10-Q

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q

(Mark One)

    x     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 2012.

    ¨     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT.

For the transition period from          to         

Commission file number 0-27610

LCA-Vision Inc.

(Exact name of registrant as specified in its charter)

Delaware	11-2882328
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

7840 Montgomery Road, Cincinnati, Ohio 45236

(Address of principal executive offices)

(513) 792-9292

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 19,024,305 shares as of October 25, 2012.

LCA-Vision Inc.

TABLE OF CONTENTS

Part I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets (Unaudited) September 30, 2012 and December 31, 2011	3
	Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) Three Months and Nine Months Ended September 30, 2012 and 2011	4
	Condensed Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended September 30, 2012 and 2011	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	21
Part II. OTHER INFORMATION
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.	Defaults Upon Senior Securities	22
Item 4.	Mine Safety Disclosures	22
Item 5.	Other Information	22
Item 6.	Exhibits	22
	Signatures	23

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

LCA-Vision Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(Dollars in thousands)

	September 30, 2012			December 31, 2011
Assets
Current assets
Cash and cash equivalents	$	31,186		$	18,568
Short-term investments		2,804			25,311
Patient receivables, net of allowances of $1,034 and $1,035, respectively		2,998			2,366
Other accounts receivable, net		2,043			1,974
Prepaid expenses and other		3,210			4,254
Total current assets		42,241			52,473
Property and equipment, net		7,788			10,637
Long-term investments		923			902
Patient receivables, net of allowances of $705 and $634		1,177			769
Other assets		777			1,652
Total assets	$	52,906		$	66,433
Liabilities and Stockholders’ Investment
Current liabilities
Accounts payable	$	5,443		$	8,103
Accrued liabilities and other		11,283			12,175
Deferred revenue		1,229			2,516
Debt obligations maturing within one year		—			2,978
Total current liabilities		17,955			25,772
Long-term insurance reserves, less current portion		5,988			6,264
Long-term debt obligations, less current portion		—			1,026
Other long-term liabilities		4,164			7,106
Stockholders’ investment
Common stock ($.001 par value; 25,291,637 shares issued and 19,024,305 and 18,858,147 shares outstanding, respectively)		25			25
Contributed capital		178,818			177,287
Common stock in treasury, at cost (6,267,332 shares and 6,433,490 shares, respectively)		(111,658	)		(112,910	)
Accumulated deficit		(43,166	)		(38,720	)
Accumulated other comprehensive income		780			583
Total stockholders’ investment		24,799			26,265
Total liabilities and stockholders’ investment	$	52,906		$	66,433

The notes to the Condensed Consolidated Financial Statements are an integral part of this statement.

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LCA-Vision Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)

(Amounts in thousands except per share data)

	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Revenues	$	20,009		$	21,790		$	81,298		$	78,489
Operating costs and expenses
Medical professional and license fees		4,648			5,181			19,139			19,236
Direct costs of services		10,068			10,461			33,477			31,931
General and administrative expenses		3,037			3,586			10,151			10,577
Marketing and advertising		4,803			5,305			18,283			17,730
Depreciation		1,223			1,458			3,743			4,346
Impairment and restructuring charges		10			—			47			56
		23,789			25,991			84,840			83,876
Gain on sale of assets		33			99			221			498
Operating loss		(3,747	)		(4,102	)		(3,321	)		(4,889	)
Net investment income and other		220			334			498			492
Loss before taxes on income		(3,527	)		(3,768	)		(2,823	)		(4,397	)
Income tax expense		22			32			70			149
Net loss	$	(3,549	)	$	(3,800	)	$	(2,893	)	$	(4,546	)
Loss per common share
Basic	$	(0.19	)	$	(0.20	)	$	(0.15	)	$	(0.24	)
Diluted	$	(0.19	)	$	(0.20	)	$	(0.15	)	$	(0.24	)
Weighted average shares outstanding
Basic		19,017			18,838			18,968			18,798
Diluted		19,017			18,838			18,968			18,798
Comprehensive loss	$	(3,360	)	$	(4,112	)	$	(2,696	)	$	(4,792	)

The notes to the Condensed Consolidated Financial Statements are an integral part of this statement.

4

LCA-Vision Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)

	Nine months ended September 30,
	2012			2011
Cash flow from operating activities:
Net loss	$	(2,893	)	$	(4,546	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		3,743			4,346
Provision for loss on doubtful accounts		704			554
Loss on sale of investments		8			9
Impairment charges		37			—
Gain on sale of assets		(221	)		(498	)
Stock-based compensation		1,531			1,259
Insurance reserve		(318	)		(223	)
Changes in operating assets and liabilities:
Patient accounts receivable		(1,719	)		(754	)
Other accounts receivable		(60	)		138
Prepaid expenses and other		870			896
Accounts payable		(2,660	)		(1,311	)
Deferred revenue, net of professional fees		(1,838	)		(3,094	)
Accrued liabilities and other		(2,144	)		771
Net cash used in operations		(4,960	)		(2,453	)
Cash flow from investing activities:
Purchases of property and equipment		(973	)		(869	)
Proceeds from sale of assets		283			1,252
Purchases of investment securities		(39,659	)		(137,480	)
Proceeds from sale of investment securities		62,064			142,716
Net cash provided by investing activities		21,715			5,619
Cash flow from financing activities:
Principal payments of loan		(4,004	)		(2,563	)
Shares repurchased for treasury stock		(357	)		(288	)
Proceeds from exercise of stock options		57			23
Net cash used in financing activities		(4,304	)		(2,828	)
Net effect of exchange rate changes on cash and cash equivalents		167			(143	)
Increase in cash and cash equivalents		12,618			195
Cash and cash equivalents at beginning of period		18,568			19,350
Cash and cash equivalents at end of period	$	31,186		$	19,545

The notes to the Condensed Consolidated Financial Statements are an integral part of this statement.

5

LCA-Vision Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Description of Business and Accounting Policies

Description of Business

We are a provider of fixed-site laser vision correction services at our LasikPlus^® vision centers. Our vision centers provide the staff, facilities, equipment and support services for performing laser vision correction that employ advanced laser technologies to help correct nearsightedness, farsightedness and astigmatism. We currently use two suppliers for fixed-site excimer lasers: Abbott Medical Optics and Alcon, Inc. Our vision centers are supported by independent ophthalmologists and credentialed optometrists, as well as other healthcare professionals. The ophthalmologists perform the laser vision correction procedures in our vision centers, and ophthalmologists or optometrists conduct pre-procedure evaluations and post-operative follow-up care in-center. Most of our patients currently receive a procedure called LASIK, which we began performing in the United States in 1996.

As of September 30, 2012, we operated 53 LasikPlus^® fixed-site laser vision correction centers in the United States. Included in the 53 vision centers are two vision centers licensed to ophthalmologists who use our trademarks. Beginning in late 2011, we began offering cataract, premium intraocular lens (“IOL”) and implantable collamer lens (“ICL”) services in certain of our existing markets under our new Visium Eye Institute™ brand.

Basis of Presentation

Our Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, include all adjustments necessary for a fair presentation of our financial position, results of operations, and cash flows for each period presented. These adjustments are of a normal and recurring nature unless otherwise disclosed herein. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to SEC rules and regulations.

We derived the Condensed Consolidated Balance Sheet as of December 31, 2011 from audited financial statements, but did not include all disclosures required by U.S. GAAP. These Condensed Consolidated Financial Statements should be read in conjunction with our 2011 Annual Report on Form 10-K. Operating results for the three and nine month periods ended September 30, 2012 are not necessarily indicative of the results expected in subsequent quarters or for the year ending December 31, 2012.

Use of Estimates

The preparation of our Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Significant items that are subject to such estimates and assumptions include investment valuation, allowance for doubtful accounts against patient receivables, insurance reserves, income taxes and enhancement accruals. Although management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, actual results could differ significantly from the estimates under different assumptions or conditions.

Reclassifications

We have reclassified certain prior-period amounts in the Condensed Consolidated Balance Sheets and Statements of Cash Flows to conform to current period presentation. The reclassifications were not material to the Condensed Consolidated Financial Statements.

Patient Receivables and Allowance for Doubtful Accounts

We provide financing to some of our patients, including those who could not otherwise obtain third-party financing. The terms of the financing usually require the patient to pay an up-front fee which is intended to cover some or all of our variable costs, and then generally we deduct the remainder automatically from the patient’s bank account over a period of 12 to 36 months. We have recorded an allowance for doubtful accounts as a best estimate of the amount of probable credit losses from our patient financing program. Each month, we review the allowance and adjust the allowance based upon our own experience with patient financing. We charge-off receivables against it when it is probable that a receivable will not be recovered. Our policy is to reserve for all patient receivables that remain open past their financial maturity date and to provide reserves for patient receivables prior to the maturity date so as to bring patient receivables, net of reserves, down to the estimated net realizable value based on historical collectability rates, recent

6

LCA-Vision Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

default activity and the current credit environment. Receivable balances that remain open past their financial maturity amounted to $101,000 and $160,000 at September 30, 2012 and December 31, 2011, respectively.

We maintained an allowance for doubtful accounts on our patient receivables of $1.7 million at September 30, 2012 and December 31, 2011. During the three and nine months ended September 30, 2012, we wrote-off $296,000 and $712,000, respectively, of receivables against the allowance for doubtful accounts and recovered $40,000 and $102,000, respectively, in receivables previously written off. During the three and nine months ended September 30, 2011, we wrote-off $213,000 and $590,000, respectively, of receivables against the allowance for doubtful accounts and recovered $23,000 and $110,000, respectively, in receivables previously written off.

2. Investments

Management determines the appropriate classification of securities at the time of purchase and reevaluates such designation as of each balance sheet date. Currently, we classify all securities as available-for-sale. We carry available-for-sale securities at fair value, with temporary unrealized gains and losses, net of tax, reported in accumulated other comprehensive income, a component of stockholders’ investment. The amortized cost of debt securities in this category reflects amortization of premiums and accretion of discounts to maturity computed under the effective interest method. We include this amortization in the caption “Net investment income and other” within the Condensed Consolidated Statement of Operations and Comprehensive Income. We also include in “Net investment income and other” realized gains and losses on sales of securities and declines in value of securities determined to be other-than-temporary. We base the cost of securities sold upon the specific identification method. We include interest and dividends on securities classified as available-for-sale in net investment income.

The following table summarizes unrealized gains and losses related to our investments designated as available-for-sale (dollars in thousands):

	September 30, 2012
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Certificates of deposit	$	2,804	$	—	$	—		$	2,804
Auction rate municipal securities		882		41		—			923
Total investments	$	3,686	$	41	$	—		$	3,727
	December 31, 2011
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Corporate obligations	$	11,260	$	—	$	(1	)	$	11,259
U.S. Government notes		14,049		7		(4	)		14,052
Auction rate municipal securities		893		9		—			902
Total investments	$	26,202	$	16	$	(5	)	$	26,213

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LCA-Vision Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table shows the net carrying value (amortized cost) and estimated fair value of investments at September 30, 2012 by contractual maturity (dollars in thousands). Expected maturities may differ from contractual maturities because the issuers of the securities may have the right or obligation to prepay obligations without prepayment penalties.

