LVCI is going through a change which will effect earnings for the next 2 quarters, but will still remain profitable and that I believe is why the downgrades.I am holding this more as a long term.
Here is a press release that explains the transition.
April 12, 2000--LASER VISION CENTERS,
INC. (Nasdaq:LVCI) today announced an update for investors on the
Company's progress in its transition from an access provider model to
its Market Development business model and its forecasts for its fourth
quarter which ends April 30, 2000. The Company also provided a
preliminary outlook for fiscal 2001, which begins May 1, 2000.
The Company reported that it has made significant progress in the
transition to its new business model. As of April 12, 2000, the
Company had signed 22 Market Development agreements and 18 of these
agreements are operational. The Company also reported it has signed
eight Partnership agreements as of April 12, 2000 and that all of
these agreements are operational. A Market Development agreement is an
arrangement between a local surgeon and LaserVision whereby
LaserVision provides significant resources including marketing,
personnel, training, laser access and practice development in exchange
for a higher percentage of the global patient fee than it received
under the Company's old "access" model. A Partnership agreement is an
agreement whereby LaserVision and a local surgeon invest in a
partnership to provide refractive surgery. The Company receives a
percentage of the profits as well as a management fee. LaserVision
said its basic mobile laser access business remains strong and it
plans to continue to grow this segment of its business.
Laser Vision Centers, Inc. Chairman and CEO, John J. Klobnak said
the new strategy which the Company recently reported, employs lower,
more competitive pricing without "bricks and mortar". "LaserVision has
an extensive network of surgeons and locations throughout America as
well as the country's largest fleet of excimer lasers. With our much
lower overhead, we now will be able to compete with discount centers.
Because we are very well capitalized, we will not be required to incur
debt to finance these new centers. Based on our initial beta site
results and research we are very bullish on this model."
Mr. Klobnak reported the Company had passed three major milestones
during the month of March. During the month, LaserVision performed
more than 10,000 surgical cases, provided access to more than 700
surgeons and served over 300 sites. "We have already seen the power of
this new model," said Mr. Klobnak. "In the first five Market
Development market sites, we have seen case volume increase on average
157%."
The Company further said that the new strategic initiatives will
require an investment of as much as $6 million to fund existing
opportunities. This, as well as the recent change in pricing by laser
manufacturers will cause a decline in earnings during the first two
quarters of fiscal 2001, however, the Company said it does not expect
to report a loss during the transition period. The Company noted that
it had previously recorded the $260 laser royalty fee in its sales and
the reduction to $110 will contribute to a major percentage of this
decline in revenue. The Company said that while VISX lowered its
royalty fee, it raised certain other fees. This change required the
Company to move to the new model to take advantage of the new lower
royalty fees.
Based on its current projections, the Company believes it will end
the fourth quarter of fiscal 2001 on an annualized run-rate of $16
million in pre-tax earnings. Net of the decrease in the royalty fees,
the Company projects revenues to increase by about 35% and surgical
case volume to increase by about 50% during fiscal year 2001. The
Company stated it believes that it will record between $0.07 and $0.09
in pre-tax earnings for the fourth quarter of fiscal year 2000.
"The recent changes in our industry's environment require that we
make these investments at this time in order to position the Company
for the future," said Mr. Klobnak. "As we have previously discussed,
while we expect the next several quarters to be transitional we are
extremely positive about the long term prospects for the positioned
company."
Commenting on the Company's stock price, Mr. Klobnak noted that
the Company had begun its stock re-purchase program and expected to
complete it by the end of the current fiscal year. On March 16, 2000,
LaserVision's Board authorized the re-purchase of up to five percent
of the Company's outstanding shares. "Obviously our Board feels the
stock is a good buy at this price," Klobnak said.
LaserVision is one of the world's largest providers of excimer
lasers, related equipment and support services for the treatment of
nearsightedness, farsightedness and astigmatism.
Except for historical information, statements relating to the
Company's plan, objectives and future performance are forward looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Such statements are based on management's current
expectations. Because of various risks and uncertainties, actual
strategies and results in future periods may differ materially from
those currently expected. Additional discussion of factors affecting
the Company's business is contained in the Company's most recent
filings with the Securities and Exchange Commission. |
