TLC Vision Corporation
TSX : TLC
NASDAQ : TLCV

TLC Vision Corporation

August 09, 2005 09:25 ET

TLCVision Reports Second Quarter Financial Results and Announces Several New Acquisitions

ST. LOUIS, MISSOURI--(CCNMatthews - Aug. 9, 2005) - TLC Vision Corporation (TSX:TLC)(NASDAQ:TLCV), North America's premier eye care services company, today announced its financial results for the second quarter and six month period ended June 30, 2005. All dollar amounts are expressed in U.S. currency and results are reported in accordance with U.S. generally accepted accounting principles (U.S. GAAP) unless otherwise noted.



Second Quarter Highlights:

CONSOLIDATED:
- Revenues were $66.8 million, up 3%
- EPS of $0.08 on net income of $5.5 million
- Operating cash flow was $7.0 million or $0.10 per share

OPERATING BUSINESS (Excluding AMD):
- Revenues were $66.3 million, up $1.7 million or 3%
- EPS of $0.10 on net income of $7.1 million, up 5%
- Operating cash flow was $11.6 million or $0.16 per share, up 36%

Six-Month Highlights:

CONSOLIDATED:
- Revenues were $137.9 million, up 6%
- EPS of $0.21 on net income of $15.1 million
- Operating cash flow was $12.8 million or $0.18 per share

OPERATING BUSINESS (Excluding AMD):
- Revenues were $136.9 million, up 6%
- EPS of $0.25 on net income of $18.4 million, up 20%
- Operating cash flow was $23.3 million or $0.32 per share, up 18%

Editor's Note: "Operating Business" (or "Operating") is defined as
TLCVision's operating activities excluding the impact of the AMD
segment, principally represented by our investment in OccuLogix Inc.
To provide maximum transparency for investors, Operating Business
financial results are listed separately from consolidated results
in this press release.


"TLCVision delivered on the company's EPS target of $0.10 for the second quarter and grew the Operating Business net income by 20% for the first half of 2005," commented Jim Wachtman, President and Chief Executive Officer. "These results continue to demonstrate the tremendous income and cash generation inherent in our business model, even though revenues were not as robust as we had hoped. We're confident that our current organic and acquisition strategies will deliver both revenue and earnings growth in the second half of 2005."

REVENUES

TLCVision's quarterly Operating Business net revenues were $66.3 million vs. $64.6 million in the second quarter last year, an increase of $1.7 million or 3%. TLCVision refractive centers' revenues were up 4.5% to $38 million, driven by higher CustomLASIK mix of 61% that contributed to a 6% higher price per procedure. Overall, centers procedure volume grew by 1% for the quarter, but exited the quarter with procedure growth of 6.3% year-over-year. The access business revenues declined 6.8% during the quarter, as stronger mobile volumes (procedures up 5.3%) were more than offset by lower fixed-site volume. Resulting overall refractive procedures were 49,900, down 3.3% vs. the prior year. Other healthcare revenues grew by 4%, and MSS mobile cataract revenues grew by 17% as a result of organic procedure growth as well as acquisitions. Total revenue growth does not reflect the timing of several acquisitions whose full benefit will begin to be realized in the second half of 2005.

SOLID NET INCOME AND EARNING PER SHARE

TLCVision continues to demonstrate the leverage in its refractive business model, primarily through its centers, and realize growing contribution from its other healthcare services. Consolidated net income was $5.5 million or $0.08 per share for the second quarter. Net income from the Operating Business grew by 5%, contributing $7.1 million or $0.10 per share.

STRONG CASH GENERATION

The business model continues to demonstrate strong cash generation.

Consolidated Cash Position: Operating cash flow per share was $7.0 million or $0.10 per share, vs. $8.5 million or $0.12 per share in 2004.

With the consolidation of OccuLogix's cash position, TLCVision's cash and short-term investments totaled $141.6 million, up 193% vs. prior year.

Operating Business Cash Position: Operating cash flow per share rose 36% to $0.16 from $0.12, and demonstrates our ongoing strong cash generation.

The company continues to maintain a strong financial position, with cash and short-term investments up 91% vs. prior year and totaling $92.1 million.

