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TLC Vision Corp. (TLC) Reports Third Quarter 2009 Results


11/17/2009 11:08:27 AM

ST. LOUIS, MO--(Marketwire - November 16, 2009) - TLC Vision Corporation (NASDAQ: TLCV) (TSX: TLC), North America's premier eye care services company, today announced results for the third quarter ended September 30, 2009.

James B. Tiffany, President and Chief Operating Officer of TLCVision, commented, "TLCVision posted solid operating results during the third quarter of 2009. Our refractive centers procedure volume was down 17% for the quarter, in-line with industry metrics and we continued to reduce costs during the quarter. We reduced our fixed cost structure by $9.2 million in the third quarter, a 23% decrease from the prior year.

"We continue to benefit from strong performances in our non-refractive businesses as they continue to contribute positive EBITDA and cash flow. Our non-refractive businesses, which include other surgical procedures and general eye care, accounted for 46% of our total revenue for the third quarter. We continued to see solid growth in both our cataract business and eye care business.

"Our consolidated cash balance at September 30, 2009 was $13.2 million."

Third Quarter 2009 Results

    -- Revenue for the third quarter was $51.6 million, a 10% decrease over
       prior year revenue of $57.5 million, with refractive revenues
       showing a decline of 22%.
          - Refractive Centers revenue of $22.2 million decreased by 22%,
            as same-store majority-owned center procedures declined by 17%,
            less than estimated market declines.
          - Doctor Services revenue of $22.2 million decreased by 2%, due
            primarily to the sale of the Phoenix ambulatory surgery center.
          - Eye Care revenue of $7.2 million increased 13%. This increase
            was due to increases in franchisee revenue.
    -- General and administrative and marketing costs declined by 35% or
       $5.7 million below prior year due to cost reduction initiatives.
    -- Other expenses increased $6.6 million due to various restructuring
       activities including legal fees, consulting costs and severance
       charges.
    -- Consolidated net loss attributable to TLC Vision Corporation for the
       third quarter was ($10.0) million, compared to ($6.7) million from
       the prior year period. Net loss attributable to TLC Vision
       Corporation per diluted share for the third quarter was ($0.20),
       compared to net a loss of ($0.13) for the prior year period.
    -- Pro-forma net loss attributable to TLC Vision Corporation for the
       third quarter (excluding impairment, severance and restructuring
       charges) was ($2.3) million or ($0.04) per fully diluted share,
       compared to ($5.2) million, or ($0.10) per fully diluted share in
       the third quarter of 2008.
    -- Adjusted EBITDA for the third quarter was $6.7 million, or $0.13 per
       fully diluted share, compared to $2.7 million, or $0.05 per fully
       diluted share for the third quarter of 2008.

Nine Month 2009 Results

    -- Revenue for the nine months ended September 30, 2009, was $179.5
       million, a 19% decrease over prior year revenue of $222.0 million,
       with refractive revenues showing a decline of 33%.
          - Refractive Centers revenue of $85.1 million decreased by 33%,
            as same-store majority-owned center procedures declined by 30%.
          - Doctor Services revenue of $70.3 million decreased by 4%,
            reflecting weakness in the refractive access business partially
            offset by growth in the cataract business.
          - Eye Care revenue of $24.1 million increased 8% as a result of
            increased franchises and revenue per franchisee.
    -- General and administrative and marketing costs declined by 34% or
       $18.2 million below prior year due to cost reduction initiatives.
    -- Other expenses increased $15.3 million due to various restructuring
       activities including legal fees, consulting costs and severance
       charges.
    -- Consolidated net loss attributable to TLC Vision Corporation for the
       nine months ended September 30, 2009 was ($18.2) million, compared
       to a loss of ($2.8) million for the prior year period. Net loss
       attributable to TLC Vision Corporation per diluted share for the
       nine months ended September 30, 2009, was ($0.36), compared to a net
       loss per diluted share of ($0.06) for the prior year period.
    -- Pro-forma net loss attributable to TLC Vision Corporation for the
       nine months ended September 30, 2009 (excluding impairment,
       severance and restructuring charges) was ($2.2) million, or ($0.04)
       per fully diluted share, compared to a loss of ($1.3) million, or
       ($0.03) per fully diluted share for the prior year period.
    -- Adjusted EBITDA for the nine months ended September 30, 2009 was
       $21.3 million, or $0.42 per fully diluted share, compared to $22.2
       million, or $0.44 per fully diluted share, for the first nine months
       of 2008.

