balancing operating costs and revenue generation. To ongoing evaluation, we reached the decision to consolidate operations in Atlanta, Chicago, Dallas Fort Worth and Houston by closing one of multiple centers in each of those markets. We are closing Vision Centers in San Diego, Fort Lauderdale, Long Island and Rally. Seven of these Vision Center closures are expected to be completed by mid December and we expect to take a related charge in the fourth quarter of $4.3 million. The charge is comprised primarily of recording 100% of the future rent obligations from the closing centers and severance costs. It is possible that the charge will be reduced if we’re successful in negotiating lease buyouts or sub-leases. The eighth center will close when the lease expires in April 2011. With these closings, we expect to have sufficient cash and investments to fund our business beyond 2012 if we perform at least 52,000 procedures annually. Now I’d like to review our 2010 third quarter financial results. As in the past, we are providing both GAAP and adjusted revenues and operating loss as a means of measuring our performance. The adjusted results account for the non-cash impact of the accounting for separately priced extended warranties. A reconciliation of revenues and operating loss as reported in accordance with GAAP is provided at the end of the news release we issued this morning.
For the third quarter of 2010, revenues were $20.3 million, compared with $27.6 million for the 2009 third quarter, and adjusted revenues were $18.8 million, compared with $25.7 million a year ago. We performed 11,497 procedures at 62 Vision centers during the 2010 quarter, compared with 15,335 procedures at 71 Vision centers during the 2009 quarter.Our same store procedure volume declined 18% versus the prior year. Lower procedure volume in the 2010 third quarter was attributable to a 31% decline in pre-operative appointment bookings, which reflects both reduced consumer confidence and a decrease in the number of Vision centers from 71 to 62. Same store revenues decreased 19% for the third quarter while adjusted same store revenues decreased 18%. This compares with declines of 9% and 7% respectively for the second quarter which we believe reflected higher consumer confidence levels during that period. However, our Q3 declines are improved from the 23% and 22% declines respectively during the first quarter of this year. We reported an operating loss of $8.5 million and adjusted operating loss of $9.8 million for the 2010 third quarter. Both these figures included $1.8 million in impairment and restructuring charges and $266,000 in gain on sale of assets. In the 2009 third quarter, we reported an an operating loss of $10.4 million and an adjusted operating loss of $11.1 million which included $4.4 million in impairment and restructuring charges and $10, 000 in gain on sale of assets. Read the rest of this transcript for free on seekingalpha.com