SIX-MONTH FINANCIAL RESULTS

Total Operating Business net revenues were up 6% to $136.9 million compared to $129.6 million. Refractive revenues were $103 million, up 5%. Other healthcare revenues, excluding the AMD segment, were up 7% and MSS mobile cataract revenues were up 15%. Consolidated net income was up 6% to $15.1 million and contributed $0.21 earnings per share. Operating Business earnings were up 20% to $18.4 million, and contributed $0.25 earnings per share.

GROWTH THROUGH NEW ACQUISITIONS

"These new business activities continue to deliver on our strategy and position us for long term growth as a diversified eye care services provider, and to capitalize on new implantable opportunities in the refractive and cataract markets," commented Jim Wachtman. "The impact of these acquisitions will begin to be realized in the second half of 2005, and fully in fiscal 2006 and we expect to continue this strong acquisition trend in those same periods."

REFRACTIVE

TLCVision announces the acquisition of Millenium Laser Eye in Washington, DC, retaining a 100% ownership in this large refractive business with annual revenues of $4M and annual procedure volume of over 2000. Millenium Laser Eye is a well recognized brand in the market, with a strong co-management based model which is synergistic to our current operations. This acquisition expands TLC's already strong geographic presence in this market, the 8th largest in the country, and adds to the existing team of exceptional surgeons. Dr. Andrew Holtzman, a leading surgeon in this market, will remain with the center.

In addition, the Kremer Laser Eye acquisition in Philadelphia, PA, was announced in July, generating over $19M in annual revenues, and adding three refractive centers and 7,500 refractive procedures per year, plus one ASC and over 1,500 cataract procedures per year.

AMBULATORY SURGERY CENTERS

TLCVision has cleared state regulatory hurdles in the development of two new ambulatory surgery centers (ASCs) in Delaware and Oklahoma. TLCVision will have a significant minority interest in both centers, which are expected to be operational by the end of the second quarter, 2006. Both ASCs are single-specialty, two-room ophthalmic facilities, and will ultimately support other procedures for additional revenue generation. In addition, TLCVision exercised an option to buy another 5% of the Rayner Surgery Center in Oxford, Mississippi, increasing our ownership in that successful venture to 70%.

MOBILE CATARACT

Midwest Surgical Services completed 3 acquisitions of mobile cataract services companies, adding 42 sites in 8 states, bringing total sites to over 460 sites across 42 states. The mobile cataract acquisitions broaden our presence nationally and continue to strengthen our industry leadership position in outsourced cataract and related services.

CONFERENCE CALL

TLCVision is pleased to invite all interested parties to participate in a conference call during which these results will be discussed. The call will be held today, August 9, at 10:00 a.m. Eastern Time at 1-800-732-6079. The call will also be broadcast live and archived on the Company's web site at www.tlcv.com under the "Webcasts" link in the Investor Relations section. In addition, the live web cast will be available at various other popular portals and financial web sites.

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 and technology access service models, TLCVision maintains leading positions in Refractive, Cataract, Optometric Services and AMD markets. More information about TLCVision can be found on the web site at www.tlcv.com.

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 and Section 21E of the U.S. Securities Exchange Act of 1934, 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. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of numerous factors, including the timing of expenditures, effects of competition, changes to pricing, acquisitions and expansion opportunities, any of which could cause actual results to vary materially from current results or TLCVision's anticipated future results. 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.



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


Three Months Ended Three Months Ended
June 30, 2005 June 30, 2004
--------------------------- ---------------------------
Results Results
Before Before
AMD AMD Total AMD AMD Total
Segment Segment TLCVision Segment Segment TLCVision
--------------------------- ---------------------------


Revenues:
Refractive:
Centers $ 38,010 $ - $ 38,010 $ 36,374 $ - $ 36,374
Access 9,828 - 9,828 10,544 - 10,544
Other
Healthcare
services 18,414 568 18,982 17,681 62 17,743
--------------------------- ---------------------------
Total revenues 66,252 568 66,820 64,599 62 64,661

Cost of revenues:
Refractive:
Centers 25,921 - 25,921 24,645 - 24,645
Access 7,200 - 7,200 7,135 - 7,135
Other
healthcare
services 10,697 510 11,207 10,463 111 10,574
--------------------------- ---------------------------
Total cost
of revenues 43,818 510 44,328 42,243 111 42,354
--------------------------- ---------------------------

