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CEOCFO CEOCFO Monthly Analyst |
"To print this page go to file and left click on print" Your eyes are No. 1 with us
Healthcare LCA
Vision, Inc. 7840
Montgomery Alan H.
Buckey Interview
conducted by: Mr.
Buckey came to LCA-Vision from Pease Industries, a $70 million manufacturing company based
in Fairfield, Ohio, where he served as vice president, finance, from 1991. His
responsibilities at Pease encompassed finance, accounting, information systems and human
resources. Before joining Pease, Mr. Buckey was
chief executive officer and co-founder of Corson & Buckey, a successful real estate
investment firm in Ohio and Texas. He also
served as CFO of the Hilltop Companies, a contract laboratory research firm, and as a
senior manager with Ernst & Young’s Great Lakes Consulting Group. While at Ernst & Young, he was named acting
CFO of a start-up laser surgery management company which was the predecessor of
LCA-Vision. Mr. Buckey began his career as a
finance specialist with the RCA Corporation. Alan received his B.S. degree
in Applied Science from Miami University in Oxford, Ohio.
He is a CPA and holds an MBA in finance from the Wharton School of the
University of Pennsylvania, where he graduated in the top 10 percent of his class. Mr. Buckey: LCA Vision
is a leading provider of value priced laser correction services in the United States. We currently have 31 center is the US and 2 in
Canada and 1 in Europe. Laser vision
correction is the most popular elective medical procedure performed in the United States
and has experienced rapid growth since its approval by the FDA in 1995. We are currently about to celebrate our tenth
anniversary in laser vision correction as we were performing a surgery in Canada before it
was approved here in the US. Ceocfointerviews: You were performing this in Canada before you
came to the US? Mr. Buckey: Yes, we
started in 1992; we made an acquisition of a center in Toronto to build an experience base
so when the procedure was approved in the US we could be the first to open a corporate
laser center. Ceocfointerviews: You said you had one in Europe, do you see
yourself expanding over there? Mr. Buckey: Currently
our growth prospects are focused on the United States and Canada. Europe is a possibility, as is Japan. Ceocfointerviews: What are the risks involved? Mr. Buckey: It is a very
safe procedure, but understanding the risks are important to our patients. Our market research shows that fear is a
leading reason keeping people from having the procedure done. We try to educate potential patients on the
risks. Our experience is that serious
complications are rare – about one in a thousand patients will have a serious
complication. The good news is that
complications are correctable with appropriate follow up care. We see all our patients on the day after
surgery and on a regular follow up schedule thereafter to monitor their progress. We have performed almost 200,000 procedures
to date and no one has ever been blinded by this procedure.
Ceocfointerviews: The number one factor is fear because of lack of
education. How are you handling this factor? Mr. Buckey: We conduct
an extensive eye exam with state-of-the-art diagnostic equipment to determine if a
prospect is a qualified candidate for the procedure.
If someone is not a good candidate for the procedure we will tell
them. Currently, we turn down almost 20
percent of the prospects who come into our centers.
Patients are put at ease with a caring professional staff. Another way we help address fear is to allow
a prospect to experience the joy of someone who has just been treated. The way our centers are designed, we have a common
waiting area where preoperative and postoperative patients can mix. The wow factor of a patient who has just
experienced a dramatic improvement in their vision is a big help to calm the fears of
potential patients. Ceocfointerviews: Why the restructuring in the third quarter? Mr. Buckey: As the
industry and economy slowed in the second half of last year, we looked at all of our costs
and decided to reduce costs in the current environment.
We took a restructuring charge of about $1.7 million, which yielded a little
under $10 million in annualized cost savings. We
wanted to position the company to be profitable in 2002.
Ceocfointerviews: Ok, would this include cutting back on opening
new centers? Mr. Buckey: Temporarily,
we stopped opening new centers until we can see signs that the economy is improving. Ceocfointerviews: I think a lot of it had to do with the September
11th incident. Mr. Buckey: The business
was slowing down prior to September 11th, but clearly the tragedy in September
was another setback for our industry. It was
not until the beginning of October that we actually saw business start to improve. Ceocfointerviews: Obviously technology is changing, laser surgery
is improving in technology, technique and the instruments that are being used are you
keeping up with the latest technology and how are you acquiring it? Mr. Buckey: We
constantly evaluate technology to have the latest and best technology in our centers. Currently we utilize Bausch and Lomb lasers as
well as VISX. In our Toronto center we have a
Bausch and Lomb Zyoptics Laser System which is their custom ablation product and it is not
yet approved in the United States. We
acquired Zyoptics in Toronto to see if there are improved clinical outcomes. We want to be in position to roll out any
new technology that has demonstrated benefits to the consumer as soon as it is approved by
the FDA. Ceocfointerviews: Most of the approvals are done in Canada first
prior to its introduction in the United States? Mr. Buckey: Frequently,
that’s the way it happens, yes. Ceocfointerviews: Why is that? Mr. Buckey: It takes
longer to get through the FDA than it does internationally.
