8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________

FORM 8-K
 

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 29, 2013

LCA-VISION INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or Other Jurisdiction of Incorporation) 0-27610
(Commission File Number) 11-2882328
(IRS Employer Identification No.)

7840 Montgomery Road, Cincinnati, Ohio	45236
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (513) 792-9292

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

□ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

□ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

□ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

□ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On October 29, 2013, LCA-Vision Inc. issued a press release to report third quarter 2013 results. The text of the press release is furnished as Exhibit 99.1 to this Form 8-K.

The information in this Current Report on Form 8-K and the Exhibit attached hereto is furnished pursuant to the rules and regulations of the Securities and Exchange Commission and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

99.1     Press release dated October 29, 2013

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 hereunto duly authorized.  

	LCA-VISION INC.
	/s/ Michael J. Celebrezze
	Michael J. Celebrezze
	Chief Executive Officer
Date: October 29, 2013

EX-99

Exhibit 99.1

News Release

LCA-Vision Third Quarter Results Feature Revenue Growth and

Narrowed Operating Loss

CINCINNATI (October 29, 2013) – LCA-Vision Inc. (NASDAQ: LCAV), a leading provider of laser vision correction services under the LasikPlus^® brand, today announced financial and operating results for the three and nine months ended September 30, 2013.

Third Quarter 2013 Financial and Operating Highlights (all comparisons are with the third quarter of 2012)

■ Revenues increased 3.2% to $20.7 million from $20.0 million; adjusted revenues increased 5.4% to $20.5 million from $19.5 million.

■ Procedure volume increased 3.7% to 11,932 from 11,510.

■ Medical professional and license fees remained essentially unchanged at $4.6 million. Medical professional and license fees for the 2013 third quarter included higher fees due to an increase in procedure volume, offset by lower license fees as a result of the company’s purchase in April 2013 of its previously leased excimer lasers.

■ Vision center direct costs decreased by $0.2 million to $9.9 million from $10.1 million. The decrease was a result of savings in employee-related costs, lower financing fees from finance plan mix and renegotiated rates for third-party financing plans. These costs were offset partially by higher laser maintenance costs and increases in insurance expense.

■ General and administrative expenses decreased by $0.2 million to $2.8 million from $3.0 million, due primarily to reductions in employee-related costs as a result of restructuring initiatives implemented earlier in the year.

■ Marketing expense increased by $0.2 million to $5.0 million from $4.8 million. Marketing cost per eye was $417 for the third quarters of each of 2013 and 2012.

■ Depreciation expense decreased by $0.7 million to $0.5 million from $1.2 million, due to lower capital expenditures in recent years.

■ Operating loss was $2.0 million, a $1.7 million improvement from an operating loss of $3.7 million; adjusted operating loss was $2.1 million, a $2.1 million improvement from an adjusted operating loss of $4.2 million.

■ Net loss was $1.6 million, or $0.08 per share, a $1.9 million improvement from a net loss of $3.5 million, or $0.19 per share.

Year-to-Date 2013 Financial and Operating Highlights (all comparisons are with the first nine months of 2012)

■ Revenues were $71.6 million compared with $81.3 million; adjusted revenues were $70.8 million compared with $79.3 million.

■ Procedure volume was 41,198 compared with 46,912.

■ Medical professional and license fees decreased by $3.6 million to $15.5 million from $19.1 million. The decrease resulted from lower procedure volume coupled with the impact of lower license fees and enhancement expenses related to the company’s purchase of its previously leased excimer lasers.

■ Vision center direct costs decreased by $4.1 million to $29.4 million from $33.5 million. The decrease was a result of lower variable costs associated with the procedure volume combined with other cost savings. These savings primarily included lower financing fees from renegotiated rates and a shift in portfolio mix, reductions in employee-related costs and lower insurance costs from favorable claims experience.

■ General and administrative expenses decreased by $1.4 million to $8.8 million from $10.2 million, due primarily to reductions in employee-related costs and rent from the consolidation of the company’s call center as a result of restructuring initiatives implemented in early 2013, and reductions in travel and telecommunications expenses.

■ Marketing expense decreased by $1.4 million to $16.9 million from $18.3 million. Marketing cost per eye was $411 compared with $390.

■ Depreciation expense decreased by $2.1 million to $1.6 million from $3.7 million, primarily due to lower capital expenditures in recent years.