	Amortized Cost		Estimated Fair Value
Due in one year or less	$	2,804	$	2,804
Due after one year through three years		—		—
Due after three years		882		923
Total investments	$	3,686	$	3,727

The following tables present gross unrealized losses and fair values for those investments that were in an unrealized loss position as of September 30, 2012 and December 31, 2011, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (dollars in thousands):

	September 30, 2012				December 31, 2011
	Less than 12 Months				Less than 12 Months
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Corporate obligations	$	—	$	—	$	3,810	$	(1	)
U.S. Government notes		—		—		6,758		(4	)
	$	—	$	—	$	10,568	$	(5	)

We had no realized gains or losses on the sale of our debt securities for the three months ended September 30, 2012, and realized gains of $3,000 and no losses for the nine months ended September 30, 2012. We had realized gains of $8,000 and losses of $22,000 for the three months ended September 30, 2011 and realized gains of $35,000 and losses of $44,000 for the nine months ended September 30, 2011.

We recognized unrealized gains of $41,000 and no unrealized losses in accumulated other comprehensive income as of September 30, 2012. We recognized unrealized gains of $16,000 and unrealized losses of $5,000 as of December 31, 2011.

Auction Rate Securities

At September 30, 2012 and December 31, 2011, we held $1.1 million par value of various auction rate securities. The assets underlying the auction rate instruments are municipal bonds. Maturity dates for our auction rate municipal securities are 2030 and 2036. Given the extent of the decline in fair value associated with our auction rate securities, we recognized an other-than-temporary impairment of $11,000, before taxes, during the nine months ended September 30, 2012. No other-than-temporary impairments were recognized during the three months ended September 30, 2012 or during the three and nine months ended September 30, 2011. When evaluating investments for other-than-temporary impairment, we review factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer of the investment securities and any changes thereto, and our intent to sell, or whether it is more-likely-than-not that we would be required to sell the investment before recovery of the investment’s amortized cost basis.

As a result of failed auctions, our auction rate instruments are not currently liquid. Due to the continuation of the unstable credit environment, we believe that the recovery period for most of our auction rate instruments will exceed 12 months. Accordingly, we have classified the fair value of the auction rate instruments that were not redeemed prior to September 30, 2012 as long-term.

8

LCA-Vision Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

3. Fair Values of Financial Instruments

U.S. GAAP establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1:	Quoted prices for identical assets or liabilities in active markets at the measurement date
Level 2:	Observable market-based inputs or unobservable inputs that are corroborated by market data at the measurement date
Level 3:	Unobservable inputs reflecting management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The following tables summarize fair value measurements by level at September 30, 2012 and December 31, 2011 for assets and liabilities measured at fair value on a recurring basis (dollars in thousands):

	Level 1				Level 2				Level 3				Total
Description	2012		2011		2012		2011		2012		2011		2012		2011
Investments	$	2,804	$	—	$	—	$	25,311	$	923	$	902	$	3,727	$	26,213
Total assets at fair value	$	2,804	$	—	$	—	$	25,311	$	923	$	902	$	3,727	$	26,213

The fair values of some investment securities included within our investment portfolio were based on quoted market prices from various stock and bond exchanges. Certificates of deposit have original maturities greater than 90 days and less than one year. Certain of our debt securities were classified at fair value utilizing Level 2 inputs in the prior year. For these securities, fair value was measured using observable market data that includes dealer quotes, live trading levels, trade execution data, credit information and the bond’s terms and conditions.

The fair values of our auction rate instruments are classified in Level 3 because they are valued using a trinomial discount model due to insufficient observable auction rate market information available to determine the fair value of these investments. The determination of the fair value of the auction rate instruments employs assumptions including financial standing of the issuer of the instruments, final stated maturities, estimates of the probability of the issue being called prior to final maturity (ranging from 84.0% to 87.6%), estimates of the probability of defaults (ranging from 11.9% to 14.1%) and recoveries (ranging from 40% to 60%), expected changes in interest rates paid on the securities, interest rates paid on similar instruments, and an estimated illiquidity discount (ranging from 3.5% to 4.5%) due to extended redemption periods. Significant changes in any of those inputs in isolation would result in a significantly different fair value measurement. Generally, a change in the assumption used for the probability of default is accompanied by a directionally similar change in the assumption used for the probability of principal returned prior to maturity and the liquidity risk premium.

9

LCA-Vision Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

There were no transfers between Level 1 and Level 2 measurements in the three and nine months ended September 30, 2012 and 2011. The following table sets forth the reconciliation of beginning and ending balances for each major category of assets measured at fair value using significant unobservable inputs (Level 3) for the three and nine months ended September 31, 2012 and 2011 (dollars in thousands):

	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2012		2011			2012			2011
Balance at beginning of period	$	923	$	954		$	902		$	951
Losses included in earnings		—		(21	)		(11	)		(21	)
Gains included in other comprehensive income		—		—			32			3
Balance as of September 30	$	923	$	933		$	923		$	933

4. Income Taxes

The following table presents the components of our income tax expense for the following periods (dollars in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Current:
Federal	$	6		$	7		$	19		$	18
State and local		16			25			51			131
Total Current		22			32			70			149
Deferred:
Federal	$	—		$	—		$	—		$	—
State and local		—			—			—			—
Total Deferred		—			—			—			—
Income tax expense	$	22		$	32		$	70		$	149
Effective income tax rate		0.6	%		0.9	%		2.5	%		3.4	%

Our effective tax rate for the three and nine month periods ended September 30, 2012 is impacted by a full valuation allowance against all of our deferred tax assets, net of deferred tax liabilities.

As of September 30, 2012 and December 31, 2011, the net deferred tax assets are offset by full valuation allowances because it is not more-likely-than-not that we will realize our deferred tax assets. We did not record the related tax benefits in the United States and state jurisdictions during the three and nine month periods ended September 30, 2012. Income tax expense for the three and nine months ended September 30, 2012 and 2011 includes interest on unrecognized tax benefits and state taxes in certain jurisdictions.

During the three and nine month periods ended September 30, 2012, there were no significant changes to the liability for unrecognized tax benefits. All interest and penalties related to unrecognized tax benefits are recorded as a component of income tax. The total amount of unrecognized tax benefits at each of September 30, 2012 and December 31, 2011 was $610,000 and $614,000, respectively. It is reasonably possible that the amount of the total unrecognized tax benefits may change in the next 12 months. However, we do not believe that any anticipated change will be material to the Condensed Consolidated Financial Statements.

10

LCA-Vision Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

5. Earnings Per Common Share

We calculate basic earnings per common share data using the weighted average number of common shares outstanding during the period. Diluted per share data reflects the potential dilution that would occur if common stock equivalents were exercised or converted to common stock but only to the extent that they are considered dilutive to our earnings. The following table is a reconciliation of basic and diluted per share data for the following periods (dollars in thousands, except per share amounts):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Basic Loss
Net loss	$	(3,549	)	$	(3,800	)	$	(2,893	)	$	(4,546	)
Weighted average shares outstanding		19,017			18,838			18,968			18,798
Basic loss per common share	$	(0.19	)	$	(0.20	)	$	(0.15	)	$	(0.24	)
Diluted Loss
Net loss	$	(3,549	)	$	(3,800	)	$	(2,893	)	$	(4,546	)
Weighted average shares outstanding		19,017			18,838			18,968			18,798
Effect of dilutive securities
Stock options		—			—			—			—
Restricted stock		—			—			—			—
Weighted average common shares and potential dilutive shares		19,017			18,838			18,968			18,798
Diluted loss per common share	$	(0.19	)	$	(0.20	)	$	(0.15	)	$	(0.24	)
Anti-dilutive options (excluded from diluted net loss per share computations)		489			705			363			448

6. Stock-Based Compensation

We have stock incentive plans through which employees and directors have been or are granted stock-based compensation. We recognize compensation expense for the grant date fair value of stock-based awards over the applicable vesting period. The components of our pre-tax stock-based compensation expense, net of forfeitures and associated income tax effect, were as follows for the following periods (dollars in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
Stock options	$	15	$	18	$	46	$	53
Restricted stock		434		414		1,485		1,206
		449		432		1,531		1,259
Income tax effect		174		166		594		486
	$	275	$	266	$	937	$	773

We estimate the fair value of stock options granted using the Black-Scholes option-pricing model. This model requires several assumptions, which we have developed and update based on historical trends and current market observations. The accuracy of these assumptions is critical to the estimate of fair value for these equity instruments.

Our restricted stock unit awards include both time-based awards that vest ratably over three years and restricted stock units that are tied to the achievement of certain financial targets and stock performance criteria and cliff-vest in three years. The financial targets include revenue measurements. Total stockholder return is considered a market condition and the fair value of those awards was calculated using a Monte Carlo simulation valuation model.

11

LCA-Vision Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

7. Restructuring Charges

At September 30, 2012 and December 31, 2011, we included short-term restructuring reserves of $1.1 million and $1.3 million, respectively, in “Accrued liabilities and other” in the Condensed Consolidated Balance Sheets. Long-term restructuring reserves were $317,000 and $1.0 million at September 30, 2012 and December 31, 2011, respectively, and were included in “Other long-term liabilities.” The decline in restructuring reserves relates primarily to lease payments for previously closed vision centers during the three and nine months ended September 30, 2012.

The following table summarizes the restructuring reserve for the three and nine months ended September 30, 2012 (dollars in thousands):

	Employee Separation Costs			Contract Termination Costs			Total
Balance at December 31, 2011	$	20		$	2,298		$	2,318
Liabilities recognized		—			—			—
Payments		(20	)		(291	)		(311	)
Balance at March 31, 2012	$	—		$	2,007		$	2,007
Liabilities recognized		—			—			—
Payments		—			(294	)		(294	)
Balance as of June 30, 2012	$	—		$	1,713		$	1,713
Liabilities recognized		—			10			10
Payments		—			(303	)		(303	)
Balance as of September 30, 2012	$	—		$	1,420		$	1,420

8. Debt

We prepaid our outstanding bank loan in full in June 2012, reducing our total debt to zero. Our outstanding debt was $4.0 million as of December 31, 2011, of which $3.0 million was due within 12 months.

9. Comprehensive Income (Loss)

The components of accumulated other comprehensive income consisted of the following (dollars in thousands):

	September 30, 2012		December 31, 2011
Foreign currency translation adjustment	$	739	$	572
Unrealized investment gain		41		11
Accumulated other comprehensive income	$	780	$	583

The components of comprehensive loss consisted of the following for the following periods (dollars in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Net loss	$	(3,549	)	$	(3,800	)	$	(2,893	)	$	(4,546	)
Unrealized investment (loss) gain		—			(54	)		30			(97	)
Foreign currency translation		189			(258	)		167			(149	)
Comprehensive loss	$	(3,360	)	$	(4,112	)	$	(2,696	)	$	(4,792	)

12

LCA-Vision Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

10. Commitments and Contingencies

Our business results in medical malpractice lawsuits. We are insured through our captive insurance company to provide coverage for current claims brought against us. We use the captive insurance company for both primary insurance and excess liability coverage. A number of claims are now pending with our captive insurance company.