Expiration of Limited Waiver and Forbearance and Ongoing Discussions with Lenders

The limited waiver and forbearance which had been granted to the Company by its senior lenders under the Company's secured credit facility, expired in accordance with its terms on November 15, 2009. The Company continues to be in discussions with the secured lenders on the terms of a restructuring of the Company's capital structure. There can be no assurance, however, that the Company will be able to reach agreement on the terms of a restructuring with the secured lenders or that the secured lenders will continue to forbear from exercising their rights under the credit facility. The Company is also in discussions with certain third parties regarding the sale of certain non-core assets.

The credit agreement, dated June 21, 2007, as amended, provides for an $85 million term loan and a $25 million revolving credit line. As of October 31, 2009, the principal amount outstanding under the credit facility was approximately $100.1 million.

The Company's Quarterly Report on Form 10-Q, issued today and the Company's Annual Report on Form 10-K disclose additional information regarding the amendments to its debt agreements and provide additional disclosure regarding the risks of the Company's current liquidity situation and its ability to comply with its financial covenants.

Use of Non-GAAP Measures

Pro-forma results are presented to facilitate a comparison of current year and prior year results. The calculations of pro-forma results are not specified by United States generally accepted accounting principles ("GAAP"). Our calculations of pro-forma results may not be comparable to similarly-titled measures of other companies. A reconciliation of reported net income to pro-forma net income for the quarter and nine months ended September 30, 2009 and 2008, is included in the attached Consolidated Statements of Operations.

Adjusted EBITDA is a non-GAAP financial measure. It is used in addition to and in conjunction with results presented in accordance with GAAP. This non-GAAP financial measure reflects an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. A schedule detailing the calculation of Adjusted EBITDA is attached to this release.

Non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with generally accepted accounting principles.

Conference Call

The company will host a conference call and live webcast with investors and analysts on Monday, November 16, 2009 at 4:30 p.m. (EST). To access, please dial 877-874-1586 or 719-325-4896 (international callers) and enter the pass code 7118427. The call will be broadcast live on the company's website at www.tlcv.com under the "Webcasts" link in the Investor Relations section.

A replay of the conference call will be available until November 30, 2009. To access the replay, dial 888-203-1112 or 719-457-0820 (international callers) and enter the pass code: 7118427. The call will also be archived on the company's web site at www.tlcv.com under the "Webcasts" link in the Investor Relations section.

Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, Section 21E of the U.S. Securities Exchange Act of 1934 and Canadian Provincial Securities Laws, which statements can be identified by the use of forward-looking terminology, such as "may," "will," "expect," "intend," "anticipate," "estimate," "predict," "plans" or "continue" or the negative thereof or other variations thereon or comparable terminology referring to future events or results. We caution that all forward-looking information is inherently uncertain and that actual results may differ materially from the assumptions, estimates or expectations reflected in the forward-looking information. A number of factors could cause actual results to differ materially from those in forward-looking statements, including but not limited to economic conditions, the level of competitive intensity for laser vision correction, the market acceptance of laser vision correction, concerns about potential side effects and long term effects of laser vision correction, the ability to maintain agreements with doctors on satisfactory terms, quarterly fluctuation of operating results that make financial forecasting difficult, the volatility of the market price of our common shares, profitability of investments, successful execution of our direct-to-consumer marketing programs, the ability to open new centers, the reliance on key personnel, medical malpractice claims and the ability to maintain adequate insurance therefore, claims for federal, state and local taxes, compliance with industry regulation, compliance with U.S. and Canadian healthcare regulations, disputes regarding intellectual property, many of which are beyond our control.

