TLC Vision Corporation
TSX : TLC
NASDAQ : TLCV

TLC Vision Corporation

November 07, 2005 09:00 ET

TLCVision Reports Third Quarter 2005 Financial Results

ST. LOUIS, MISSOURI--(CCNMatthews - Nov. 7, 2005) - TLC Vision Corporation (TSX:TLC)(NASDAQ:TLCV), North America's premier eye care services company, today announced its financial results for the third quarter and nine month period ended September 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.

Third Quarter Highlights:



CONSOLIDATED:
- Revenues were $62 million
- EPS of $0.02 on net income of $1.7 million
- Operating cash flow was $6 million or $.09 per share

OPERATING BUSINESS (Excluding AMD):
- Revenues were $61 million
- EPS of $0.04 on net income of $2.8 million
- Operating cash flow was $10.4 million or $0.15 per share

Nine-Month Highlights:

CONSOLIDATED:
- Revenues were $200 million
- EPS of $0.23 on net income of $16.8 million
- Operating cash flow was $19 million or $.27 per share

OPERATING BUSINESS (Excluding AMD):
- Revenues were $198 million
- EPS of $0.30 on net income of $21 million
- Operating cash flow was $34 million or $0.47 per share


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.

HIGHER REVENUES

TLCVision's third quarter net revenues from the Operating Business were $61.0 million vs. $57.5 million last year, an increase of $3.5 million or 6%. TLCVision refractive centers revenues were up 9% to $35 million, driven by a 4% increase in price per procedure vs. prior quarter. Year to date, centers refractive revenues were up 6%. Overall, centers quarterly procedure volume was equal to last year, as North American same store procedure volume was down by 5%, offset by volume from recent acquisitions. The access business revenues declined by $1.5 million during the quarter, with access procedure volumes down 18% as compared to the same period last year. Overall refractive procedures were 42,500 compared to 45,700 the prior year, down 7%.

Other healthcare revenues from ongoing operations grew by 20% over the prior year. Revenues from MSS were up 17%. Vision Source revenues were 21% higher than third quarter 2004.

SOLID NET INCOME AND EARNING PER SHARE

Consolidated net income for the third quarter was $1.7 million or $0.02 per share. After removing the loss from the Company's 51% ownership in OccuLogix, Inc., net income from the Operating Business was $2.8 million or $0.04 per share, which was down $0.02 from prior year primarily as the result of lower volumes in the refractive business.

"Despite the dip in refractive volumes, we delivered a solid, profitable quarter," said Jim Wachtman, President and Chief Executive Officer. "Currently, we are not seeing the levels of procedure growth that we or our shareholders would expect. To deliver higher growth rates, we have launched a new expansion strategy focused on the value-priced consumer segment, which includes our new LASIK Select branded centers and the acquisition of TruVision, a leading managed care contractor. We remain confident in our diversified service model and growth strategy, and comfortable with current analyst earnings expectations for full year 2005, before the impact of our AMD business."

STRONG CASH GENERATION

The business model continues to demonstrate strong cash generation that will fund the growth strategy for the company.

Consolidated operating cash flow per share decreased 38% to $0.09 from $0.14, reflecting cash used in OccuLogix operations. Quarter-end consolidated cash and short-term investments totaled $101 million, up 88% vs. September 2004.

Operating cash flow from the Operating Business was $10.4 million or $0.15 per share, up marginally from last year. The company continues to maintain a strong financial position, with cash and short-term investments totaling $55.5 million. TLCVision completed its previously announced share repurchase program in early October, with a total repurchase of two million shares of common stock.

NINE-MONTH FINANCIAL RESULTS

Total Operating Business net revenues were up 4% to $198 million compared to $190 million. Refractive revenues were $146 million, up 3%. Other healthcare revenues, excluding the AMD segment, were up 9% and MSS mobile cataract revenues were up 16%. Consolidated net income was $17 million or $0.23 per share. Operating Business earnings were $21 million or $0.30 per share, a level that compares to $0.29 for the entire year of 2004.

GROWTH STRATEGY ANNOUNCEMENTS

REFRACTIVE

TLCVision recently announced a new refractive expansion strategy that will establish 15 value-priced "LASIK Select" branded centers by the end of 2006. The company also acquired TruVision, a leading managed care contractor for elective health care services that will serve as a patient generation channel for the new LASIK Select centers. This acquisition provides an immediate entry point into the under-penetrated, value-priced market as TruVision is projected to refer over 23,000 LASIK procedures to its network of providers in 2005 and 28,000 in 2006.