Our loss reserves are based on our historical claim experience, comparable industry experience and recent trends that would impact the ultimate settlement of claims. However, due to the uncertainties inherent in the determination of these liabilities, the ultimate settlement of claims incurred through September 30, 2012 could differ from the amounts recorded. At September 30, 2012 and December 31, 2011, we maintained insurance reserves of $6.9 million and $7.2 million, respectively, of which $909,000 and $951,000 have been classified as current within the caption “Accrued liabilities and other” in the Condensed Consolidated Balance Sheets. Although our insurance reserve reflects our best estimate of the amount of probable loss, we believe the range of loss that is reasonably possible to have been incurred to be approximately $5.1 million to $12.2 million at September 30, 2012. We record any adjustment to these estimates in the period determined.

During 2012, we entered into certain marketing commitments which require us to spend an aggregate of $1.1 million over the next three years.

In addition to the above, we are periodically subject to various other claims and lawsuits. We believe that none of these other claims or lawsuits to which we are currently subject, individually or in the aggregate, will have a material adverse affect on our business, financial condition, results of operations or cash flows.

13

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Information included in this Quarterly Report on Form 10-Q contains forward-looking statements that involve potential risks and uncertainties. Actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed herein and those discussed in our Annual Report on Form 10-K for the year ended December 31, 2011. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date thereof.

We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (SEC) under the Exchange Act. These reports and other information filed by us may be read and copied at the Public Reference Room of the SEC, 100 F Street N.E., Washington, D.C. 20549. Information may be obtained about the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website (www.sec.gov) that contains reports, proxy and information statements and other information about issuers that we file electronically with the SEC.

This Management’s Discussion and Analysis section provides an overview of our financial condition as of September 30, 2012, and the results of operations for the three and nine months ended September 30, 2012 and 2011. This discussion should be read in conjunction with our Condensed Consolidated Financial Statements and the accompanying Notes, as well as our Annual Report on Form 10-K for the year ended December 31, 2011. Results of interim periods may not be indicative of the results for subsequent periods or the full year.

14

Overview

Key financial highlights for the three months ended September 30, 2012 include (all comparisons are with the same period of 2011):

• Revenues were $20.0 million compared with $21.8 million; adjusted revenues were $19.5 million compared with $20.8 million.

• Procedure volume was 11,510 procedures versus 12,444 procedures.

• Operating loss narrowed to $3.7 million from $4.1 million; adjusted operating loss narrowed to $4.2 million from $5.0 million. The improvement reflects a decrease in variable costs, lower general and administrative costs and a decrease in spending on marketing and advertising, offset partially by costs incurred in connection with our business expansion initiatives.

• Marketing cost per eye was $417 compared with $426.

• Net loss was $3.5 million, or $0.19 per share, compared with a net loss of $3.8 million, or $0.20 per share.

Key financial highlights for the nine months ended September 30, 2012 include (all comparisons are with the same period of 2011):

• Revenues increased 3.6% to $81.3 million from $78.5 million; adjusted revenues increased 5.6% to $79.3 million from $75.1 million.

• Procedure volume increased 3.4% to 46,912 procedures from 45,382 procedures.

• Operating loss was $3.3 million, a $1.6 million improvement from an operating loss of $4.9 million; adjusted operating loss was $5.2 million, a $2.8 million improvement from an adjusted operating loss of $8.0 million. The improvement reflects higher procedure revenue, lower variable costs, a decrease in general and administrative expenses and a decline in depreciation expense, offset partially by higher spending on marketing and advertising and costs incurred in connection with our business expansion initiatives.

• Marketing cost per eye was $390 compared with $391.

• Net loss was $2.9 million, or $0.15 per share, a $1.6 million improvement from a net loss of $4.5 million, or $0.24 per share.

• Cash and investments totaled $34.9 million as of September 30, 2012, compared with $44.8 million as of December 31, 2011. The cash and investment balance for the first nine months of 2012 was impacted primarily by $4.0 million of payments to retire all outstanding debt, $2.3 million of investment in developing the cataract services business, and $5.7 million of changes in working capital, offset partially by $2.1 million of cash sources from other activity.

We derive substantially all of our revenues from the delivery of laser vision correction procedures performed in our U.S. vision centers. Our revenues, therefore, depend on our volume of procedures, and are impacted by a number of factors, including the following:

• General economic conditions and consumer confidence and discretionary spending levels,

• Our ability to generate customers through our arrangements with managed care companies, direct-to-consumer advertising, and word-of-mouth referrals,

• The availability of patient financing,

• Our ability to manage equipment and operating costs, and

• The impact of competitors and discounting practices in our industry.

Other factors that impact our revenues include:

• Deferred revenue from the sale, prior to June 15, 2007, of separately priced acuity programs, and

• Our mix of procedures among the different types of laser technology.

15

Because our revenues are a function of the number of laser vision correction procedures performed and the pricing for these services, and many of our costs are fixed, our vision centers have a relatively high degree of operating leverage. As a result, our level of procedure volume can have a significant impact on our level of profitability. The following table details the number of laser vision correction procedures performed at our consolidated vision centers. Included within total procedure volume are laser vision correction, cataract and implantable collamer lens procedures.

	2012		2011
First quarter		20,987		18,857
Second quarter		14,415		14,081
Third quarter		11,510		12,444
Fourth quarter				14,205
Year		46,912		59,587

As of September 30, 2012, we operated 53 LasikPlus^® vision centers in the United States.

Economic conditions in the United States have resulted in cautious high-end discretionary spending for many consumers that has continued to impact our procedure volume and operating results. We have no immediate plans to open any new full service vision centers until we move closer to sustained profitability in our core laser vision correction business. We will open a satellite LasikPlus^® vision center in Chicago during the fourth quarter to leverage our marketing spending in that market. The satellite center will perform pre-operative and post-operative exams, providing added convenience for patients who live considerable distances from our full-service LasikPlus^® vision centers in that market.

We have provided both adjusted revenues and operating losses as a means of measuring performance that adjusts for the non-cash impact of accounting for separately priced extended warranties which we offered prior to June 15, 2007. We believe the adjusted information better reflects operating performance and therefore is more meaningful to investors. A reconciliation of revenues and operating losses reported in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) is provided below (dollars in thousands).

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Revenues
Reported U.S. GAAP	$	20,009		$	21,790		$	81,298		$	78,489
Adjustments
Amortization of prior deferred revenue		(555	)		(1,031	)		(2,043	)		(3,437	)
Adjusted revenues	$	19,454		$	20,759		$	79,255		$	75,052
Operating Loss
Reported U.S. GAAP	$	(3,747	)	$	(4,102	)	$	(3,321	)	$	(4,889	)
Adjustments
Amortization of prior deferred revenue		(555	)		(1,031	)		(2,043	)		(3,437	)
Amortization of prior professional fees		56			103			204			344
Adjusted operating loss	$	(4,246	)	$	(5,030	)	$	(5,160	)	$	(7,982	)

16

Results of Operations for the Three Months Ended September 30, 2012 Compared to the Same Period in 2011

Revenues

In the third quarter of 2012, revenues decreased by $1.8 million, or 8.2%, to $20.0 million from $21.8 million in the third quarter of 2011. Procedure volume decreased 7.5% to 11,510 in the third quarter of 2012 from 12,444 in the third quarter of 2011. The adjusted average reported revenue per procedure, which excludes the impact of deferring revenue from separately priced extended warranties, increased to $1,690 in the third quarter of 2012 from $1,668 in the third quarter of 2011, and decreased from $1,699 in the second quarter of 2012. The components of the revenue change include (dollars in thousands):

Decrease in revenue from lower procedure volume	$	(1,557	)
Impact from increase in average procedure price, adjusted for revenue deferral		252
Change in deferred revenue		(476	)
Decrease in revenues	$	(1,781	)

The decrease in procedure volume during the third quarter was driven, in part, by continued cautious consumer spending, as well as by factors specific to our direct-to-consumer marketing model that made it difficult to have our advertising messages heard. These impacts were partially offset by improved operational metrics, including appointment show rate and conversion rate.

Operating costs and expenses

Our operating costs and expenses include:

• Medical professional and license fees, including per procedure fees for the ophthalmologists performing laser vision correction and other services, and per procedure license fees paid to the equipment suppliers of our excimer and femtosecond lasers,

• Direct costs of services, including the salary component of physician compensation for certain physicians employed by us, staff compensation, facility costs of operating laser vision correction centers, equipment lease and maintenance costs, medical malpractice insurance costs, surgical supplies, financing charges for third-party patient financing, and other costs related to revenues,

• General and administrative costs, including corporate headquarters and call center staff expense, and other overhead costs,

• Marketing and advertising costs, and

• Depreciation of equipment and leasehold improvements.

Medical professional and license fees

Medical professional and license fees in the third quarter of 2012, totaling $4.6 million, decreased by $533,000, or 10.3%, from the third quarter of 2011. The decrease was due to a decrease in our license and physician fees due to lower procedure volume and the renegotiation of license fees with one of our suppliers. The amortization of the deferred medical professional fees attributable to prior years was $56,000 in the third quarter of 2012 and $103,000 in the third quarter of 2011.

Direct costs of services

Direct costs of services decreased $393,000, or 3.8%, in the third quarter of 2012 to $10.1 million from $10.5 million in the third quarter of 2011. The decrease was due primarily to lower insurance costs of $297,000 because of favorable actuarial valuation changes resulting from updated claims experience, state taxes of $159,000 primarily due to a prior year unfavorable state sales tax settlement and other operating expenses of $166,000, due to the timing of vision center renovations activity in 2012 compared with 2011. Partially offsetting the decreases was an increase in salary expense of $347,000 due to merit increases and new positions.

General and administrative

General and administrative expenses decreased in the third quarter of 2012 by $549,000, or 15.3%, from the third quarter of 2011, due primarily to decreased professional fees from the prior year related to business expansion initiatives.

17

Marketing and advertising

Marketing and advertising expenses in the third quarter of 2012 decreased by $502,000, or 9.5%, from the third quarter of 2011. These expenses were 24.0% of revenues in the third quarter of 2012, compared to 24.3% during the same period of 2011. Adjusted marketing cost per eye, excluding new business spend, decreased to $413 in the third quarter of 2012 compared with $426 in the same period of 2011. We adjust our marketing spend levels continuously in an attempt to align spending levels with consumer demand. We are continuing to work to develop more efficient marketing techniques and expand local initiatives as a means to attract patients. Our future operating profitability will depend in large part on the success of our efforts in this regard.

Depreciation

Depreciation expense decreased in the third quarter of 2012 by approximately $235,000, or 16.1%, to $1.2 million, from $1.5 million in the third quarter of 2011. Due to reduced capital expenditures beginning in 2009 and impairment charges and disposals as a result of closed vision centers in 2009 and 2010, our depreciable base of assets has decreased.