Therefore, should one or more of these risks materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary significantly from what we currently foresee. Accordingly, we warn investors to exercise caution when considering any such forward-looking information herein and to not place undue reliance on such statements and assumptions. We are under no obligation (and we expressly disclaim any such obligation) to update or alter any forward-looking statements or assumptions whether as a result of new information, future events or otherwise, except as required by law.

See the Company's reports filed with the Canadian Securities Regulators and the U.S. Securities and Exchange Commission from time to time for cautionary statements identifying important factors with respect to such forward-looking statements, including certain risks and uncertainties, that could cause actual results to differ materially from results referred to in forward-looking statements. TLCVision assumes no obligation to update the information contained in this press release.

About TLCVision

TLCVision is North America's premier eye care services company, providing eye doctors with the tools and technologies needed to deliver high-quality patient care. Through its centers' management, technology access service models, extensive optometric relationships, direct to consumer advertising and managed care contracting strength, TLCVision maintains leading positions in Refractive, Cataract and Eye Care markets. Information about vision correction surgery can be found on the TLC Laser Eye Centers' website at www.tlcvision.com.

TLC VISION CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share amounts)



                                                      Three months ended
                                                        September 30,
                                                    ----------------------
                                                       2009        2008
                                                    ----------  ----------
Revenues:
   Refractive centers                               $   22,197  $   28,516
   Doctor services                                      22,216      22,634
   Eye care                                              7,212       6,384
                                                    ----------  ----------
Total revenues                                          51,625      57,534

Cost of revenues (excluding amortization):
   Refractive centers                                   17,510      22,245
   Doctor services                                      16,371      16,618
   Eye care                                              3,491       2,596
                                                    ----------  ----------
Total cost of revenues (excluding amortization)         37,372      41,459
                                                    ----------  ----------

Gross profit                                            14,253      16,075
                                                    ----------  ----------

General and administrative                               5,679       6,848
Marketing and sales                                      4,948       9,448
Amortization of intangibles                                583         799
Impairment of goodwill, intangibles and other
 long-term assets                                          496       1,500
Other expense (income), net                              6,471        (147)
                                                    ----------  ----------
   Total operating costs                                18,177      18,448
                                                    ----------  ----------
   Operating loss                                       (3,924)     (2,373)

Interest income                                              -         122
Interest expense                                        (4,118)     (2,577)
Earnings from equity investments                           230         467
                                                    ----------  ----------
Loss before income taxes                                (7,812)     (4,361)
Income tax expense                                        (176)       (218)
                                                    ----------  ----------

Net loss                                                (7,988)     (4,579)

   Less: Net income attributable to noncontrolling
    interest                                             2,057       2,132
                                                    ----------  ----------

Net loss attributable to TLC Vision Corporation     $  (10,045) $   (6,711)
                                                    ==========  ==========
Net loss per share attributable to TLC Vision
 Corporation, diluted                               $    (0.20) $    (0.13)
                                                    ==========  ==========

Weighted average number of common shares
 outstanding, diluted                                   50,565      50,345

Calculation of Pro Forma Net Loss and EPS
   Net loss attributable to TLC Vision
    Corporation, as reported                        $  (10,045) $   (6,711)
      Add:  Impairment, severance and
       restructuring charges                             7,790       1,500
                                                    ----------  ----------
   Pro forma net loss attributable to TLC
    Vision Corporation                              $   (2,255) $   (5,211)
                                                    ==========  ==========
   Pro forma net loss per share attributable to
    TLC Vision Corporation, diluted                 $    (0.04) $    (0.10)
                                                    ==========  ==========
Calculation of Adjusted EBITDA
   Net loss attributable to TLC Vision
    Corporation, as reported                        $  (10,045) $   (6,711)
      Add: Income tax expense                              176         218
         Depreciation and amortization                   3,946       4,968
         Interest expense, net                           4,118       2,455
         Non-cash compensation                             332         390
         Foreign exchange loss (gain)                      342        (165)
         Impairment, severance and
          restructuring charges                          7,790       1,500
         Other                                               7           -
                                                    ----------  ----------
   Adjusted EBITDA                                  $    6,666  $    2,655
                                                    ==========  ==========
   Adjusted EBITDA per share, diluted               $     0.13  $     0.05
                                                    ==========  ==========