■ Restructuring charges of $0.2 million resulted primarily from the relocation of the company’s call center.

■ Operating loss was $0.7 million, a $2.6 million improvement from an operating loss of $3.3 million; adjusted operating loss was $1.4 million, a $3.8 million improvement from an adjusted operating loss of $5.2 million.

■ Net income was $0.1 million, or $0.01 per diluted share, a $3.0 million improvement from a net loss of $2.9 million, or $0.15 per share.

■ Cash and investments were $29.1 million as of September 30, 2013, compared with $34.5 million as of December 31, 2012. Cash used in operations included working capital changes driven primarily by $1.5 million of restructuring payments related to previously closed vision centers, reductions in accounts payable related to timing of payments, increased accounts receivable for self-financed patients and reductions in accruals. Cash used in operations also included approximately $1.1 million of start-up losses related to the company’s refractive lens and cataract business.

The company provides adjusted revenues and operating loss as a means of measuring performance that adjusts for the non-cash impact of accounting for separately priced extended warranties. A reconciliation of revenues and operating loss as reported in accordance with U.S. Generally Accepted Accounting Principles (GAAP) is provided at the end of this news release. Management believes that the adjusted information better reflects operating performance and, therefore, is more meaningful to investors.

“We are reporting a significant improvement in operating performance for the nine-month period. Revenues and procedure volume grew for the first time in five quarters,” said LCA-Vision Chief Executive Officer Michael J. Celebrezze. “We are working diligently to support patient acquisition while managing expenses and we are making progress toward our goals of returning our core LASIK business to sustained profitability, growing our core business and diversifying our service offerings. Our average revenue per procedure was $1,718, up $28 year-over-year and, as expected, down $4 sequentially due to the $500-off discount promotion we offered throughout the third quarter.

“Among other highlights for the quarter, we added one licensed full-service vision center and two satellite pre- and post-operative centers, bringing the total number of new centers since the beginning of 2013 to six. Additionally, our co-management partner network contributed 2.1% of our third quarter LASIK procedure volume, up from 1.7% in the second quarter and just under 1.0% in the first quarter.”

Near-Term Financial Outlook

LCA-Vision intends to manage expenses conservatively into 2014; its plans and outlook for the remainder of the 2013 year include:

■ The company plans to open one additional full-service licensed vision center late in the fourth quarter of 2013, bringing the total number of full-service licensed vision centers opened in 2013 to three. The company also intends to continue leveraging marketing spend and may add a few satellite vision centers where it has confidence that incremental patient volume can be achieved. Four satellite vision centers have been opened since the beginning of 2013.

■ The company revised its expectation for annual capital expenditures to be between $0.7 million and $0.9 million from its prior outlook of $0.8 million to $1.2 million.

■ For the fourth quarter of 2013, the company expects marketing and advertising expenses to be between $4.6 million and $5.0 million.

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LCA-Vision is affirming its estimate for the annual number of procedures companywide necessary to reach cash-flow breakeven from its LASIK business at approximately 56,000. This cash-flow estimate does not include restructuring payments, or start-up losses and capital expenditures for its refractive lens and cataract business. The company expects to continue to incur start-up costs and capital investment for its business expansion initiatives.

Conference Call and Webcast

As previously announced, a conference call and webcast will be held today beginning at 10:00 a.m. Eastern time. To access the conference call, dial 866-322-1352 (U.S. and Canada) or 706-643-6246 (international callers). A webcast will be available in the investor relations section of LCA-Vision’s website. A replay of the call and webcast will begin approximately two hours after the live call has ended. To access the replay, dial 855-859-2056 (U.S. and Canada) or 404-537-3406 (international callers) and enter the conference ID number: 68999720.