Impairment and restructuring charges

During the third quarter of 2012 we recorded restructuring charges of $10,000 as an adjustment to previous estimates for contract termination costs for closed vision centers. We did not record any impairment or restructuring charges in the third quarter of 2011.

Gain on sale of assets

We sold assets held for sale for a gain of approximately $33,000 in the third quarter of 2012. Gain on sale of assets was $99,000 in the same period of 2011.

Non-operating income and expenses

Net investment income and other in the third quarter of 2012 decreased $114,000, or 34.1%, due primarily to lower yields and reduced investment balances.

Income taxes

Income tax expense for the third quarter of 2012 and 2011 included the interest on unrecognized tax benefits and state taxes in certain jurisdictions.

Results of Operations for the Nine Months Ended September 30, 2012 Compared to the Same Period in 2011

Revenues

In the nine months ended September 30, 2012, revenues increased by $2.8 million, or 3.6%, to $81.3 million from $78.5 million in the nine months ended September 30, 2011. Procedure volume increased 3.4% to 46,912 in the nine months ended September 30, 2012 from 45,382 in the nine months ended September 30, 2011. The adjusted average reported revenue per procedure, which excludes the impact of deferring revenue from separately priced extended warranties, increased to $1,689 in nine months ended September 30, 2012 from $1,654 in the nine months ended September 30, 2011. The components of the revenue change include (dollars in thousands):

Increase in revenue from higher procedure volume	$	2,530
Impact from increase in average procedure price, adjusted for revenue deferral		1,673
Change in deferred revenue		(1,394	)
Increase in revenues	$	2,809

Medical professional and license fees

Medical professional and license fees in the nine months ended September 30, 2012, totaling $19.1 million, decreased by $97,000, or 0.5%, from $19.2 million during the nine months ended September 30, 2011. The decrease was due to lower enhancement costs of $1.1 million related to improvements in our enhancement rates in 2012 which have resulted in lower expected costs compared to unfavorable experience for previously closed vision centers in 2011. Offsetting the decrease was increased physician fees of $347,000 and license fees of $594,000 associated with increased procedure volumes partially offset by lower per-procedure costs due to renegotiated license fees with a supplier. The amortization of the deferred medical professional fees attributable to prior years was $204,000 in the nine months ended September 30, 2012 and $344,000 in the same period of 2011.

18

Direct costs of services

Direct costs of services in the nine months ended September 30, 2012 increased $1.5 million, or 4.8%, to $33.5 million from $31.9 million in the same period of 2011. The increase was due primarily to salaries, benefits, and stock compensation expense of $1.4 million related to merit increases and filling open and new positions, including our business expansion roles. Additional increases included financing fees of $316,000 and bad debt expense of $150,000 as a result of increased procedure volume and changes in financing plan mix and insurance costs of $100,000. Partially offsetting the increases was a decrease in rent expense of $256,000 from recent favorable negotiations of leases and state taxes of $302,000 due to unfavorable audit assessments in the prior year.

General and administrative

General and administrative expenses decreased in the nine months ended September 30, 2012 by $426,000, or 4.0%, from the nine months ended September 30, 2011, due primarily to decreased professional services related to business expansion initiatives in 2011.

Marketing and advertising

Marketing and advertising expenses increased in the nine months ended September 30, 2012 by $553,000, or 3.1%, from the nine months ended September 30, 2011. These expenses were 22.5% of revenues in the nine months ended September 30, 2012, compared with 22.6% during the nine months ended September 30, 2011. Adjusted marketing cost per eye, which excludes the impact of new business marketing spend of $442,000 decreased to $381 in the nine months ended September 30, 2012 compared with $391 in the same period of 2011. We adjust our marketing spend levels continuously in an attempt to align spending levels with consumer demand. We are continuing to work to develop more efficient marketing techniques and expand local initiatives as a means to attract patients. Our future operating profitability will depend in large part on the success of our efforts in this regard.

Depreciation

Depreciation expense decreased in the nine months ended September 30, 2012 by $603,000, or 13.9%, to $3.7 million, from $4.3 million in the nine months ended September 30, 2011. Due to reduced capital expenditures beginning in 2009 and impairment charges and disposals as a result of closed vision centers in 2009 and 2010, our depreciable base of assets has decreased.

Impairment and restructuring charges

The net impairment and restructuring charges in the nine months ended September 30, 2012 were $47,000, which were comprised of impairment charges to reduce the carrying amount of long-lived assets in one vision center and adjustments to previous estimates for contract termination costs for closed vision centers. We incurred restructuring charges totaling $56,000 for the nine months ended September 30, 2011, comprised primarily of adjustments to previous estimates for contract termination costs for closed vision centers and additional severance costs.

Gain on sale of assets

We sold lasers and other assets held for sale for a gain of approximately $221,000 in the nine months ended September 30, 2012. Gain on sale of assets was $498,000 for the nine months ended September 30, 2011.

Non-operating income and expenses

Net investment income and other in the nine months ended September 30, 2012 increased $6,000, or 1.2%, due primarily to a reduction in interest expense as a result of paying off our debt balance in June 2012. Additionally, interest income on patient receivables increased $158,000 due to higher outstanding accounts receivable balances, offset by lower yields on investment income of $167,000.

Income taxes

Income tax expense for the nine months ended September 30, 2012 and 2011 includes the interest unrecognized tax benefits and state taxes in certain jurisdictions.

19

Liquidity and Capital Resources

At September 30, 2012, we held $34.0 million in cash and cash equivalents and short-term investments, a decrease of $9.9 million from $43.9 million at December 31, 2011. Our cash flows from operating, investing, and financing activities, as reflected in the Condensed Consolidated Statements of Cash Flows, are summarized as follows (dollars in thousands):

	Nine Months Ending
	September 30,
	2012			2011
Cash provided by (used in):
Operating activities	$	(4,960	)	$	(2,453	)
Investing activities		21,715			5,619
Financing activities		(4,304	)		(2,828	)
Net effect of exchange rate changes on cash and cash equivalents		167			(143	)
Net increase in cash and cash equivalents	$	12,618		$	195

Cash used in operating activities was $5.0 million for the nine months ended September 30, 2012 compared to $2.5 million for the same period of 2011. Although earnings increased in 2012 compared with 2011, increases in patient receivables, coupled with decreases in accounts payable and accrued liabilities, have resulted in decreased cash from operations in 2012 compared with 2011. We continue to manage working capital closely with particular focus on ensuring timely collection of outstanding patient receivables and the management of our trade payable obligations. Efforts have continued regarding cost control and cash conservation in order to maintain efficiencies in many discretionary areas.

At September 30, 2012, working capital amounted to $24.3 million compared to $29.7 million at December 31, 2011. Liquid assets (cash and cash equivalents, short-term investments and accounts receivable) amounted to 217.4% of current liabilities at September 30, 2012, compared to 187.1% at December 31, 2011.

We continue to offer our own patient financing. As of September 30, 2012, we had $4.2 million in patient receivables, net of allowance for doubtful accounts, which was an increase of $1.0 million, or 33.2% from December 31, 2011. In 2012, the amount of revenue internally financed has increased from the same period in 2011. We continually monitor the allowance for doubtful accounts and will adjust our lending criteria or require greater down payments if our experience indicates that is necessary. However, our ability to collect patient accounts depends, in part, on overall economic conditions. Bad debt expense was approximately 1% of revenue for the nine months ended September 30, 2012 and 2011.

During the nine months ended September 30, 2012, we purchased $39.7 million of investment securities and received proceeds from the sale of investment securities of $62.1 million. As our investments in corporate debt obligations matured in 2012, we purchased money market funds and certificates of deposit due to minimal returns on corporate debt. As of September 30, 2012, our cash and investment portfolio is comprised primarily of cash and certificates of deposit due to the low investment yields in the current market.

At September 30, 2012 and December 31, 2011, we held $1.1 million par value of various auction rate securities. The assets underlying the auction rate instruments are municipal bonds. Our auction rate instruments are not currently liquid. Maturity dates for our auction rate securities are 2030 and 2036. We have not redeemed any auction rate instruments in the first nine months of 2012. In 2011, issuers called at par $25,000 of the related securities, and we redeemed an additional $1.1 million at 81% of original par value. See Note 2 to the Condensed Consolidated Financial Statements for further information regarding our auction rate security investments.

During June 2012 we prepaid our remaining outstanding debt because the interest rate applicable to the debt exceeded our investment return rate. Loan repayments of $4.0 million for the nine months ended September 30, 2012 reflect an increase of $1.4 million, compared to the same period in 2011, due to our prepayment.

We have not opened any new full service vision centers in 2012 or 2011. Capital expenditures for the nine months ended September 30, 2012 and 2011 were $973,000 and $869,000, respectively, primarily associated with our business expansion initiatives.

20

Critical Accounting Estimates

There have been no material changes in the critical accounting policies described in Management’s Discussion and Analysis in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

Item 3. Quantitative and Qualitative Disclosure About Market Risk.

The carrying values of financial instruments, including cash and cash equivalents, accounts receivable and accounts payable, approximate fair value because of the short maturity of these instruments.

Long-term investments are comprised of auction rate securities that are currently failing auction. These investments are recorded at fair value using a trinomial discount model. We are divesting all auction rate securities as the market allows. There can be no assurance, however, that the issuers of the auction rate securities that we hold will redeem them in advance of their maturity or the restoration of a regularized auction market.

We have a low exposure to changes in foreign currency exchange rates and, as such, have not used derivative financial instruments to manage foreign currency fluctuation risk.

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

Under the supervision of and with the participation of our management, including the company’s Chief Operating Officer (COO) and Chief Financial Officer (CFO), an evaluation of the effectiveness of our disclosure controls and procedures was performed as of September 30, 2012. Based on this evaluation, the COO and CFO concluded that our disclosure controls and procedures are effective to ensure that material information is (1) accumulated and communicated to our management as appropriate to allow timely decisions regarding disclosure and (2) recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.

(b) Changes in Internal Control over Financial Reporting

Under the supervision of and with the participation of our management, including the COO and CFO, an evaluation of our internal control over financial reporting was performed as of September 30, 2012. Based on this evaluation, management concluded that there were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

21

PART II. OTHER INFORMATION.

Item 1. Legal Proceedings

Not applicable.