AMBULATORY SURGERY CENTERS (ASC)

TLCVision announces the acquisition, effective November 1, 2005, of 49% of the Eastern Oregon Regional Surgery Center in Hermiston, Oregon. This ASC is well recognized in their market place and currently performs 800 cataract procedures annually.

In addition, TLCVision announces the development of a new surgery center in Milwaukee, Wisconsin. This two room ASC is a joint venture with American Surgisite and several area ophthalmologists, and is expected to open in May 2006.

MOBILE CATARACT

TLCVision announces the acquisition of 20/20 Medical, a Chicago, Illinois based mobile diagnostics company with 200 customers in 8 states. This is a strategic and geographic expansion of the growing in-office diagnostic services offering to ophthalmologists and optometrists.

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, November 7, at 10:30 a.m. Eastern Time at 800-756-8919. 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, and its managed care contracting strength, TLCVision maintains leading positions in Refractive, Cataract, and AMD markets. More information about TLCVision can be found on the website 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
September 30, 2005 September 30, 2004
------------------------------------------------------
Results Results
Before Before
AMD AMD Total AMD AMD Total
Segment Segment TLCVision Segment Segment TLCVision
------------------------------------------------------

Revenues:
Refractive:
Centers $ 34,968 $ - $ 34,968 $ 32,003 $ - $ 32,003
Access 7,846 - 7,846 9,390 - 9,390
Other
healthcare
services 18,190 635 18,825 16,080 219 16,299
------------------------------------------------------
Total
revenues 61,004 635 61,639 57,473 219 57,692

Cost of revenues:
Refractive:
Centers 26,147 - 26,147 23,201 - 23,201
Access 6,319 - 6,319 6,910 - 6,910
Other
healthcare
services 11,289 363 11,652 9,753 219 9,972
------------------------------------------------------
Total cost
of revenues 43,755 363 44,118 39,864 219 40,083
------------------------------------------------------

Gross profit
(loss) 17,249 272 17,521 17,609 - 17,609
------------------------------------------------------

General and
administrative 6,695 1,994 8,689 6,580 212 6,792
Marketing and
sales 5,279 119 5,398 4,688 22 4,710
Research and
development,
clinical and
regulatory - 1,140 1,140 - 525 525
Amortization
of intangibles 1,047 - 1,047 1,016 - 1,016
Other 198 (166) 32 (163) - (163)
------------------------------------------------------
Total
operating
costs 13,219 3,087 16,306 12,121 759 12,880
------------------------------------------------------
Operating
income (loss) 4,030 (2,815) 1,215 5,488 (759) 4,729

Interest income 660 411 1,071 387 - 387
Interest expense (435) - (435) (573) - (573)
Minority
interests (1,867) 1,258 (609) (1,674) - (1,674)
Earnings from
equity
investments 487 - 487 555 - 555
------------------------------------------------------
Income (loss)
before income
taxes 2,875 (1,146) 1,729 4,183 (759) 3,424

Income tax
expense (27) (3) (30) (102) - (102)
------------------------------------------------------

Net income
(loss) $ 2,848$(1,149) $ 1,699 $ 4,081 $(759) $ 3,322
------------------------------------------------------
------------------------------------------------------

Earnings (loss)
per share
- diluted $ 0.04 $(0.02) $ 0.02 $ 0.06 $(0.01) $ 0.05
------------------------------------------------------
------------------------------------------------------

Weighted
average
number of
common
shares
outstanding
- diluted 71,524 71,524 71,524 71,353 71,353 71,353

Note: The AMD segment primarily includes the Company's majority
interest in OccuLogix, Inc. (formerly Vascular Sciences Corp.).


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

Nine Months Ended Nine Months Ended
September 30, 2005 September 30, 2004
------------------------------------------------------
Results Results
Before Before
AMD AMD Total AMD AMD Total
Segment Segment TLCVision Segment Segment TLCVision
------------------------------------------------------
Revenues:
Refractive:
Centers $ 116,743 $ - $ 116,743 $110,058 $ - $ 110,058
Access 29,085 - 29,085 31,983 - 31,983
Other
healthcare
services 52,045 1,635 53,680 47,839 491 48,330
------------------------------------------------------
Total revenues 197,873 1,635 199,508 189,880 491 190,371