Ceocfointerviews: How are you making sure that the doctors who are
representing your company are qualified? Mr. Buckey: Well, one of
the strengths of our business model is that we employ either directly or through
professional corporations full time physicians who do nothing but laser vision correction
surgeries. So, the average surgeon in our
system has done over 4,000 procedures and we have some who have done more than 20,000
procedures. We have a medical advisory board
that oversees clinical outcomes and best practices. We
also will bring the doctors together periodically and give them the opportunity to share
experiences. Ceocfointerviews: It’s a little scary out there; I do hear
some horror stories. Mr. Buckey: The key
to great outcomes is careful patient selection.
In November of last year, our Medical Advisor board publishes a white
paper on patient selection criteria. In the
control group studies over 99 percent of the group achieved 20/40 vision or better which
is the vision needed to drive without glasses or contacts.
When the procedure is performed by a skilled surgeon, on the best
available technology, with a highly trained staff, in an environmentally controlled laser
room, and these are all factors we use at LasikPlus, then it is very safe. Ceocfointerviews: What cities are your centers available? Mr. Buckey: We are in
about 22% of the US currently, mostly on the east coast, Cincinnati, Dayton, Columbus,
Toledo, Chicago, Minneapolis, Philadelphia, Baltimore, Washington DC, Atlanta, and Tampa,
we’re also in upstate New York, in Albany, in Charlotte and then out on the west
coast we are in the Bay area, San Francisco. Ceocfointerviews: Do you see expanding more, maybe out toward the
west coast? Mr. Buckey: Absolutely,
I we want to have a national company within the next five years where we are in the top
one hundred metro markets. Ceocfointerviews: After the restructuring does this company have
the cash and/or credit to go forward? Mr.
Buckey::
It’s
a very strong balance sheet with over $16 million dollars in cash, no debt. We are generating positive cash flow and can
fund our planned growth from internally generated funds. Ceocfointerviews: What makes
this company unique? Mr. Buckey: We really
think it’s the strength of the business model where we combine unsurpassed clinical
outcomes at a price that consumers can afford. Currently
we are getting over 99% 20/40 or better and over 87% of patients achieve 20/20 or better. Ceocfointerviews: What is the average cost of the procedure? Mr.
Buckey: Right
now our average price $1,100.00 per eye, so our average price is about $2,200 per patient. Ceocfointerviews: Do you
have any payment programs? Mr. Buckey: Yes. We offer different financial payment programs. Presently we have a twelve month zero interest
plan. If you pay off the balance in twelve
months there is not a finance charge. Ceocfointerviews: Every company has different avenues to choose for
growth: internal, acquisitions, partnerships. What is your strategy? Mr. Buckey: We
look at all three; traditionally most of the growth has occurred by opening our own
centers. We did do a joint venture in Canada in the fourth quarter last year where
we had one center in Toronto and now we have two. We have looked at acquisition
alternatives in the past, but have not been able to justify the prices needed to make the
deal happen when we look at the cost of internal growth. At this point I expect
internal growth will continue to be the primary mode of expansion. Ceocfointerviews: What would
you say to a potential investor? Mr. Buckey: I
think you start with the industry and evaluate the prospects for growth. This is a
high growth industry because of the low penetration rate of the people who have had the
procedure performed and could benefit from it. Our target audience would be
households with household income in the range of $35,000 to $150,000. In this
target, the penetration rate is under 2% and yet it represents two thirds of the US
population. If you go above $150,000 household income the penetration rate is over
8%, so you can see that the industry is still in its early times. The second
question to ask is what company is best positioned to make money in this industry.
We are confident that LCA-Vision has the best business model to deliver
terrific clinical outcomes at a price people can afford, and this will translate into the
highest level of profitability for our shareholders. Ceocfointerviews: If a patient comes to you and is not a candidate
for laser surgery. Is there something else
that you can do to help them? Mr. Buckey: No,
we would basically refer them back to an eye care professional for glasses or contacts.
We constantly evaluate new technology, but at this time we do not offer other
treatments. Ceocfointerviews: So, there may be some help for them down the road
then? Mr. Buckey: Yes,
we keep them in our database and if a new technology becomes available we would then
contact them and let them know. Ceocfointerviews: Do you keep in constant communications with them? Mr. Buckey: Only
when
we have a significant new development. For example, on the Ladarvision laser we can
treat patients with thinner corneas than those that have been done in the past. So,
we are contacting people who we rejected in the past for thin corneas to see if they have
an interest in the new technology. Ceocfointerviews: Is it beneficial to have your own doctor evaluate
you to see if you are a candidate or should you go to a laser surgeon specialist? Mr.
Buckey:
To
become a candidate at LasikPlus we need to perform a dilated eye exam with our
computerized diagnostic equipment. A patient is free to consult with another
doctor, but it would not replace the need for an exam in our center. One
of the reasons we get exceptional clinical results is that we perform all of the
preoperative and postoperative care. We would not be comfortable treating a
patient that we had not examined. Ceocfointerviews: Do you have a closing statement for my readers? Mr. Buckey:
This is an interesting time for our business and for our industry. If you are currently an investor in our company we
appreciate your support. If you are someone looking at investing in our company please
feel free to contact our investors relations for additional information at (513) 792-9292,
or visit our website at LasikPlus.com. disclaimers © CEOCFOinterviews.com – Any reproduction or further distribution of this article without the express written consent of CEOCFOinterviews.com is prohibited. |