Item 1A. Risk Factors

For a discussion of risk factors attributable to our business, refer to Part 1, Item 1A, “Risk Factors,” contained in our Annual Report on Form 10-K for the year ended December 31, 2011. There have been no material changes to the risk factors disclosed in the Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

Exhibits Number	Description
31.1	COO Certification under Section 302 of the Sarbanes-Oxley Act of 2002
31.2	CFO Certification under Section 302 of the Sarbanes-Oxley Act of 2002
32	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*101.INS	XBRL Instance Document
*101.SCH	XBRL Taxonomy Extension Schema Document
*101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
*101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
*101.LAB	XBRL Taxonomy Extension Label Linkbase Document
*101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

22

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	LCA-VISION INC.
Date: November 1, 2012	/s/ David L. Thomas
	David L. Thomas
	Chief Operating Officer
Date: November 1, 2012	/s/ Michael J. Celebrezze
	Michael J. Celebrezze
	Senior Vice President of Finance,
	Chief Financial Officer and Treasurer

23

EX-31.1

Exhibit 31.1

Certification of Chief Operating Officer

I, David L. Thomas, certify that:

1. I have reviewed this report on Form 10-Q of LCA-Vision Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 1, 2012	/s/ David L. Thomas
	David L. Thomas
	Chief Operating Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

I, Michael J. Celebrezze, certify that:

1. I have reviewed this report on Form 10-Q of LCA-Vision Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 1, 2012	/s/ Michael J. Celebrezze
	Michael J. Celebrezze
	Senior Vice President of Finance,
	Chief Financial Officer and Treasurer

EX-32

Exhibit 32

CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of LCA-Vision Inc. (the “Company”), does hereby certify, to such officer’s knowledge, that:

This quarterly report on Form 10-Q for the period ended September 30, 2012 of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in this Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 1, 2012	/s/ David L. Thomas
	David L. Thomas
	Chief Operating Officer
Date: November 1, 2012	/s/ Michael J. Celebrezze
	Michael J. Celebrezze
	Senior Vice President of Finance,
	Chief Financial Officer and Treasurer

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Debt (Details Textual) (USD $)	Sep. 30, 2012	Jun. 30, 2012	Dec. 31, 2011
Debt (Textual) [Abstract]
Bank loan		$ 0	$ 4,000,000
Outstanding debt due within 12 months			$ 2,978,000

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Income Taxes (Details Textual) (USD $)	3 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2012	Dec. 31, 2011
Income Taxes (Textual) [Abstract]
Change in liability for unrecognized tax benefits	$ 0	$ 0
Unrecognized tax benefits	$ 610,000	$ 610,000	$ 614,000
Period in which unrecognized tax benefits may be changed		12 months

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Investments (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Unrealized gains and losses related to our investments designated as available-for-sale
Adjusted Cost	$ 3,686	$ 26,202
Gross Unrealized Gains	41	16
Gross Unrealized Losses		(5)
Fair Value	3,727	26,213
Corporate obligations [Member]
Unrealized gains and losses related to our investments designated as available-for-sale
Adjusted Cost		11,260
Gross Unrealized Gains
Gross Unrealized Losses		(1)
Fair Value		11,259
Certificates of deposit [Member]
Unrealized gains and losses related to our investments designated as available-for-sale
Adjusted Cost	2,804
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value	2,804
U.S. Government notes [Member]
Unrealized gains and losses related to our investments designated as available-for-sale
Adjusted Cost		14,049
Gross Unrealized Gains		7
Gross Unrealized Losses		(4)
Fair Value		14,052
Auction rate municipal securities [Member]
Unrealized gains and losses related to our investments designated as available-for-sale
Adjusted Cost	882	893
Gross Unrealized Gains	41	9
Gross Unrealized Losses
Fair Value	$ 923	$ 902

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Commitments and Contingencies (Details) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Commitments and Contingencies (Additional Textual) [Abstract]
Insurance reserves	$ 6,900,000	$ 7,200,000
Insurance reserves classified as current accrued liabilities and other	909,000	951,000
Marketing contract expense, 2012	1,100,000
Marketing contract expense, 2013	1,100,000
Marketing contract expense, 2014	1,100,000
Maximum [Member]
Commitments and Contingencies (Textual) [Abstract]
Estimate of the amount of probable loss	12,200,000
Minimum [Member]
Commitments and Contingencies (Textual) [Abstract]
Estimate of the amount of probable loss	$ 5,100,000

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Restructuring Charges (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012
Summary of restructuring reserve
Restructuring reserve, beginning balance	$ 1,713	$ 2,007	$ 2,318
Liabilities recognized	10
Payments	(303)	(294)	(311)
Restructuring reserve, ending balance	1,420	1,713	2,007
Employee Separation Costs [Member]
Summary of restructuring reserve
Restructuring reserve, beginning balance			20
Liabilities recognized
Payments			(20)
Restructuring reserve, ending balance
Contract Termination Costs [Member]
Summary of restructuring reserve
Restructuring reserve, beginning balance	1,713	2,007	2,298
Liabilities recognized	10
Payments	(303)	(294)	(291)
Restructuring reserve, ending balance	$ 1,420	$ 1,713	$ 2,007

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Income Taxes

9 Months Ended

Sep. 30, 2012

Income Taxes [Abstract]

Income Taxes

4. Income Taxes

The following table presents the components of our income tax expense for the following periods (dollars in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Current:
Federal	$	6		$	7		$	19		$	18
State and local		16			25			51			131
Total Current		22			32			70			149
Deferred:
Federal	$	—		$	—		$	—		$	—
State and local		—			—			—			—
Total Deferred		—			—			—			—
Income tax expense	$	22		$	32		$	70		$	149
Effective income tax rate		0.6	%		0.9	%		2.5	%		3.4	%

Our effective tax rate for the three and nine month periods ended September 30, 2012 is impacted by a full valuation allowance against all of our deferred tax assets, net of deferred tax liabilities.

As of September 30, 2012 and December 31, 2011, the net deferred tax assets are offset by full valuation allowances because it is not more-likely-than-not that we will realize our deferred tax assets. We did not record the related tax benefits in the United States and state jurisdictions during the three and nine month periods ended September 30, 2012. Income tax expense for the three and nine months ended September 30, 2012 and 2011 includes interest on unrecognized tax benefits and state taxes in certain jurisdictions.

During the three and nine month periods ended September 30, 2012, there were no significant changes to the liability for unrecognized tax benefits. All interest and penalties related to unrecognized tax benefits are recorded as a component of income tax. The total amount of unrecognized tax benefits at each of September 30, 2012 and December 31, 2011 was $610,000 and $614,000, respectively. It is reasonably possible that the amount of the total unrecognized tax benefits may change in the next 12 months. However, we do not believe that any anticipated change will be material to the Condensed Consolidated Financial Statements.

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Fair Values of Financial Instruments (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Assets:
Investments	$ 3,727	$ 26,213
Total assets at fair value	3,727	26,213
Level 1 [Member]
Assets:
Investments	2,804
Total assets at fair value	2,804
Level 2 [Member]
Assets:
Investments		25,311
Total assets at fair value		25,311
Level 3 [Member]
Assets:
Investments	923	902
Total assets at fair value	$ 923	$ 902

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Investments (Details Textual) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Investments (Textual) [Abstract]
Sale of debt securities, realized gains	$ 0	$ 8,000	$ 3,000	$ 35,000
Sale of debt securities, realized losses	0	22,000	0	44,000
Recognized unrealized gains in accumulated other comprehensive income	41,000		41,000		32,000
Recognized unrealized losses in accumulated other comprehensive income	0		0		129,000
Other-than-temporary impairments before taxes	0	0	11,000	0
Auction rate instruments recovery period, minimum, months			12 months
Auction rate municipal securities [Member]
Investments (Textual) [Abstract]
Auction rate securities, par value	$ 1,100,000		$ 1,100,000		$ 1,100,000
Maturity dates for auction rate securities range, low			2030
Maturity dates for auction rate securities range, high			2036

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Fair Values of Financial Instruments (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Jun. 30, 2012
Changes in Level 3 instruments
Balance at beginning of period	$ 954	$ 902	$ 951	$ 923
Losses included in earnings	(21)	(11)	(21)
Gains included in other comprehensive income		32	3
Balance as of September 30	$ 933	$ 923	$ 933	$ 923

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Fair Values of Financial Instruments (Details Textual)	9 Months Ended
	Sep. 30, 2012
Maximum [Member]
Fair Values of Financial Instruments (Textual) [Abstract]
Maturity period of certificates of deposit	1 year
Probability of the issue being called prior to final maturity	87.60%
Estimates of the probability of defaults	14.10%
Estimates of the probability of recovery	60.00%
Estimated illiquidity discount	4.50%
Minimum [Member]
Fair Values of Financial Instruments (Textual) [Abstract]
Maturity period of certificates of deposit	90 days
Probability of the issue being called prior to final maturity	84.00%
Estimates of the probability of defaults	11.90%
Estimates of the probability of recovery	40.00%
Estimated illiquidity discount	3.50%

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Fair Values of Financial Instruments

9 Months Ended

Sep. 30, 2012

Fair Values of Financial Instruments [Abstract]

Fair Values of Financial Instruments

3. Fair Values of Financial Instruments

U.S. GAAP establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1:	Quoted prices for identical assets or liabilities in active markets at the measurement date
Level 2:	Observable market-based inputs or unobservable inputs that are corroborated by market data at the measurement date
Level 3:	Unobservable inputs reflecting management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The following tables summarize fair value measurements by level at September 30, 2012 and December 31, 2011 for assets and liabilities measured at fair value on a recurring basis (dollars in thousands):

	Level 1				Level 2				Level 3				Total
Description	2012		2011		2012		2011		2012		2011		2012		2011
Investments	$	2,804	$	—	$	—	$	25,311	$	923	$	902	$	3,727	$	26,213
Total assets at fair value	$	2,804	$	—	$	—	$	25,311	$	923	$	902	$	3,727	$	26,213

The fair values of some investment securities included within our investment portfolio were based on quoted market prices from various stock and bond exchanges. Certificates of deposit have original maturities greater than 90 days and less than one year. Certain of our debt securities were classified at fair value utilizing Level 2 inputs in the prior year. For these securities, fair value was measured using observable market data that includes dealer quotes, live trading levels, trade execution data, credit information and the bond’s terms and conditions.

The fair values of our auction rate instruments are classified in Level 3 because they are valued using a trinomial discount model due to insufficient observable auction rate market information available to determine the fair value of these investments. The determination of the fair value of the auction rate instruments employs assumptions including financial standing of the issuer of the instruments, final stated maturities, estimates of the probability of the issue being called prior to final maturity (ranging from 84.0% to 87.6%), estimates of the probability of defaults (ranging from 11.9% to 14.1%) and recoveries (ranging from 40% to 60%), expected changes in interest rates paid on the securities, interest rates paid on similar instruments, and an estimated illiquidity discount (ranging from 3.5% to 4.5%) due to extended redemption periods. Significant changes in any of those inputs in isolation would result in a significantly different fair value measurement. Generally, a change in the assumption used for the probability of default is accompanied by a directionally similar change in the assumption used for the probability of principal returned prior to maturity and the liquidity risk premium.

