02/08/99 Laser Vision Centers (LVCI $26.50,1-S,Tgt $32.00) Geoffrey E. Harri --SUMMARY:--Laser Vision Centers, Inc.--Healthcare Products/Services
* We believe that LVCI stock is down today as a result of OHSI's announcement that it is expanding its laser vision correction services.
* We do not believe that this will negatively impact LVCI's income statement. We are not concerned with loss of current business or future business.
* LVCI will be announcing 3Q99 results in the first week of March. We believe that the company had a good quarter, in spite of anticipated slowness in November (because of the AAO conference and the holidays). We would be buyers of LVCI at these levels.
02/08/99 Laser Vision Centers (LVCI $26.50,1-S,Tgt $32.00) --EARNINGS:-----------------------------------------------------------------
FYE 1 Qtr 2 Qtr 3 Qtr 4 Qtr Year
Actual 04/98 EPS $(0.17)A $(0.14)A $(0.10)A $0.01A $(0.40)A
Previous 04/99 EPS $0.03A $0.09A $0.09E $0.12E $0.33E
Current 04/99 EPS $0.03A $0.09A $0.09E $0.12E $0.33E
Previous 04/00 EPS $N/A $N/A $N/A $N/A $0.76E
Current 04/00 EPS $N/A $N/A $N/A $N/A $0.76E
Previous 04/01 EPS $N/A $N/A $N/A $N/A $N/A
Current 04/01 EPS $N/A $N/A $N/A $N/A $N/A
Footnotes: EPS are fully diluted.
02/08/99 Laser Vision Centers (LVCI $26.50,1-S,Tgt $32.00) --FUNDAMENTALS:-------------------------------------------------------------
Current Rank........:1-S Price 02/08/99 12:08:$26.50
Prior Rank..........: Target Price........:$32.00
P/E 04/99...........:80.3X 52 Wk Price Range...:29.87 - 7.18
P/E 04/00...........:34.9X Proj. 5yr EPS Grth..:35.0%
Return on Equity 98.:N/A% BookValue...........:$N/A
LT Debt-to-Capital..:31.33% Dividend............:$N/A
Revenue 1999........:$45.30 mil Yield...............:N/A%
Shares Outstanding..:10.90 mil Convertible.........:No
Mkt. Capitalization.:$288.85 mil Hedge Clause(s).....:
Comments............:
02/08/99 Laser Vision Centers (LVCI $26.50,1-S,Tgt $32.00) --OPINION:------------------------------------------------------------------
This morning, Omega Health Systems (OHSI) announced a change in strategic focus that will include a major new initiative to expand its laser vision correction capabilities. During the first half of 1999, the company plans to have excimer laser technology available on-site in all of its 22 markets across the country. In connection with this new initiative, Omega has agreed to acquire 12 VISX STAR S2 excimer lasers from VISX. OHSI's current 1999 procedure run rate is 7,000.
It is perhaps in reaction to this news that LVCI shares are trading down today. We believe that this reaction creates a buying opportunity. We do not believe that this decision by OHSI will impact LVCI's income statement negatively. Currently, LVCI services 3 of these sites with its lasers. As a result of OHSI's decision to expand its laser vision correction centers, LVCI will no longer service these sites. However, the procedure volume at these sites is low enough so as to make this loss insignificant. At the three sites, Tallahassee, Nashville and an Ohio site, LVCI does 20, 75 and 20 procedures per month, respectively. These 115 procedures per month account for less than 2% of LVCI's current monthly procedure volume. As well, given LVCI's strong same store growth, as well as growth from "de novo" sites, this 115 procedure loss become increasingly insignificant as time passes.
Although some investors may be concerned that OHSI's decision means reduced growth opportunities for LVCI, as they will not be able to partner with OHSI in the future, we believe that this concern is misguided. OHSI doctors are typically not market leaders - as such, LVCI had never planned on "hitching its wagon" to OHSI in order to execute its growth strategy.
In short, we believe that OHSI's decision to expand its laser vision correction services speaks to the popularity of, and the demand for, the procedure. Given the procedure volumes done by OHSI doctors relative to the procedure volumes done by LVCI, we are not concerned by either loss of current business nor loss of future business opportunities.
As well, we believe that LVCI's 3Q99, which closed January 31, was a strong quarter, in spite of the anticipated November slowness (due to the AAO conference and the holidays). Results will be released in the first month of March. We would be buyers of LVCI at this level.
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