Forward-Looking Statements

This news release contains forward-looking statements based on current expectations, forecasts and assumptions of LCA-Vision that are subject to risks and uncertainties. The forward-looking statements in this release are based on information available to the company as of the date hereof. Actual results could differ materially from those stated or implied in the forward-looking statements due to risks and uncertainties associated with its business. In addition to the risk factors discussed in the company’s Form 10-K and other filings with the Securities and Exchange Commission, there are a number of other risks and uncertainties associated with its business including, without limitation, the successful execution of cost effective marketing strategies to attract patients to its vision centers; the impact of low consumer confidence and discretionary spending; the impact of changes in government regulations related to medical expenses; competition in the laser vision correction industry; the possibility of adverse outcomes or long-term side effects of laser vision correction and negative publicity regarding laser vision correction; the company’s ability to operate profitable vision centers and retain qualified personnel during periods of lower procedure volumes; the company’s success in expanding its services into the refractive lens and cataract market; additional regulatory requirements, such as for Medicare, related to cataract and other refractive procedures; the continued availability of non-recourse third-party financing for its patients on terms similar to what it has paid historically; the company’s ability to achieve profitability in its developing business expansion initiatives; and the future value of revenues financed by the company and its ability to collect on such financings, which will in turn depend on a number of factors, including the consumer credit environment and the company’s ability to manage credit risk related to consumer debt, bankruptcies and other credit trends.

Further, the Food and Drug Administration’s (FDA) advisory board on ophthalmic devices currently is reviewing concerns about post-LASIK quality of life matters and the FDA is recruiting participants for two studies on LASIK outcomes and quality of life. The FDA or another regulatory body could take legal action against the company or others in the laser vision correction industry. The outcome of this review or legal action potentially could impact negatively the acceptance of LASIK. In addition, the acceptance rate of new technologies and the Company’s ability to implement successfully new technologies on a national basis create additional risk.

Except to the extent required under the federal securities laws and the rules and regulations promulgated by the Securities and Exchange Commission, the company assumes no obligation to update the information included in this news release, whether as a result of new information, future events or circumstances, or otherwise.

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About LCA-Vision Inc./LasikPlus^®

LCA-Vision Inc., a leading provider of laser vision correction services under the LasikPlus^® brand, operates 59 LasikPlus^® vision centers in the United States: 51 full-service LasikPlus^® fixed-site laser vision correction centers and eight pre- and post-operative LasikPlus^® satellite centers. LCA-Vision has performed more than 1.3 million procedures since FDA approval of photorefractive keratectomy (PRK) in late 1995.

Earning Trust Every Moment; Transforming Lives Every Day.

For Additional Information

 

Company Contact:	Investor Relations Contact:
Barb Kise	Bruce Voss
LCA-Vision Inc.	LHA
513-792-5629	310-691-7100 – bvoss@lhai.com
	@LHA_IR_PR

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LCA-Vision Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(Dollars in thousands)

	September 30, 2013			December 31, 2012
Assets
Current assets
Cash and cash equivalents	$	27,129		$	31,653
Short-term investments		1,984			2,804
Patient receivables, net of allowances of $855 and $1,019, respectively		3,061			2,810
Other accounts receivable, net		666			443
Prepaid expenses and other		2,473			3,318
Total current assets		35,313			41,028
Property and equipment, net		7,289			6,380
Patient receivables, net of allowances of $552 and $634, respectively		1,170			1,059
Other assets		223			501
Total assets	$	43,995		$	48,968
Liabilities and Stockholders' Investment
Current liabilities
Accounts payable	$	6,461		$	8,046
Accrued liabilities and other		7,099			11,930
Debt obligations maturing within one year		751			-
Total current liabilities		14,311			19,976
Long-term insurance reserves, less current portion		5,651			5,741
Long-term debt obligations, less current portion		1,245			-
Other long-term liabilities		2,308			3,454
Stockholders' investment
Common stock ($.001 par value; 25,291,637 shares issued and 19,247,765 and 19,050,504 shares outstanding, respectively)		25			25
Contributed capital		180,500			179,543
Common stock in treasury, at cost (6,043,872 shares and 6,241,133 shares, respectively)		(110,063	)		(111,395	)
Accumulated deficit		(50,509	)		(49,053	)
Accumulated other comprehensive income		527			677
Total stockholders' investment		20,480			19,797
Total liabilities and stockholders' investment	$	43,995		$	48,968

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LCA-Vision Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

(Amounts in thousands except per share data)