Cost of revenues:
Refractive:
Centers 80,597 - 80,597 76,841 - 76,841
Access 20,929 - 20,929 22,217 - 22,217
Other
healthcare
services 31,617 1,393 33,010 29,131 553 29,684
------------------------------------------------------
Total cost of
revenues 133,143 1,393 134,536 128,189 553 128,742
------------------------------------------------------

Gross profit
(loss) 64,730 242 64,972 61,691 (62) 61,629
------------------------------------------------------

General and
administrative 21,108 5,868 26,976 19,174 393 19,567
Marketing and
sales 15,747 491 16,238 13,478 87 13,565
Research and
development,
clinical and
regulatory - 3,794 3,794 - 1,249 1,249
Amortization of
intangibles 3,090 - 3,090 3,085 - 3,085
Other (835) (166) (1,001) (1,895) - (1,895)
Restructuring,
severance and
other charges - - - 2,755 - 2,755
------------------------------------------------------
Total
operating
costs 39,110 9,987 49,097 36,597 1,729 38,326
------------------------------------------------------
Operating
income
(loss) 25,620 (9,745) 15,875 25,094 (1,791) 23,303

Interest income 2,174 1,187 3,361 1,338 - 1,338
Interest
expense (1,316) - (1,316) (2,199) - (2,199)
Minority
interests (6,567) 4,167 (2,400) (6,002) - (6,002)
Earnings from
equity
investments 1,826 - 1,826 1,567 - 1,567
------------------------------------------------------
Income (loss)
before income
taxes 21,737 (4,391) 17,346 19,798 (1,791) 18,007

Income tax
expense (527) (3) (530) (394) - (394)
------------------------------------------------------

Net income
(loss) $ 21,210$(4,394) $ 16,816 $ 19,404$(1,791) $ 17,613
------------------------------------------------------
------------------------------------------------------

Earnings
(loss) per
share
- diluted $ 0.30 $(0.07) $ 0.23 $ 0.27 $(0.02) $ 0.25
------------------------------------------------------
------------------------------------------------------

Weighted
average
number of
common
shares
outstanding
- diluted 71,877 71,877 71,877 70,832 70,832 70,832

Note: The AMD segment primarily includes the Company's majority
interest in OccuLogix, Inc. (formerly Vascular Sciences Corp.).


TLC VISION CORPORATION
CONSOLIDATING BALANCE SHEETS
(In thousands)
September 30, 2005 December 31, 2004
(Unaudited)
------------------------------------------------------
Results Results
Before Before
AMD AMD Total AMD AMD Total
Segment Segment TLCVision Segment Segment TLCVision
------------------------------------------------------
ASSETS
Current assets
Cash and cash
equivalents $ 37,263 $13,394 $ 50,657 $ 15,847 $17,588 $ 33,435
Short-term
investments 18,200 32,435 50,635 68,515 42,500 111,015
Accounts
receivable 18,063 949 19,012 16,489 954 17,443
Prepaids and
other current
assets 11,874 6,398 18,272 12,212 1,609 13,821
------------------------------------------------------
Total current
assets 85,400 53,176 138,576 113,063 62,651 175,714

Intercompany 1,679 (1,679) - 1,877 (1,877) -
Restricted cash 1,140 - 1,140 932 - 932
Investments and
other assets 12,497 - 12,497 10,482 - 10,482
Goodwill 89,039 - 89,039 53,774 - 53,774
Intangibles,
net 22,587 116 22,703 18,037 103 18,140
Fixed assets,
net 46,853 495 47,348 45,636 563 46,199
------------------------------------------------------
Total assets $ 259,195 $52,108 $ 311,303 $243,801 $61,440 $ 305,241
------------------------------------------------------
------------------------------------------------------

LIABILITIES
Current
liabilities
Accounts
payable $ 8,688 $ 113 $ 8,801 $ 8,491 $ 225 $ 8,716
Accrued
liabilities 25,807 2,827 28,634 23,425 3,714 27,139
Current portion
of long-term
debt 4,572 - 4,572 8,664 - 8,664
------------------------------------------------------
Total current
liabilities 39,067 2,940 42,007 40,580 3,939 44,519

Long-term debt,
less current
maturities 12,020 - 12,020 9,991 - 9,991
Other long-term
liabilities 2,640 - 2,640 2,242 480 2,722
Minority
interests 15,030 24,222 39,252 9,307 27,915 37,222
------------------------------------------------------
Total
liabilities 68,757 27,162 95,919 62,120 32,334 94,454