Gross profit
(loss) 22,434 58 22,492 22,356 (49) 22,307
--------------------------- ---------------------------

General and
administrative 7,232 1,995 9,227 6,032 83 6,115
Marketing and
sales 5,656 187 5,843 4,677 43 4,720
Research and
development,
clinical and
regulatory - 1,310 1,310 - 350 350
Amortization of
intangibles 1,032 - 1,032 1,057 - 1,057
Other (363) - (363) (1,184) - (1,184)
Restructuring,
severance and
other charges - - - 2,755 - 2,755
--------------------------- ---------------------------
Total operating
costs 13,557 3,492 17,049 13,337 476 13,813
--------------------------- ---------------------------
Operating income
(loss) 8,877 (3,434) 5,443 9,019 (525) 8,494

Interest income 798 421 1,219 473 - 473
Interest expense (424) - (424) (745) - (745)
Minority
interests (2,516) 1,411 (1,105) (2,454) - (2,454)
Earnings from
equity
investments 680 - 680 613 - 613
--------------------------- ---------------------------
Income (loss)
before
income taxes 7,415 (1,602) 5,813 6,906 (525) 6,381

Income tax
expense (302) - (302) (142) - (142)
--------------------------- ---------------------------

Net income
(loss) $ 7,113 $(1,602) $ 5,511 $ 6,764 $(525) $ 6,239
--------------------------- ---------------------------
--------------------------- ---------------------------

Earnings (loss)
per share
- diluted $ 0.10 $(0.02) $ 0.08 $ 0.09 $ 0.00 $ 0.09
--------------------------- ---------------------------
--------------------------- ---------------------------

Weighted average
number of
common shares
outstanding
- diluted 72,071 72,071 72,071 71,249 71,249 71,249

Note: The AMD segment includes the Company's majority interest in
OccuLogix, Inc. (formerly Vascular Sciences Corporation),
OccuLogix, L.P. and RHEO Clinic, Inc.



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

Six Months Ended Six Months Ended
June 30, 2005 June 30, 2004
--------------------------- ---------------------------
Results Results
Before Before
AMD AMD Total AMD AMD Total
Segment Segment TLCVision Segment Segment TLCVision
--------------------------- ---------------------------

Revenues:
Refractive:
Centers $ 81,775 $ - $ 81,775 $ 75,212 $ - $ 75,212
Access 21,239 - 21,239 22,593 - 22,593
Other
healthcare
services 33,855 1,000 34,855 31,760 271 32,031
--------------------------- ---------------------------
Total revenues 136,869 1,000 137,869 129,565 271 129,836

Cost of revenues:
Refractive:
Centers 54,450 - 54,450 50,797 - 50,797
Access 14,610 - 14,610 15,307 - 15,307
Other
healthcare
services 20,328 1,030 21,358 19,378 334 19,712
--------------------------- ---------------------------
Total cost
of revenues 89,388 1,030 90,418 85,482 334 85,816
--------------------------- ---------------------------

Gross profit
(loss) 47,481 (30) 47,451 44,083 (63) 44,020
--------------------------- ---------------------------

General and
administrative 14,411 3,876 18,287 12,595 180 12,775
Marketing and
sales 10,468 372 10,840 8,790 65 8,855
Research and
development,
clinical and
regulatory - 2,654 2,654 - 724 724
Amortization of
intangibles 2,043 - 2,043 2,069 - 2,069
Other (1,033) - (1,033) (1,732) - (1,732)
Restructuring,
severance and
other charges - - - 2,755 - 2,755
--------------------------- ---------------------------
Total operating
costs 25,889 6,902 32,791 24,477 969 25,446
--------------------------- ---------------------------
Operating
income
(loss) 21,592 (6,932) 14,660 19,606 (1,032) 18,574


Interest income 1,515 776 2,291 951 - 951
Interest
expense (882) - (882) (1,626) - (1,626)
Minority
interests (4,701) 2,910 (1,791) (4,328) - (4,328)
Earnings from
equity
investments 1,339 - 1,339 1,012 - 1,012
--------------------------- ---------------------------
Income (loss)
before
income taxes 18,863 (3,246) 15,617 15,615 (1,032) 14,583