There were no transfers between Level 1 and Level 2 measurements in the three and nine months ended September 30, 2012 and 2011. The following table sets forth the reconciliation of beginning and ending balances for each major category of assets measured at fair value using significant unobservable inputs (Level 3) for the three and nine months ended September 31, 2012 and 2011 (dollars in thousands):

	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2012		2011			2012			2011
Balance at beginning of period	$	923	$	954		$	902		$	951
Losses included in earnings		—		(21	)		(11	)		(21	)
Gains included in other comprehensive income		—		—			32			3
Balance as of September 30	$	923	$	933		$	923		$	933

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Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Current:
Federal	$ 6	$ 7	$ 19	$ 18
State and local	16	25	51	131
Total Current	22	32	70	149
Deferred:
Federal
State and local
Total Deferred
Income tax expense	$ 22	$ 32	$ 70	$ 149
Effective income tax rate	0.60%	0.90%	2.50%	3.40%

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Comprehensive Income (Loss) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Components of accumulated other comprehensive income
Foreign currency translation adjustment	$ 739	$ 572
Unrealized investment gain	41	11
Accumulated other comprehensive income	$ 780	$ 583

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Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Current assets
Cash and cash equivalents	$ 31,186	$ 18,568
Short-term investments	2,804	25,311
Patient receivables, net of allowances of $1,034 and $1,035, respectively	2,998	2,366
Other accounts receivable, net	2,043	1,974
Prepaid expenses and other	3,210	4,254
Total current assets	42,241	52,473
Property and equipment, net	7,788	10,637
Long-term investments	923	902
Patient receivables, net of allowances of $705 and $634	1,177	769
Other assets	777	1,652
Total assets	52,906	66,433
Current liabilities
Accounts payable	5,443	8,103
Accrued liabilities and other	11,283	12,175
Deferred revenue	1,229	2,516
Debt obligations maturing within one year		2,978
Total current liabilities	17,955	25,772
Long-term insurance reserves, less current portion	5,988	6,264
Long-term debt obligations, less current portion		1,026
Other long-term liabilities	4,164	7,106
Stockholders' investment
Common stock ($.001 par value; 25,291,637 shares issued and 19,024,305 and 18,858,147 shares outstanding, respectively)	25	25
Contributed capital	178,818	177,287
Common stock in treasury, at cost (6,267,332 shares and 6,433,490 shares, respectively)	(111,658)	(112,910)
Accumulated deficit	(43,166)	(38,720)
Accumulated other comprehensive income	780	583
Total stockholders' investment	24,799	26,265
Total liabilities and stockholders' investment	$ 52,906	$ 66,433

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Description of Business and Accounting Policies

9 Months Ended

Sep. 30, 2012

Description of Business and Accounting Policies [Abstract]

Description of Business and Accounting Policies

1. Description of Business and Accounting Policies

Description of Business

We are a provider of fixed-site laser vision correction services at our LasikPlus^® vision centers. Our vision centers provide the staff, facilities, equipment and support services for performing laser vision correction that employ advanced laser technologies to help correct nearsightedness, farsightedness and astigmatism. We currently use two suppliers for fixed-site excimer lasers: Abbott Medical Optics and Alcon, Inc. Our vision centers are supported by independent ophthalmologists and credentialed optometrists, as well as other healthcare professionals. The ophthalmologists perform the laser vision correction procedures in our vision centers, and ophthalmologists or optometrists conduct pre-procedure evaluations and post-operative follow-up care in-center. Most of our patients currently receive a procedure called LASIK, which we began performing in the United States in 1996.

As of September 30, 2012, we operated 53 LasikPlus ^® fixed-site laser vision correction centers in the United States. Included in the 53 vision centers are two vision centers licensed to ophthalmologists who use our trademarks. Beginning in late 2011, we began offering cataract, premium intraocular lens (“IOL”) and implantable collamer lens (“ICL”) services in certain of our existing markets under our new Visium Eye Institute™ brand.

Basis of Presentation

Our Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, include all adjustments necessary for a fair presentation of our financial position, results of operations, and cash flows for each period presented. These adjustments are of a normal and recurring nature unless otherwise disclosed herein. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to SEC rules and regulations.

We derived the Condensed Consolidated Balance Sheet as of December 31, 2011 from audited financial statements, but did not include all disclosures required by U.S. GAAP. These Condensed Consolidated Financial Statements should be read in conjunction with our 2011 Annual Report on Form 10-K. Operating results for the three and nine month periods ended September 30, 2012 are not necessarily indicative of the results expected in subsequent quarters or for the year ending December 31, 2012.

Use of Estimates

The preparation of our Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Significant items that are subject to such estimates and assumptions include investment valuation, allowance for doubtful accounts against patient receivables, insurance reserves, income taxes and enhancement accruals. Although management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, actual results could differ significantly from the estimates under different assumptions or conditions.

Reclassifications

We have reclassified certain prior-period amounts in the Condensed Consolidated Balance Sheets and Statements of Cash Flows to conform to current period presentation. The reclassifications were not material to the Condensed Consolidated Financial Statements.

Patient Receivables and Allowance for Doubtful Accounts

We provide financing to some of our patients, including those who could not otherwise obtain third-party financing. The terms of the financing usually require the patient to pay an up-front fee which is intended to cover some or all of our variable costs, and then generally we deduct the remainder automatically from the patient’s bank account over a period of 12 to 36 months. We have recorded an allowance for doubtful accounts as a best estimate of the amount of probable credit losses from our patient financing program. Each month, we review the allowance and adjust the allowance based upon our own experience with patient financing. We charge-off receivables against it when it is probable that a receivable will not be recovered. Our policy is to reserve for all patient receivables that remain open past their financial maturity date and to provide reserves for patient receivables prior to the maturity date so as to bring patient receivables, net of reserves, down to the estimated net realizable value based on historical collectability rates, recent default activity and the current credit environment. Receivable balances that remain open past their financial maturity amounted to $101,000 and $160,000 at September 30, 2012 and December 31, 2011, respectively.

We maintained an allowance for doubtful accounts on our patient receivables of $1.7 million at September 30, 2012 and December 31, 2011. During the three and nine months ended September 30, 2012, we wrote-off $296,000 and $712,000, respectively, of receivables against the allowance for doubtful accounts and recovered $40,000 and $102,000, respectively, in receivables previously written off. During the three and nine months ended September 30, 2011, we wrote-off $213,000 and $590,000, respectively, of receivables against the allowance for doubtful accounts and recovered $23,000 and $110,000, respectively, in receivables previously written off.

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Stock-Based Compensation (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Components of pre-tax stock-based compensation expense, net of forfeitures, and associated income tax effect
Pre-tax stock-based compensation expense	$ 449	$ 432	$ 1,531	$ 1,259
Income tax effect	174	166	594	486
Pre-tax stock-based compensation expense, net of forfeitures and associated income tax effect	275	266	937	773
Stock options [Member]
Components of pre-tax stock-based compensation expense, net of forfeitures, and associated income tax effect
Pre-tax stock-based compensation expense	15	18	46	53
Restricted stock [Member]
Components of pre-tax stock-based compensation expense, net of forfeitures, and associated income tax effect
Pre-tax stock-based compensation expense	$ 434	$ 414	$ 1,485	$ 1,206

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Restructuring Charges (Tables)

9 Months Ended

Sep. 30, 2012

Restructuring Charges [Abstract]

Summary of restructuring reserve

	Employee Separation Costs			Contract Termination Costs			Total
Balance at December 31, 2011	$	20		$	2,298		$	2,318
Liabilities recognized		—			—			—
Payments		(20	)		(291	)		(311	)
Balance at March 31, 2012	$	—		$	2,007		$	2,007
Liabilities recognized		—			—			—
Payments		—			(294	)		(294	)
Balance as of June 30, 2012	$	—		$	1,713		$	1,713
Liabilities recognized		—			10			10
Payments		—			(303	)		(303	)
Balance as of September 30, 2012	$	—		$	1,420		$	1,420

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Stock-Based Compensation (Details Textual)	9 Months Ended
	Sep. 30, 2012
Restricted stock unit, time-based awards [Member]
Stock-Based Compensation (Textual) [Abstract]
Vesting period of stock-based compensation awards	3 years
Restricted stock unit, performance based awards [Member]
Stock-Based Compensation (Textual) [Abstract]
Vesting period of stock-based compensation awards	3 years

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Description of Business and Accounting Policies (Details) (USD $)	3 Months Ended		9 Months Ended			9 Months Ended	12 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012 Centres	Sep. 30, 2011	Dec. 31, 2011	Sep. 30, 2012 Patient receivable [Member]	Dec. 31, 2011 Patient receivable [Member]	Sep. 30, 2012 Maximum [Member]	Sep. 30, 2012 Minimum [Member]
Description of Business and Accounting Policies (Textual) [Abstract]
Period over which patient receivables are recovered								36 months	12 months
Doubtful accounts on our patient receivables			$ 704,000	$ 554,000		$ 1,700,000	$ 1,700,000
Description of Business and Accounting (Additional Textual) [Abstract]
Number of vision correction centers operated			53
Number of vision correction centers licensed to supplier who use trade mark			2
Receivable balances that remain open past maturity amount	101,000		101,000		160,000
Receivables wrote-off against the allowance for doubtful	296,000	210,000	710,000	576,000
Receivables recovered which were previously written off	$ 40,000	$ 23,000	$ 102,000	$ 110,000

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Investments

9 Months Ended

Sep. 30, 2012

Investments [Abstract]

Investments

2. Investments

Management determines the appropriate classification of securities at the time of purchase and reevaluates such designation as of each balance sheet date. Currently, we classify all securities as available-for-sale. We carry available-for-sale securities at fair value, with temporary unrealized gains and losses, net of tax, reported in accumulated other comprehensive income, a component of stockholders’ investment. The amortized cost of debt securities in this category reflects amortization of premiums and accretion of discounts to maturity computed under the effective interest method. We include this amortization in the caption “Net investment income and other” within the Condensed Consolidated Statement of Operations and Comprehensive Income. We also include in “Net investment income and other” realized gains and losses on sales of securities and declines in value of securities determined to be other-than-temporary. We base the cost of securities sold upon the specific identification method. We include interest and dividends on securities classified as available-for-sale in net investment income.

The following table summarizes unrealized gains and losses related to our investments designated as available-for-sale (dollars in thousands):

	September 30, 2012
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Certificates of deposit	$	2,804	$	—	$	—		$	2,804
Auction rate municipal securities		882		41		—			923
Total investments	$	3,686	$	41	$	—		$	3,727
	December 31, 2011
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Corporate obligations	$	11,260	$	—	$	(1	)	$	11,259
U.S. Government notes		14,049		7		(4	)		14,052
Auction rate municipal securities		893		9		—			902
Total investments	$	26,202	$	16	$	(5	)	$	26,213

The following table shows the net carrying value (amortized cost) and estimated fair value of investments at September 30, 2012 by contractual maturity (dollars in thousands). Expected maturities may differ from contractual maturities because the issuers of the securities may have the right or obligation to prepay obligations without prepayment penalties.