TLC VISION CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share amounts)

                                                      Nine months ended
                                                        September 30,
                                                    ----------------------
                                                       2009        2008
                                                    ----------  ----------
Revenues:
   Refractive centers                               $   85,145  $  126,540
   Doctor services                                      70,264      73,225
   Eye care                                             24,097      22,221
                                                    ----------  ----------
Total revenues                                         179,506     221,986

Cost of revenues (excluding amortization):
   Refractive centers                                   65,140      89,011
   Doctor services                                      52,462      53,439
   Eye care                                             11,413      10,109
                                                    ----------  ----------
Total cost of revenues (excluding amortization)        129,015     152,559
                                                    ----------  ----------

Gross profit                                            50,491      69,427
                                                    ----------  ----------

General and administrative                              18,007      22,201
Marketing and sales                                     17,285      31,308
Amortization of intangibles                              1,748       2,432
Impairment of goodwill, intangibles and other
 long-term assets                                          496       1,500
Other expense (income), net                             14,617        (703)
                                                    ----------  ----------
   Total operating costs                                52,153      56,738
                                                    ----------  ----------
   Operating (loss) income                              (1,662)     12,689

Interest income                                            168         548
Interest expense                                        (9,681)     (7,467)
Earnings from equity investments                         1,022         365
                                                    ----------  ----------
(Loss) income before income taxes                      (10,153)      6,135
Income tax expense                                        (660)       (950)
                                                    ----------  ----------

Net (loss) income                                      (10,813)      5,185

   Less: Net income attributable to noncontrolling
    interest                                             7,415       8,024
                                                    ----------  ----------

Net loss attributable to TLC Vision Corporation     $  (18,228) $   (2,839)
                                                    ==========  ==========
Net loss per share attributable to TLC Vision
 Corporation, diluted                               $    (0.36) $    (0.06)
                                                    ==========  ==========

Weighted average number of common shares
 outstanding, diluted                                   50,550      50,292

Calculation of Pro Forma Net Loss and EPS
   Net loss attributable to TLC Vision
    Corporation, as reported                        $  (18,228) $   (2,839)
      Add:  Impairment, severance and
       restructuring charges                            16,048       1,500
                                                    ----------  ----------
   Pro forma net loss attributable to TLC
    Vision Corporation                              $   (2,180) $   (1,339)
                                                    ==========  ==========
   Pro forma net loss per share attributable to
    TLC Vision Corporation, diluted                 $    (0.04) $    (0.03)
                                                    ==========  ==========

Calculation of Adjusted EBITDA
   Net loss attributable to TLC Vision
    Corporation, as reported                        $  (18,228) $   (2,839)
      Add: Income tax expense                              660         950
         Depreciation and amortization                  11,955      14,845
         Interest expense, net                           9,513       6,919
         Non-cash compensation                             675       1,101
         Foreign exchange loss (gain)                      651        (246)
         Impairment, severance and restructuring
          charges                                       16,048       1,500
         Other                                              14           -
                                                    ----------  ----------
   Adjusted EBITDA                                  $   21,288  $   22,230
                                                    ==========  ==========
   Adjusted EBITDA per share, diluted               $     0.42  $     0.44
                                                    ==========  ==========




TLC VISION CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)

                                                  (Unaudited)
                                                     As of        As of
                                                 September 30, December 31,
                                                      2009         2008
                                                  -----------  -----------
ASSETS
Current assets:
   Cash and cash equivalents                      $    13,153  $     4,492
   Accounts receivable, net                            16,517       16,870
   Prepaid expenses, inventory and other               11,889       14,214
                                                  -----------  -----------
      Total current assets                             41,559       35,576

