LCA Vision Inc. November Investor Presentation

Transcription

1 LCA Vision Inc. November 2013 Investor Presentation

2 Forward Looking Statements 2 This presentation contains forward looking statements that are subject to risks and uncertainties including, but not limited to, the impact of competition and pricing, procedure demand and marketplace acceptance, and unforeseen fluctuations in operating results and other risks detailed from time to time in the company s Filings with the Securities and Exchange Commission, including but not limited to, the company s Forms 10 K and 10 Q.

3 LCA Vision

4 Highlights 4 Large U.S. market opportunity Established company with proven business model National footprint / market leader Leverage standardized processes Achieve economy of scale via purchasing power Agreements in place with major health and vision plans Significant improvement in operating losses Expanding service offerings to diversify revenue stream and expand payer mix Strong balance sheet with $29.1M of cash and investments as of September 30, 2013

5 Our Company 5 Performed more than 1.3 million laser vision correction procedures 59 LasikPlus vision centers 51 full service centers 8 pre and post operative satellite centers 97% of LasikPlus patients would recommend LasikPlus to a friend or co worker 1 1 Source: LCA Vision Internal Database, Patient Satisfaction Surveys, October 2013

6 Leading Edge Technology 6 Multiple state of the art lasers and diagnostic technology in all centers a key point of differentiation 3 procedure types are available in all LasikPlus vision centers custom, optimized and traditional IntraLase femtosecond laser fully adopted Executive Medical Directors and Optometric Advisory Board assess all current technology Alcon Wavelight AMO IntraLase AMO Visx

7 Expanding Location Types Full Service Vision Center Perform laser vision correction procedures, and pre operative and post operative care Licensed Vision Center Laser vision correction procedures, and pre operative and post operative care, performed by an ophthalmologist licensed to operate using our trademarks Comprehensive Refractive Solutions Center Perform laser vision correction procedures, and pre operative and post operative care for laser vision correction, cataract and intraocular lens patients Satellite Vision Center Perform pre operative and post operative care for patients living considerable distances from our full service vision centers

8 Consumer Confidence 8 LCAV eye volume correlates to Consumer Confidence CCI Procedures 500, , , , ,000 0 Consumer Confidence LCA Eye Volume Q-13 Present Situation Future Expectations Consumer Confidence Index

9 Our Locations 9 Restart successful de novo expansion when economy improves Expand into top U.S. markets Capitalize on pentup demand Leverage infrastructure and purchasing power LasikPlus Markets Vision for the Future Note: Vision for the Future is for illustrative purposes only and is subject to change

10 Our Leadership 10 Name Title Experience Michael J. Celebrezze Chief Executive Officer 34 years experience in multi site services businesses Rhonda S. Sebastian Senior VP / Human Resources 38 years experience in global human resource management Bharat Kakar Senior VP / Operations & Marketing 22 years marketing, operations and sales experience Amy F. Kappen Chief Financial Officer CPA with 17 years experience in accounting, SEC reporting and corporate audit in various industries Joseph E. Hauck VP / Information Technology Services 21 years experience in application development and information technology Donn A. Kremmel VP / Corporate Counsel 34 years experience in litigation, business transactions and trade regulation Sonny Goel, MD Innovation and Ombudsman Executive Medical Directors. Collectively, 34 years of Lewis Groden, MD Research experience at LasikPlus Chirag Shah, MD Business Robert C. Dinga, OD National Director of Optometry 12 years experience with LasikPlus providing pre and post operative care to over 130,000 refractive surgery

11 The Industry

12 Large U.S. Market with Low Penetration 12 More than 189 million Americans wear eyeglasses or contact lenses 15.8 million eyes treated in the U.S. since FDA approval in October 1995 Untreated viable candidate pool is approximately 79 million (eyes) New entrants to patient pool approximate annual procedures Only 16% of potential candidates have been treated Source: February 2013 Market Scope 2012 Comprehensive Report on the Global Refractive Market

13 Procedures Performed by Market Segment 13 Highly fragmented market = opportunity Three Months Ended September 30, 2013 LCAV 9% 57Individual Surgeons 60% All Other Corporate 24% Hospitals/Universiti es 10% Source: November 2013 Market Scope 3Q13 Refractive Quarterly Update

14 LCA Vision s Growth Strategy

15 Building Blocks of Growth 15 Improve Core LASIK Business Add Partner Network/Co- Management Add Cataract and Premium Intraocular Lens Services Add Vision Centers in New Markets Invest in Other Growth Opportunities Short-Term (12-24 months) Medium-Term (12 36 months) Timelines subject to change Long-Term (12 months and beyond)

16 Marketing 16 Focus on optimizing positioning and marketing message Life in Focus brand positioning Feature benefits of 20/20 vision and the local surgeon Leader in broadcasting via mass media, digital, mobile and social media Develop partnerships to target strategic audience and maximize awareness Continue execution of affinity programs (i.e., US Air, Life Time Fitness) Increased focus on corporate and local public relations Wounded Warrior Project / Fisher house affiliations

17 Managed Care 17 LCA Vision s network is the largest surgeon based LASIK network Owned and operated by leaders in the laser vision correction industry LCA s LASIK Network 600 locations nationwide 59 Vision Centers Under the brand name LasikPlus Locations Nationwide Independent Surgeons Locations Nationwide LCA refers members to our vision centers first in the markets we serve Provides market intelligence for our future vision center locations