Income tax
expense (500) - (500) (292) - (292)
--------------------------- ---------------------------

Net income
(loss) $ 18,363 $(3,246) $ 15,117 $ 15,323 $(1,032) $ 14,291
--------------------------- ---------------------------
--------------------------- ---------------------------

Earnings (loss)
per share
- diluted $ 0.25 $ (0.04) $ 0.21 $ 0.22 $ (0.02) $ 0.20
--------------------------- ---------------------------
--------------------------- ---------------------------

Weighted average
number of common
shares
outstanding -
diluted 72,057 72,057 72,057 70,341 70,341 70,341

Note: The AMD segment includes the Company's majority interest in
OccuLogix, Inc. (formerly Vascular Sciences Corporation),
OccuLogix, L.P. and RHEO Clinic, Inc.




TLC VISION CORPORATION
CONSOLIDATING BALANCE SHEETS
(In thousands)

June 30, 2005 (Unaudited) December 31, 2004
--------------------------- ---------------------------
Results
Before
Results AMD AMD
Before Segment Segment
AMD AMD Total (Unau- (Unau- Total
Segment Segment TLCVision dited) dited) TLCVision
--------------------------- ---------------------------

ASSETS
Current assets
Cash and cash
equivalents $52,269 $11,670 $63,939 $15,847 $17,588 $33,435
Short-term
investments 39,875 37,785 77,660 68,515 42,500 111,015
Accounts
receivable 17,829 1,307 19,136 16,489 954 17,443
Prepaids and other
current assets 12,342 4,523 16,865 12,212 1,609 13,821
--------------------------- ---------------------------
Total current
assets 122,315 55,285 177,600 113,063 62,651 175,714

Intercompany 2,045 (2,045) - 1,877 (1,877) -
Restricted cash 907 - 907 932 - 932
Investments and
other assets 12,197 - 12,197 10,482 - 1 0,482
Goodwill 57,408 - 57,408 53,774 - 53,774
Intangibles,
net 17,614 144 17,758 18,037 103 18,140
Fixed assets,
net 45,718 466 46,184 45,636 563 46,199
--------------------------- ---------------------------
Total assets $258,204 $53,850 $312,054 $243,801 $61,440 $305,241
--------------------------- ---------------------------
--------------------------- ---------------------------

LIABILITIES
Current
liabilities
Accounts
payable $ 8,756 $ 383 $ 9,139 $ 8,491 $ 225 $ 8,716
Accrued
liabilities 19,632 2,205 21,837 23,425 3,714 27,139
Current portion
of long-term
debt 4,395 - 4,395 8,664 - 8,664
--------------------------- ---------------------------
Total current
liabilities 32,783 2,588 35,371 40,580 3,939 44,519
--------------------------- ---------------------------

Long-term debt,
less current
maturities 10,995 - 10,995 9,991 - 9,991
Other long-term
liabilities 2,919 - 2,919 2,242 480 2,722
Minority
interests 10,145 25,287 35,432 9,307 27,915 37,222
--------------------------- ---------------------------
Total
liabilities 56,842 27,875 84,717 62,120 32,334 94,454
--------------------------- ---------------------------

STOCKHOLDERS'
EQUITY
Capital stock 430,988 30,196 461,184 428,877 30,082 458,959
Option and
warrant
equity 2,080 - 2,080 2,872 - 2,872
Accumulated
deficit (231,706) (4,221) (235,927)(250,068) (976) (251,044)
--------------------------- ---------------------------
Total
stockholders'
equity 201,362 25,975 227,337 181,681 29,106 210,787
--------------------------- ---------------------------

Total
liabilities
and
stockholders'
equity $258,204 $53,850 $312,054 $243,801 $61,440 $305,241
--------------------------- ---------------------------
--------------------------- ---------------------------

Note: The AMD segment includes the Company's majority interest in
OccuLogix, Inc. (formerly Vascular Sciences Corporation),
OccuLogix, L.P. and RHEO Clinic, Inc.





