Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Biotech / Medical : VISX -- Ignore unavailable to you. Want to Upgrade?

To: Charlie Smith who wrote (789)	1/20/1999 11:23:00 PM
From: John Binford, Jr.	Read Replies (1) \| Respond to of 1754

Excellent conference call today. A quick summary follows: Record procedures and equipment sales for Q498. Visx is raising their estimates for FY99 from 600,000 to 650,000. (These are for the industry and Visx has around 70 to 80% of the market.) Record equipment Sales of 41 lasers with 75% U.S. versus International versus the more normal 2/3 U.S./International. Pleasantly surprised by growth of procedures and equipment sales, and the fact that the rate of growth is increasing. Last year Visx estimated 300,000 procedures and the actual was something over 400,000. The sales of the lasers are attributable to many factors including the excellent technology of the reliable and proven STAR platform, and Visx's outstanding reputation for service and marketing support, and the large number of approved indications. Laser sales estimated to remain very strong this quarter (Q199) and return to more normal levels for the remaining of the year Two years ago Visx had 166 employees and now has 200 employees. Visx makes alot per employee demonstrating Visx's efficiency advantage of as a key component in maintaining market leadership. Expenses were up due to two main factors: Legal expenses grew sharply because of FTC hearing. R&D expenses were also up. R&D expenses due to: (1) Continuous enhancement of existing STAR. (Constant enhancements will keep the STAR as the technology leader well into the next millenium.) (1) Efforts to create the next refraction system beyond the STAR. Substantial portions contracted outside of Laser Correction industry. For Q199, legal expenses will remain high as Nidek action will become more active. FTC hearing: Closing arguments will be on Feb. 11. A decision will follow roughly 60 to 90 days after that. Decision on appeals estimated around March 2000. Appeal to federal court taking 1 to 2 years after that. Mark calendars for early 2002 for federal court decision. 68% sales increase over Q497. 6% lower average sales price versus Q497, 17% lower than Q398 due to increased tradeins, and "procedure based revenue shipments." December strongest month yet for procedure revenue. Service revenue up by 85% over Q497. Expenses were 90% higher than Q497 due to: Higher legal expenses and incremental marketing and 4th quarter incentives. Expenses were an incremental 2.1 million more than Q497. FY99 expenses (run rate) will decrease by 5 to 10% versus Q498. Earnings per share: $.52 vs .22 (Q497) (fully dilluted) $.36 vs .15 (140% increase) (fully taxed and fully dilluted) Cash generated in quarter was 16 million, with 5 million used for stock buyback. Japan approval expected toward the middle of the year. They should know more soon as Visx's regulatory people are over in Japan now. The patents Visx is suing Nidek on are not part of the FTC hearing (i.e. they are not using the Trokel '388 patent). Procedures increased 30% versus the previous quarter, and 140% versus Q497. More tradeins and "procedural leases" lowered gross margins. Lasik was approximately 85% to 90% of the Visx procedures. A total of around 75 to 80 Summit lasers have been traded-in to date. The consumer's cost for the procedure has stayed constant between $2000 and $3000/eye. The procedure fees have not been lowered and there are no plans to reduce these fees or offer a volume discount. Visx does offer volume discounts on the laser equipment. Nobody asked about raising the fees. However, Mark Logan commented that the fee has more value in that Visx is supporting customers with more marketing support. (Personally, I would like Visx to increase the fee with inflation.) All in all it was an excellent quarter. And the increase in machine sales and procedures should bode well for 1999.