CEO: LCA-Vision hurt by sour economy
LCA-Vision Inc. (Nasdaq: LCAV) CEO Steve Straus said that although consumers continue to indicate interest in the provider of laser vision correction surgeries, the company was hurt by negative economic factors during the fourth quarter. Straus made the comments during a morning conference call.
“In 2007, the U.S. economy and our industry were impacted by a cautious consumer and the macro environmental factors influencing their spending decisions,” Straus said.
“Consumers across the country remain interested in laser vision correction, but they’re not ready to commit to getting the procedure performed compared with the rates we experienced in 2005 and 2006.”
To cope with the sour economy, Straus said LCA is slashing costs. The firm recently reduced its workforce by about 16%, so that staffing levels would meet the expected sales volume.
“We are aggressively managing expenses,” the CEO said. “We continue to control general and administrative costs.”
Additionally, the company is implementing sales and management effectiveness training programs to meet goals. LCA is also using knowledge learned through market research to optimize marketing efforts.
“We’ve reached a point where we can utilize national marketing to supplement our regional marketing efforts to increase awareness and demand for the laser vision correction procedure in our LasikPlus vision centers,” Straus said. “In operations, we’ve expanded the hours of operations in many of our centers to be more consumer-friendly.”
Strauss said that the consumers the company wants to attract are economically challenged.
“There’s a lot of pressure on discretionary spending,” Strauss said. “Everyone who visits a center desires and wants this procedure. Many face the reality that it’s a purchase that they have to put off for the short term.”
The Cincinnati-based firm posted fourth-quarter net income of $4.1 million, or $0.22 per share, up 27% from $5.6 million, or $0.27 per share, a year earlier. Wall Street analysts, on average, were expecting LCA to post earnings of $0.21 per share.
The laser vision surgery company’s quarterly revenue rose 24% to $69.7 million, compared with $56 million during the year-ago period. On an adjusted basis, LCA’s revenue for the three months ended Dec. 31 increased 7% to $62.9 million, from $58.8 million during the same period of 2006. Analysts were projecting revenue of $63.9 million.
During the fourth quarter, LCA performed 39,888 laser vision correction procedures, down 5% from 42,049 a year earlier. The company opened new facilities in Coral Springs, Florida and Chandler, Arizona, during the quarter. CFO Alan Buckey said LCA saw a lower rate of customers who showed up for the laser surgery both before the operation and for the actual procedure.
“The phone’s still ringing. People are still interested,” Buckey said. “They’re still scheduling the appointment, but it’s getting them to show up and then once they’ve gone through the process, making sure they attend that surgery appointment as well.”
LCA operates 73 centers in 32 states. Straus said the company aims to have more than 120 centers in the top 100 markets in the United States, which he said LCA expects to achieve within the next three to four years. The firm expects to open five to 10 locations during 2008, he said. LCA also opened an expanded call and data center during late December, along with rolling out an upgraded website.
For the fourth quarter, Buckey said LCA repurchased more than 588,000 shares at an average price just under $17 for a total of about $10 million. Buckey said about $40 million remains in the company’s repurchase plan.
In midday trading, LCAV shares are plummeting near a year low — down 20.08%, or $3.46, at $13.77. Over the last 52 weeks, shares have ranged from low of $13.79 notched on Jan. 18 to $50.69, which was achieved on July 5.