	Three months ended September 30,						Nine months ended September 30,
	2013			2012			2013			2012
Revenues	$	20,656		$	20,009		$	71,569		$	81,298
Operating costs and expenses
Medical professional and license fees		4,554			4,648			15,518			19,139
Direct costs of services		9,886			10,068			29,376			33,477
General and administrative expenses		2,791			3,037			8,847			10,151
Marketing and advertising		4,981			4,803			16,918			18,283
Depreciation		516			1,223			1,555			3,743
Restructuring and impairment		(5	)		10			214			47
		22,723			23,789			72,428			84,840
Gain on sale of assets		65			33			180			221
Operating loss		(2,002	)		(3,747	)		(679	)		(3,321	)
Net investment income and other		225			220			676			498
Loss before taxes on income		(1,777	)		(3,527	)		(3	)		(2,823	)
Income tax (benefit) expense		(217	)		22			(111	)		70
Net (loss) income	$	(1,560	)	$	(3,549	)	$	108		$	(2,893	)
(Loss) earnings per common share
Basic	$	(0.08	)	$	(0.19	)	$	0.01		$	(0.15	)
Diluted	$	(0.08	)	$	(0.19	)	$	0.01		$	(0.15	)
Weighted average shares outstanding
Basic		19,241			19,017			19,182			18,968
Diluted		19,241			19,017			19,332			18,968
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	$	92		$	189		$	(150	)	$	167
Unrealized investment gain		-			-			-			30
Total other comprehensive income (loss), net of tax	$	92		$	189		$	(150	)	$	197
Comprehensive loss	$	(1,468	)	$	(3,360	)	$	(42	)	$	(2,696	)

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LCA-Vision Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)

	Nine months ended September 30,
	2013			2012
Cash flow from operating activities:
Net income (loss)	$	108		$	(2,893	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation		1,555			3,743
Provision for loss on doubtful accounts		388			704
Loss on sale of investments		-			8
Impairment charges		-			37
Gain on sale of assets		(180	)		(221	)
Stock-based compensation		957			1,531
Insurance reserve		(102	)		(318	)
Changes in operating assets and liabilities:
Patient accounts receivable		(773	)		(1,719	)
Other accounts receivable		(207	)		(60	)
Prepaid expenses and other		(108	)		870
Accounts payable		(1,585	)		(2,660	)
Deferred revenue, net of professional fees		(680	)		(1,838	)
Accrued liabilities and other		(3,744	)		(2,144	)
Net cash used in operations		(4,371	)		(4,960	)
Cash flow from investing activities:
Purchases of property and equipment		(505	)		(973	)
Proceeds from sale of assets		217			283
Purchases of investment securities		(1,984	)		(39,659	)
Proceeds from sale of investment securities		2,804			62,064
Net cash provided by investing activities		532			21,715
Cash flow from financing activities:
Principal payments on loans		(304	)		(4,004	)
Shares repurchased for treasury stock		(231	)		(357	)
Proceeds from exercise of stock options		-			57
Net cash used in financing activities		(535	)		(4,304	)
Net effect of exchange rate changes on cash and cash equivalents		(150	)		167
(Decrease) increase in cash and cash equivalents		(4,524	)		12,618
Cash and cash equivalents at beginning of period		31,653			18,568
Cash and cash equivalents at end of period	$	27,129		$	31,186

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LCA-Vision Inc.

Effect of the Change in Accounting for Deferred Revenues on Financial Results

(Dollars in thousands)

(Unaudited)

To supplement its Consolidated Financial Statements presented in accordance with accounting principles generally accepted in the United States, LCA-Vision discusses adjusted revenues and operating loss. Management utilizes this information as a means of measuring performance that adjusts for the non-cash impact of the accounting for separately priced extended warranties and believes that including this additional disclosure is meaningful to investors for the same reason.

Accordingly, this news release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. A reconciliation of the difference between the non-GAAP measures with the most directly comparable financial measures calculated in accordance with GAAP follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Revenues
Reported U.S. GAAP	$	20,656		$	20,009		$	71,569		$	81,298
Adjustments
Amortization of prior deferred revenue		(154	)		(555	)		(756	)		(2,043	)
Adjusted revenues	$	20,502		$	19,454		$	70,813		$	79,255
Operating loss
Reported U.S. GAAP	$	(2,002	)	$	(3,747	)	$	(679	)	$	(3,321	)
Adjustments
Amortization of prior deferred revenue		(154	)		(555	)		(756	)		(2,043	)
Amortization of prior professional fees		15			56			76			204
Adjusted operating loss	$	(2,141	)	$	(4,246	)	$	(1,359	)	$	(5,160	)

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