	Amortized Cost		Estimated Fair Value
Due in one year or less	$	2,804	$	2,804
Due after one year through three years		—		—
Due after three years		882		923
Total investments	$	3,686	$	3,727

The following tables present gross unrealized losses and fair values for those investments that were in an unrealized loss position as of September 30, 2012 and December 31, 2011, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (dollars in thousands):

	September 30, 2012				December 31, 2011
	Less than 12 Months				Less than 12 Months
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Corporate obligations	$	—	$	—	$	3,810	$	(1	)
U.S. Government notes		—		—		6,758		(4	)
	$	—	$	—	$	10,568	$	(5	)

We had no realized gains or losses on the sale of our debt securities for the three months ended September 30, 2012, and realized gains of $3,000 and no losses for the nine months ended September 30, 2012. We had realized gains of $8,000 and losses of $22,000 for the three months ended September 30, 2011 and realized gains of $35,000 and losses of $44,000 for the nine months ended September 30, 2011.

We recognized unrealized gains of $41,000 and no unrealized losses in accumulated other comprehensive income as of September 30, 2012. We recognized unrealized gains of $16,000 and unrealized losses of $5,000 as of December 31, 2011.

Auction Rate Securities

At September 30, 2012 and December 31, 2011, we held $1.1 million par value of various auction rate securities. The assets underlying the auction rate instruments are municipal bonds. Maturity dates for our auction rate municipal securities are 2030 and 2036. Given the extent of the decline in fair value associated with our auction rate securities, we recognized an other-than-temporary impairment of $11,000, before taxes, during the nine months ended September 30, 2012. No other-than-temporary impairments were recognized during the three months ended September 30, 2012 or during the three and nine months ended September 30, 2011. When evaluating investments for other-than-temporary impairment, we review factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer of the investment securities and any changes thereto, and our intent to sell, or whether it is more-likely-than-not that we would be required to sell the investment before recovery of the investment’s amortized cost basis.

As a result of failed auctions, our auction rate instruments are not currently liquid. Due to the continuation of the unstable credit environment, we believe that the recovery period for most of our auction rate instruments will exceed 12 months. Accordingly, we have classified the fair value of the auction rate instruments that were not redeemed prior to September 30, 2012 as long-term.

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Condensed Consolidated Balance Sheets [Abstract]
Patient receivables, net of allowances - Current	$ 1,034	$ 1,035
Patient receivables, net of allowances - Non-current	$ 705	$ 634
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares issued	25,291,637	25,291,637
Common stock, shares outstanding	19,024,305	18,858,147
Treasury stock, shares	6,267,332	6,433,490

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Investments (Tables)

9 Months Ended

Sep. 30, 2012

Investments [Abstract]

Unrealized gains and losses related to our investments designated as available-for-sale

	September 30, 2012
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Certificates of deposit	$	2,804	$	—	$	—		$	2,804
Auction rate municipal securities		882		41		—			923
Total investments	$	3,686	$	41	$	—		$	3,727
	December 31, 2011
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Corporate obligations	$	11,260	$	—	$	(1	)	$	11,259
U.S. Government notes		14,049		7		(4	)		14,052
Auction rate municipal securities		893		9		—			902
Total investments	$	26,202	$	16	$	(5	)	$	26,213

Schedule of net carrying value (amortized cost) and estimated fair value of investments

	Amortized Cost		Estimated Fair Value
Due in one year or less	$	2,804	$	2,804
Due after one year through three years		—		—
Due after three years		882		923
Total investments	$	3,686	$	3,727

Schedule of unrealized losses and fair values of investments in unrealized loss position aggregated by investment category and length of time that individual securities have been in a continuous loss position

	September 30, 2012				December 31, 2011
	Less than 12 Months				Less than 12 Months
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Corporate obligations	$	—	$	—	$	3,810	$	(1	)
U.S. Government notes		—		—		6,758		(4	)
	$	—	$	—	$	10,568	$	(5	)

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Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Oct. 25, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	LCA VISION INC
Entity Central Index Key	0001003130
Document Type	10-Q
Document Period End Date	Sep. 30, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		19,024,305

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Fair Values of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2012

Fair Values of Financial Instruments [Abstract]

Fair value measurements by level for assets and liabilities measured at fair value on a recurring basis

	Level 1				Level 2				Level 3				Total
Description	2012		2011		2012		2011		2012		2011		2012		2011
Investments	$	2,804	$	—	$	—	$	25,311	$	923	$	902	$	3,727	$	26,213
Total assets at fair value	$	2,804	$	—	$	—	$	25,311	$	923	$	902	$	3,727	$	26,213

Changes in Level 3 instruments

	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2012		2011			2012			2011
Balance at beginning of period	$	923	$	954		$	902		$	951
Losses included in earnings		—		(21	)		(11	)		(21	)
Gains included in other comprehensive income		—		—			32			3
Balance as of September 30	$	923	$	933		$	923		$	933

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Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Condensed Consolidated Statements of Operations and Comprehensive Income [Abstract]
Revenues	$ 20,009	$ 21,790	$ 81,298	$ 78,489
Operating costs and expenses
Medical professional and license fees	4,648	5,181	19,139	19,236
Direct costs of services	10,068	10,461	33,477	31,931
General and administrative expenses	3,037	3,586	10,151	10,577
Marketing and advertising	4,803	5,305	18,283	17,730
Depreciation	1,223	1,458	3,743	4,346
Impairment and restructuring charges	10		47	56
Operating cost	23,789	25,991	84,840	83,876
Gain on sale of assets	33	99	221	498
Operating loss	(3,747)	(4,102)	(3,321)	(4,889)
Net investment income and other	220	334	498	492
Loss before taxes on income	(3,527)	(3,768)	(2,823)	(4,397)
Income tax expense	22	32	70	149
Net loss	(3,549)	(3,800)	(2,893)	(4,546)
Loss per common share
Basic	$ (0.19)	$ (0.20)	$ (0.15)	$ (0.24)
Diluted	$ (0.19)	$ (0.20)	$ (0.15)	$ (0.24)
Weighted average shares outstanding
Basic	19,017	18,838	18,968	18,798
Diluted	19,017	18,838	18,968	18,798
Comprehensive loss	$ (3,360)	$ (4,112)	$ (2,696)	$ (4,792)

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Restructuring Charges

9 Months Ended

Sep. 30, 2012

Restructuring Charges [Abstract]

Restructuring Charges

7. Restructuring Charges

At September 30, 2012 and December 31, 2011, we included short-term restructuring reserves of $1.1 million and $1.3 million, respectively, in “Accrued liabilities and other” in the Condensed Consolidated Balance Sheets. Long-term restructuring reserves were $317,000 and $1.0 million at September 30, 2012 and December 31, 2011, respectively, and were included in “Other long-term liabilities.” The decline in restructuring reserves relates primarily to lease payments for previously closed vision centers during the three and nine months ended September 30, 2012.

The following table summarizes the restructuring reserve for the three and nine months ended September 30, 2012 (dollars in thousands):

	Employee Separation Costs			Contract Termination Costs			Total
Balance at December 31, 2011	$	20		$	2,298		$	2,318
Liabilities recognized		—			—			—
Payments		(20	)		(291	)		(311	)
Balance at March 31, 2012	$	—		$	2,007		$	2,007
Liabilities recognized		—			—			—
Payments		—			(294	)		(294	)
Balance as of June 30, 2012	$	—		$	1,713		$	1,713
Liabilities recognized		—			10			10
Payments		—			(303	)		(303	)
Balance as of September 30, 2012	$	—		$	1,420		$	1,420

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2012

Stock-Based Compensation [Abstract]

Stock-Based Compensation

6. Stock-Based Compensation

We have stock incentive plans through which employees and directors have been or are granted stock-based compensation. We recognize compensation expense for the grant date fair value of stock-based awards over the applicable vesting period. The components of our pre-tax stock-based compensation expense, net of forfeitures and associated income tax effect, were as follows for the following periods (dollars in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
Stock options	$	15	$	18	$	46	$	53
Restricted stock		434		414		1,485		1,206
		449		432		1,531		1,259
Income tax effect		174		166		594		486
	$	275	$	266	$	937	$	773

We estimate the fair value of stock options granted using the Black-Scholes option-pricing model. This model requires several assumptions, which we have developed and update based on historical trends and current market observations. The accuracy of these assumptions is critical to the estimate of fair value for these equity instruments.

Our restricted stock unit awards include both time-based awards that vest ratably over three years and restricted stock units that are tied to the achievement of certain financial targets and stock performance criteria and cliff-vest in three years. The financial targets include revenue measurements. Total stockholder return is considered a market condition and the fair value of those awards was calculated using a Monte Carlo simulation valuation model.

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Comprehensive Income (Loss) (Tables)

9 Months Ended

Sep. 30, 2012

Comprehensive Income (Loss) [Abstract]

Components of accumulated other comprehensive income

	September 30, 2012		December 31, 2011
Foreign currency translation adjustment	$	739	$	572
Unrealized investment gain		41		11
Accumulated other comprehensive income	$	780	$	583

Components of comprehensive loss

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Net loss	$	(3,549	)	$	(3,800	)	$	(2,893	)	$	(4,546	)
Unrealized investment (loss) gain		—			(54	)		30			(97	)
Foreign currency translation		189			(258	)		167			(149	)
Comprehensive loss	$	(3,360	)	$	(4,112	)	$	(2,696	)	$	(4,792	)

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Income Taxes (Tables)

9 Months Ended

Sep. 30, 2012

Income Taxes [Abstract]

Components of income tax expense

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Current:
Federal	$	6		$	7		$	19		$	18
State and local		16			25			51			131
Total Current		22			32			70			149
Deferred:
Federal	$	—		$	—		$	—		$	—
State and local		—			—			—			—
Total Deferred		—			—			—			—
Income tax expense	$	22		$	32		$	70		$	149
Effective income tax rate		0.6	%		0.9	%		2.5	%		3.4	%

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2012

Commitments and Contingencies [Abstract]

Commitments and Contingencies

10. Commitments and Contingencies

Our business results in medical malpractice lawsuits. We are insured through our captive insurance company to provide coverage for current claims brought against us. We use the captive insurance company for both primary insurance and excess liability coverage. A number of claims are now pending with our captive insurance company.

Our loss reserves are based on our historical claim experience, comparable industry experience and recent trends that would impact the ultimate settlement of claims. However, due to the uncertainties inherent in the determination of these liabilities, the ultimate settlement of claims incurred through September 30, 2012 could differ from the amounts recorded. At September 30, 2012 and December 31, 2011, we maintained insurance reserves of $6.9 million and $7.2 million, respectively, of which $909,000 and $951,000 have been classified as current within the caption “Accrued liabilities and other” in the Condensed Consolidated Balance Sheets. Although our insurance reserve reflects our best estimate of the amount of probable loss, we believe the range of loss that is reasonably possible to have been incurred to be approximately $5.1 million to $12.2 million at September 30, 2012. We record any adjustment to these estimates in the period determined.

During 2012, we entered into certain marketing commitments which require us to spend an aggregate of $1.1 million over the next three years.

In addition to the above, we are periodically subject to various other claims and lawsuits. We believe that none of these other claims or lawsuits to which we are currently subject, individually or in the aggregate, will have a material adverse affect on our business, financial condition, results of operations or cash flows.