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

Six Months Ended Six Months Ended
June 30, 2005 June 30, 2004
--------------------------- ---------------------------
Results Results
Before Before
AMD AMD Total AMD AMD Total
Segment Segment TLCVision Segment Segment TLCVision
--------------------------- ---------------------------

OPERATING
ACTIVITIES
Net income
(loss) $18,363 $(3,246) $15,117 $15,323 $(1,032) $14,291

Adjustments to
reconcile net
income (loss)
to net
cash from
operating
activities:
Depreciation
and
amortization 7,929 59 7,988 8,980 38 9,018
Write-offs
(reimbursements)
of investments
in research
and development
arrangements (300) - (300) - 724 724
Minority
interests 4,701 (2,910) 1,791 4,328 - 4,328
Earnings from
equity
investments (1,339) - (1,339) (1,012) - (1,012)
Loss (gain) on
disposals of
fixed assets (96) - (96) 742 - 742
Gain on the sales
of subsidiaries (319) - (319) (1,143) - (1,143)
Non-cash
compensation
expense 69 137 206 575 - 575
Adjustment to
the fair
value of
investments and
long-term
receivables - - - (1,206) - (1,206)
Other - 88 88 - - -
Changes in
operating assets
and liabilities,
net of
acquisitions and
dispositions: (5,668) (4,711) (10,379) (7,305) 368 (6,937)
--------------------------- ---------------------------
Cash from
operating
activities 23,340 (10,583) 12,757 19,282 98 19,380
--------------------------- ---------------------------

INVESTING
ACTIVITIES
Purchases of
fixed assets (5,113) (64) (5,177) (3,691) (70) (3,761)
Proceeds from
sales of
fixed assets 724 - 724 467 - 467
Proceeds from
divestitures of
investments
and subsidiaries,
net 3,430 - 3,430 (271) - (271)
Distributions
and loan
payments
received from
equity
investments 1,387 - 1,387 680 - 680
Reimbursements from
(investments in)
research and
development
arrangements 300 - 300 (724) - (724)
Acquisitions and
equity
investments (8,881) - (8,881) (4,570) - (4,570)
Proceeds from
sales of
short-term
investments 56,350 10,047 66,397 1,865 - 1,865
Purchases of
short-term
investments (27,710) (5,383) (33,093) (19,415) - (19,415)
Other 35 (42) (7) 907 - 907
--------------------------- ---------------------------
Cash from
Investing
activities 20,522 4,558 25,080 (24,752) (70) (24,822)
--------------------------- ---------------------------

FINANCING
ACTIVITIES
Restricted cash
movement 25 - 25 24 - 24
Principal payments
of debt
financing
and capital
leases (6,131) - (6,131) (8,305) - (8,305)
Proceeds from
debt financing 1,321 - 1,321 - - -
Distributions
to minority
interests (3,744) - (3,744) (3,715) - (3,715)
Proceeds from
issuance of
common stock 1,089 - 1,089 18,260 - 18,260
Proceeds from
issuance of
OccuLogix, Inc.
common stock - 107 107 - - -
--------------------------- ---------------------------
Cash from financing
activities (7,440) 107 (7,333) 6,264 - 6,264
--------------------------- ---------------------------

Net increase
(decrease) in
cash and cash
equivalents
during the
period 36,422 (5,918) 30,504 794 28 822
Cash and cash
equivalents,
beginning
of period 15,847 17,588 33,435 21,554 26 21,580
--------------------------- ---------------------------
Cash and cash
equivalents,
end of period $52,269 $11,670 $63,939 $22,348 $54 $22,402
--------------------------- ---------------------------
--------------------------- ---------------------------


Operating cash
flow per
diluted share $ 0.32 $ (0.14) $ 0.18 $ 0.28 $ 0.00 $ 0.28

Note: The AMD segment includes the Company's majority interest in
OccuLogix, Inc. (formerly Vascular Sciences Corporation),
OccuLogix, L.P. and RHEO Clinic, Inc.


Contact Information

  • TLC Vision Corporation
    Anna Austin
    EVP, Corporate Communications
    (314) 523-8354
    or
    TLC Vision Corporation
    Ian Chadsey
    Manager, Investor Relations
    (905) 238-3904
    investor.relations@tlcvision.com