STOCKHOLDERS'
EQUITY
Capital stock 422,095 30,317 452,412 428,877 30,082 458,959
Option and
warrant equity 1,868 - 1,868 2,872 - 2,872
Treasury stock (4,668) - (4,668) - - -
Accumulated
deficit (228,857) (5,371) (234,228)(250,068) (976) (251,044)
------------------------------------------------------
Total
stockholders'
equity 190,438 24,946 215,384 181,681 29,106 210,787
------------------------------------------------------

Total
liabilities
and
stockholders'
equity $ 259,195 $52,108 $ 311,303 $243,801 $61,440 $ 305,241
------------------------------------------------------
------------------------------------------------------

Note: The AMD segment primarily includes the Company's majority
interest in OccuLogix, Inc. (formerly Vascular Sciences Corp.).


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

Nine Months Ended Nine Months Ended
September 30, 2005 September 30, 2004
------------------------------------------------------
Results Results
Before Before
AMD AMD Total AMD AMD Total
Segment Segment TLCVision Segment Segment TLCVision
------------------------------------------------------
OPERATING
ACTIVITIES
Net income
(loss) $ 21,210$(4,394) $ 16,816 $ 19,404 $(1,791) $ 17,613

Adjustments to
reconcile net
income (loss)
to net cash
from operating
Depreciation
and
amortization 11,931 88 12,019 13,251 53 13,304

Write-offs
(reimbursements)
of investments
in research and
development
arrangements (300) - (300) (400) 1,249 849
Minority
interests 6,567 (4,167) 2,400 6,002 - 6,002
Earnings from
equity
investments (1,826) - (1,826) (1,567) - (1,567)
Loss (gain) on
disposals of
fixed assets (38) (166) (204) 1,032 - 1,032
Gain on the
sales of
subsidiaries (319) - (319) (1,143) - (1,143)
Non-cash
compensation
expense 69 216 285 424 - 424
Adjustment to
the fair value
of investments
and long-term
receivables - - - (1,206) - (1,206)
Other - 135 135 - - -
Changes in
operating assets
and liabilities,
net of
acquisitions and
dispositions (3,594) (6,286) (9,880) (6,309) 686 (5,623)
------------------------------------------------------
Cash from
operating
activities 33,700 (14,574) 19,126 29,488 197 29,685
------------------------------------------------------


INVESTING
ACTIVITIES
Purchases of
fixed assets (6,526) (138) (6,664) (4,115) (128) (4,243)
Proceeds from
sales of fixed
assets 966 284 1,250 900 - 900
Proceeds from
divestitures
of investments
and subsidiaries,
net 3,430 - 3,430 729 - 729
Distributions and
loan payments
received from
equity
investments 1,828 - 1,828 792 - 792
Reimbursements
from
(investments
in) research
and development 300 - 300 (849) - (849)
Acquisitions and
equity
investments (42,119) - (42,119) (5,245) - (5,245)
Proceeds from
sales of
short-term
investments 78,025 20,550 98,575 2,165 - 2,165
Purchases of
short-term
investments (27,710) (10,585) (38,295) (31,230) - (31,230)
Other 48 (15) 33 711 - 711
------------------------------------------------------
Cash from
investing
activities 8,242 10,096 18,338 (36,142) (128) (36,270)
------------------------------------------------------

FINANCING
ACTIVITIES
Restricted
cash movement (208) - (208) (12) - (12)
Principal
payments of
debt
financing
and capital
leases (7,500) - (7,500) (12,137) - (12,137)
Proceeds from
debt financing 1,489 - 1,489 - - -
Distributions
to minority
interests (6,024) - (6,024) (5,536) - (5,536)
Purchases of
treasury
stock (10,031) - (10,031) - - -
Proceeds from
issuance of
common stock 1,748 - 1,748 19,121 - 19,121
Proceeds from
issuance of
OccuLogix, Inc.
common stock - 284 284 - - -
------------------------------------------------------
Cash from
financing
activities (20,526) 284 (20,242) 1,436 - 1,436
------------------------------------------------------

Net increase
(decrease)
in cash and
cash
equivalents
during the
period 21,416 (4,194) 17,222 (5,218) 69 (5,149)
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 $ 37,263 $13,394 $ 50,657 $ 16,336 $ 95 $ 16,431
------------------------------------------------------
------------------------------------------------------

Operating cash
flow per
diluted share $ 0.47 $(0.20) $ 0.27 $ 0.42 $ 0.00 $ 0.42

Note: The AMD segment primarily includes the Company's majority
interest in OccuLogix, Inc. (formerly Vascular Sciences Corp.).


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