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Debt

9 Months Ended

Sep. 30, 2012

Debt [Abstract]

Debt

8. Debt

We prepaid our outstanding bank loan in full in June 2012, reducing our total debt to zero. Our outstanding debt was $4.0 million as of December 31, 2011, of which $3.0 million was due within 12 months.

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Comprehensive Income (Loss)

9 Months Ended

Sep. 30, 2012

Comprehensive Income (Loss) [Abstract]

Comprehensive Income (Loss)

9. Comprehensive Income (Loss)

The components of accumulated other comprehensive income consisted of the following (dollars in thousands):

	September 30, 2012		December 31, 2011
Foreign currency translation adjustment	$	739	$	572
Unrealized investment gain		41		11
Accumulated other comprehensive income	$	780	$	583

The components of comprehensive loss consisted of the following for the following periods (dollars in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Net loss	$	(3,549	)	$	(3,800	)	$	(2,893	)	$	(4,546	)
Unrealized investment (loss) gain		—			(54	)		30			(97	)
Foreign currency translation		189			(258	)		167			(149	)
Comprehensive loss	$	(3,360	)	$	(4,112	)	$	(2,696	)	$	(4,792	)

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Description of Business and Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2012

Description of Business and Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

Our Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, include all adjustments necessary for a fair presentation of our financial position, results of operations, and cash flows for each period presented. These adjustments are of a normal and recurring nature unless otherwise disclosed herein. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to SEC rules and regulations.

We derived the Condensed Consolidated Balance Sheet as of December 31, 2011 from audited financial statements, but did not include all disclosures required by U.S. GAAP. These Condensed Consolidated Financial Statements should be read in conjunction with our 2011 Annual Report on Form 10-K. Operating results for the three and nine month periods ended September 30, 2012 are not necessarily indicative of the results expected in subsequent quarters or for the year ending December 31, 2012.

Use of Estimates

Use of Estimates

The preparation of our Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Significant items that are subject to such estimates and assumptions include investment valuation, allowance for doubtful accounts against patient receivables, insurance reserves, income taxes and enhancement accruals. Although management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, actual results could differ significantly from the estimates under different assumptions or conditions.

Reclassifications

Reclassifications

We have reclassified certain prior-period amounts in the Condensed Consolidated Balance Sheets and Statements of Cash Flows to conform to current period presentation. The reclassifications were not material to the Condensed Consolidated Financial Statements.

Patient Receivables and Allowance for Doubtful Accounts

Patient Receivables and Allowance for Doubtful Accounts

We provide financing to some of our patients, including those who could not otherwise obtain third-party financing. The terms of the financing usually require the patient to pay an up-front fee which is intended to cover some or all of our variable costs, and then generally we deduct the remainder automatically from the patient’s bank account over a period of 12 to 36 months. We have recorded an allowance for doubtful accounts as a best estimate of the amount of probable credit losses from our patient financing program. Each month, we review the allowance and adjust the allowance based upon our own experience with patient financing. We charge-off receivables against it when it is probable that a receivable will not be recovered. Our policy is to reserve for all patient receivables that remain open past their financial maturity date and to provide reserves for patient receivables prior to the maturity date so as to bring patient receivables, net of reserves, down to the estimated net realizable value based on historical collectability rates, recent default activity and the current credit environment. Receivable balances that remain open past their financial maturity amounted to $101,000 and $160,000 at September 30, 2012 and December 31, 2011, respectively.

We maintained an allowance for doubtful accounts on our patient receivables of $1.7 million at September 30, 2012 and December 31, 2011. During the three and nine months ended September 30, 2012, we wrote-off $296,000 and $712,000, respectively, of receivables against the allowance for doubtful accounts and recovered $40,000 and $102,000, respectively, in receivables previously written off. During the three and nine months ended September 30, 2011, we wrote-off $213,000 and $590,000, respectively, of receivables against the allowance for doubtful accounts and recovered $23,000 and $110,000, respectively, in receivables previously written off.

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Earnings Per Common Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Basic Loss
Net loss	$ (3,549)	$ (3,800)	$ (2,893)	$ (4,546)
Weighted average shares outstanding	19,017	18,838	18,968	18,798
Basic loss per common share	$ (0.19)	$ (0.20)	$ (0.15)	$ (0.24)
Diluted Loss
Net loss	$ (3,549)	$ (3,800)	$ (2,893)	$ (4,546)
Weighted average common shares and potential dilutive shares	19,017	18,838	18,968	18,798
Effect of dilutive securities
Weighted average common shares and potential dilutive shares	19,017	18,838	18,968	18,798
Diluted loss per common share	$ (0.19)	$ (0.20)	$ (0.15)	$ (0.24)
Stock options [Member]
Effect of dilutive securities
Effect of dilutive securities
Anti-dilutive options (excluded from diluted net loss per share computations)	489	705	363	448
Restricted stock [Member]
Effect of dilutive securities
Effect of dilutive securities

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2012

Stock-Based Compensation [Abstract]

Components of pre-tax stock-based compensation expense, net of forfeitures, and associated income tax effect

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
Stock options	$	15	$	18	$	46	$	53
Restricted stock		434		414		1,485		1,206
		449		432		1,531		1,259
Income tax effect		174		166		594		486
	$	275	$	266	$	937	$	773

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Investments (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012
Schedule of net carrying value (amortized cost) and estimated fair value of debt securities
Due in one year or less, Amortized Cost	$ 2,804
Due after one year through three years, Amortized Cost
Due after three years, Amortized Cost	882
Total investments, Amortized Cost	3,686
Due in one year or less, Estimated Fair Value	2,804
Due after one year through three years, Estimated Fair Value
Due after three years, Estimated Fair Value	923
Total investments, Estimated Fair Value	$ 3,727

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Comprehensive Income (Loss) (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Components of comprehensive loss
Net loss	$ (3,549)	$ (3,800)	$ (2,893)	$ (4,546)
Unrealized investment (loss) gain		(54)	30	(97)
Foreign currency translation	189	(258)	167	(149)
Comprehensive loss	$ (3,360)	$ (4,112)	$ (2,696)	$ (4,792)

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash flow from operating activities:
Net loss	$ (2,893)	$ (4,546)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	3,743	4,346
Provision for loss on doubtful accounts	704	554
Loss on sale of investments	8	9
Impairment charges	37
Gain on sale of assets	(221)	(498)
Stock-based compensation	1,531	1,259
Insurance reserve	(318)	(223)
Changes in operating assets and liabilities:
Patient accounts receivable	(1,719)	(754)
Other accounts receivable	(60)	138
Prepaid expenses and other	870	896
Accounts payable	(2,660)	(1,311)
Deferred revenue, net of professional fees	(1,838)	(3,094)
Accrued liabilities and other	(2,144)	771
Net cash used in operations	(4,960)	(2,453)
Cash flow from investing activities:
Purchases of property and equipment	(973)	(869)
Proceeds from sale of assets	283	1,252
Purchases of investment securities	(39,659)	(137,480)
Proceeds from sale of investment securities	62,064	142,716
Net cash provided by investing activities	21,715	5,619
Cash flow from financing activities:
Principal payments of loan	(4,004)	(2,563)
Shares repurchased for treasury stock	(357)	(288)
Proceeds from exercise of stock options	57	23
Net cash used in financing activities	(4,304)	(2,828)
Net effect of exchange rate changes on cash and cash equivalents	167	(143)
Increase in cash and cash equivalents	12,618	195
Cash and cash equivalents at beginning of period	18,568	19,350
Cash and cash equivalents at end of period	$ 31,186	$ 19,154

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Earnings Per Common Share

9 Months Ended

Sep. 30, 2012

Earnings Per Common Share [Abstract]

Earnings Per Common Share

5. Earnings Per Common Share

We calculate basic earnings per common share data using the weighted average number of common shares outstanding during the period. Diluted per share data reflects the potential dilution that would occur if common stock equivalents were exercised or converted to common stock but only to the extent that they are considered dilutive to our earnings. The following table is a reconciliation of basic and diluted per share data for the following periods (dollars in thousands, except per share amounts):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Basic Loss
Net loss	$	(3,549	)	$	(3,800	)	$	(2,893	)	$	(4,546	)
Weighted average shares outstanding		19,017			18,838			18,968			18,798
Basic loss per common share	$	(0.19	)	$	(0.20	)	$	(0.15	)	$	(0.24	)
Diluted Loss
Net loss	$	(3,549	)	$	(3,800	)	$	(2,893	)	$	(4,546	)
Weighted average shares outstanding		19,017			18,838			18,968			18,798
Effect of dilutive securities
Stock options		—			—			—			—
Restricted stock		—			—			—			—
Weighted average common shares and potential dilutive shares		19,017			18,838			18,968			18,798
Diluted loss per common share	$	(0.19	)	$	(0.20	)	$	(0.15	)	$	(0.24	)
Anti-dilutive options (excluded from diluted net loss per share computations)		489			705			363			448

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Investments (Details 2) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Schedule of unrealized losses and fair values of investments in unrealized loss position aggregated by investment category and length of time that individual securities have been in a continuous loss position
Less than 12 Months,Fair Value		$ 10,568
Less than 12 Months, Unrealized Loss		(5)
Corporate obligations [Member]
Schedule of unrealized losses and fair values of investments in unrealized loss position aggregated by investment category and length of time that individual securities have been in a continuous loss position
Less than 12 Months,Fair Value		3,810
Less than 12 Months, Unrealized Loss		(1)
U.S. Government notes [Member]
Schedule of unrealized losses and fair values of investments in unrealized loss position aggregated by investment category and length of time that individual securities have been in a continuous loss position
Less than 12 Months,Fair Value		6,758
Less than 12 Months, Unrealized Loss		$ (4)

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Restructuring Charges (Details Textual) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Restructuring Charges (Textual) [Abstract]
Short-term restructuring reserves	$ 1,100,000	$ 1,300,000
Long-term restructuring reserves	$ 317,000	$ 1,000,000

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Earnings Per Common Share (Tables)

9 Months Ended

Sep. 30, 2012

Earnings Per Common Share [Abstract]

Reconciliation of basic and diluted per share data

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Basic Loss
Net loss	$	(3,549	)	$	(3,800	)	$	(2,893	)	$	(4,546	)
Weighted average shares outstanding		19,017			18,838			18,968			18,798
Basic loss per common share	$	(0.19	)	$	(0.20	)	$	(0.15	)	$	(0.24	)
Diluted Loss
Net loss	$	(3,549	)	$	(3,800	)	$	(2,893	)	$	(4,546	)
Weighted average shares outstanding		19,017			18,838			18,968			18,798
Effect of dilutive securities
Stock options		—			—			—			—
Restricted stock		—			—			—			—
Weighted average common shares and potential dilutive shares		19,017			18,838			18,968			18,798
Diluted loss per common share	$	(0.19	)	$	(0.20	)	$	(0.15	)	$	(0.24	)
Anti-dilutive options (excluded from diluted net loss per share computations)		489			705			363			448