18 Partner Network / Co Management 18 Partnering with local optometrists to: 1) Build NEW patient acquisition channel Partner ODs offering patients refractive surgical solutions 2) Provide better and convenient long term care Partner ODs perform pre and/or post operative care and future routine eye care for patients released from LasikPlus Goals and Expectations: Five regional Partner Network Managers Limit the number of partnerships per market with primary focus on cataract markets Currently over 466 partner locations Contributed 2% of eye volume in the nine months ended September 30, 2013

19 Business Expansion 19 Primary Objective: Diversify the service offerings and payer mix to reduce cyclicality and leverage existing core competencies Business Expansion Strategy: Expansion underway to support future growth and profitability; mitigate exposure to future economic downturns Currently offering full suite of refractive solutions to patients in 9 LasikPlus markets cataract, premium intraocular lens, intracollamer lens and refractive lens exchange Market under LasikPlus brand in order to leverage our marketing spend Capitalize on patients already coming in through current channels direct to consumer advertising, Managed Care, Partner Network Leverage existing surgeons and staff, equipment/real estate, brand equity and expertise in advertising 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 0 LASIK vs. Cataract Volume ,000 LASIK 3,500,000 Cataracts Source: February 2013: Market Scope 2012 Comprehensive Report on the Global Refractive Market

20 Financials

21 Overview 21 The LasikPlus vision center model contains a high level of fixed costs that produce significant earnings leverage Fixed costs: leasehold improvements, equipment, rent, base level of labor Variable costs: license fees, surgeon compensation, financing fees, insurance, supplies, incremental labor Marketing and advertising costs: attempt to match spending to anticipated demand Leveraging marketing spend with low cost satellite vision centers in select existing LasikPlus markets Cash and investment balances are substantial

22 Select Balance Sheet Data ($ in thousands) 22 September 30, 2013 December 31, 2012 Cash Equivalents & Investments $ 29,113 $ 34,457 Debt Obligations 1,996 Total Assets 43,995 48,968 Working Capital 21,002 21,052 Liquidity Ratio* 229.5% 188.8% * Cash and cash equivalents, short term investments and Accounts Receivable as a percent of current liabilities

23 Earnings Summary 23 Financial Summary ($ in thousands, except per share data) Average Price per Procedure YTD September 30, $2,400 $2,079 $2,094 $2,088 Revenues $ 71,569 $ 101,493 $ 102,983 Procedure volume 41,198 58,525 59,587 Operating income (loss) $ (679) $ (9,311) $ (6,538) $2,000 $1,600 $1,731 $1,734 $1,718 $1,691 $1,728 $1,655 Adjusted EBITDA (a) 1,189 (3,272) (3,575) Pre tax net loss (3) (8,655) (6,068) Earnings (loss) per share $ 0.01 $ (0.45) $ (0.33) $1,200 3Q Avg Avg. GAAP ASP Adjusted ASP Industry ASP (a) excludes deferred revenue and related doctor fees, stock compensation, restructuring, impairment and gain on sale of assets Average Industry Price from Market Scope Quarterly Refractive Updates. Excludes discounts, which are estimated at $200 $350 per eye

24 Select Cash Flow Data ($ in thousands) 24 YTD September 30, LASIK Cash Used in Operations $ 1,689 $ 932 $ 790 Refractive and Cataract Cash Used in Operations 1,135 2,837 1,245 Restructuring Payments 1,547 1,319 1,466 Total Cash Used in Operations $ 4,371 $ 5,088 $ 3,501 Capital Expenditures $ 505 $ 1,160 $ 1,509 Debt Payments * $ 304 $ 4,004 $ 3,280 Net operating loss carryforward of approximately $43 million as of September 30, 2013 * Debt issuance of $2.3 million for excimer laser purchase executed April 2013 with debt payments beginning in third quarter 2013

25 Cost Reductions to Meet Market Demand 25 Company Cash Flow Break Even Procedures Annual * 106,000 80,000 68,000 58,000 56, Vision Center Break Even Procedures per Month ** * LASIK cash flow after capital expenditures and debt service; excludes restructuring and cataract capital expenditures and start up losses ** Vision center operating income after depreciation; excludes corporate general and administrative costs and non operating income

26 Operating Leverage 26 Impact of Volume Increases and Vision Center Additions LASIK only Dollars in $000's Future # of Vision Centers Procedures/Center/Month Procedures 56, , ,000 Adjusted Revenue $ 96,320 $ 173,720 $ 209,840 Medical & Professional Fees 21,380 38,570 46,580 Gross Margin $ 74,940 $ 135,150 $ 163,260 Gross Margin % 78% 78% 78% Marketing 21,392 38,885 46,970 Center Direct 40,130 52,000 60,000 General & Administrative 12,000 14,000 15,300 Depreciation 1,500 1,500 3,420 EBITDA $ 1,418 $ 30,915 $ 39,720 Adjusted Operating Income $ (82) $ 28,765 $ 37,570 GAAP Net Income 2 $ $ 28,847 $ 37,652 Notes: 1) For Illustrative purposes only, not intended to provide guidance 2) Includes Deferred Revenue impact for separately priced warranties

27 In Summary 27 Large U.S. market opportunity Established company with proven business model National footprint / market leader Significant improvement in operating losses Expanding service offerings to diversify revenue stream and expand payer mix Strong balance sheet with $29.1M of cash and investments as of September 30, 2013

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