Restricted cash                                         1,000            -
Investments and other assets, net                       9,279       11,694
Goodwill                                               26,755       28,570
Other intangible assets, net                            8,252       10,628
Fixed assets, net                                      43,227       50,514
                                                  -----------  -----------
         Total assets                             $   130,072  $   136,982
                                                  ===========  ===========

LIABILITIES
Current liabilities:
   Accounts payable                               $    14,094  $    17,897
   Accrued liabilities                                 24,444       28,076
   Current maturities of long-term debt
    (including debt in default of $100.1 million
    and $82.7 million at September 30, 2009 and
    December 31, 2008, respectively)                  106,644       89,081
                                                  -----------  -----------
      Total current liabilities                       145,182      135,054

Long-term debt, less current maturities                14,891       16,500
Other long-term liabilities                             6,772        5,444
                                                  -----------  -----------
      Total liabilities                               166,845      156,998
                                                  -----------  -----------

STOCKHOLDERS' DEFICIT
TLC Vision Corporation stockholders' deficit:
   Common stock, no par value                         339,809      339,112
   Option and warrant equity                              745          745
   Accumulated other comprehensive loss                     -       (1,545)
   Accumulated deficit                               (391,886)    (373,658)
                                                  -----------  -----------
      Total TLC Vision Corporation stockholders'
       deficit                                        (51,332)     (35,346)
Noncontrolling interest                                14,559       15,330
                                                  -----------  -----------
      Total stockholders' deficit                     (36,773)     (20,016)
                                                  -----------  -----------

         Total liabilities and stockholders'
          deficit                                 $   130,072  $   136,982
                                                  ===========  ===========




TLC VISION CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands, except per share amounts)

                                                      Nine months ended
                                                        September 30,
                                                    ----------------------
                                                       2009        2008
                                                    ----------  ----------
OPERATING ACTIVITIES
Net (loss) income                                   $  (10,813) $    5,185

Adjustments to reconcile net (loss) income to net
 cash from operating activities:
   Depreciation and amortization                        11,955      14,845
   Impairment of goodwill, intangibles and other
    long-term assets                                       496       1,500
   Earnings from equity investments                     (1,022)       (365)
   Gain on sales and disposals of fixed assets            (303)       (397)
   Loss (gain) on sale of businesses                     1,594        (139)
   Non-cash compensation expense                           675       1,101
   Write-down of inventory                                 720           -
   Other                                                   595         459
Changes in operating assets and liabilities, net of
 acquisitions and dispositions:                          1,706        (132)
                                                    ----------  ----------
Cash provided by operating activities                    5,603      22,057
                                                    ----------  ----------

INVESTING ACTIVITIES
Purchases of fixed assets                               (1,259)     (2,785)
Proceeds from sales of fixed assets                        534         774
Distributions and loan payments received from
 equity investments                                      1,564       1,682
Acquisitions and equity investments                     (5,038)     (8,332)
Divestitures of businesses                               2,181       1,128
Other                                                      (61)        (72)
                                                    ----------  ----------
Cash used in investing activities                       (2,079)     (7,605)
                                                    ----------  ----------

FINANCING ACTIVITIES
Restricted cash movement                                (1,000)      1,101
Principal payments of debt financing and capital
 leases                                                 (4,024)    (25,818)
Proceeds from debt financing                            17,971      13,784
Capitalized debt costs                                     (78)       (534)
Distributions to noncontrolling interests               (7,754)     (7,724)
Proceeds from issuances of common stock                     22         309
                                                    ----------  ----------
Cash provided by (used in) financing activities          5,137     (18,882)
                                                    ----------  ----------

Net increase (decrease) in cash and cash
 equivalents during the period                           8,661      (4,430)
Cash and cash equivalents, beginning of period           4,492      12,925
                                                    ----------  ----------
Cash and cash equivalents, end of period            $   13,153  $    8,495
                                                    ==========  ==========

Operating cash flow per diluted share               $     0.11  $     0.44

Contact:
James J. Hyland
VP Investor Relations
(636) 534-2369
Email: investor.relations@tlcvision.com



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