The
LCA-Vision Full Value Committee Urges LCA-Vision (NASDAQ: LCAV) Stockholders to
Reject the Status Quo:
Current
Board and Management’s History of Over-Promising & Under-Delivering Bodes
Ill for Shareholder Value Going Forward
CINCINNATI
– (BUSINESS WIRE) – The LCA-Vision Full Value Committee announced today that it
has released the following letter to the stockholders of LCA-Vision,
Inc.
March 6,
2009
Dear
Fellow Shareholder:
As one of
the largest shareholders at LCAV, with over 11% of the stock, we believe that
the stockholders’ investment in LCAV has reached a crisis point. In
the face of one of the worst recessions in recent history, with no end clearly
in sight, we are saddled with a Board and management team with a history of
over-promising and under-delivering. While they express confidence in
their plans and strategies, based on our experience in building LCAV into the
pre-eminent laser vision company and successfully weathering the last recession,
unfortunately we do not at all share that confidence.
As
stockholders with a significant amount of money at stake and the benefit of a
long memory and deep operational knowledge of the business, we urge stockholders
not to fall victim to the hollow promises you are hearing, yet again, from the
Board and management team. To protect the remaining value of your
investment, we strongly urge you to vote the WHITE proxy card to remove the
current members of the Board and to elect the Full value Committee’s highly
qualified, experienced nominees. If elected, our nominees will
restore the management team that helped build LCAV into one of the fastest
growing small cap companies in the United States, according to both
Fortune
magazine and
Business
Week
.
Perhaps
you do not share our concerns about LCAV’s viability under the current Board and
management in the current economic climate. You may take comfort from
their track record, as they would like to portray it. We certainly do
not.
If:
·
|
You
are satisfied with the Company’s loss of approximately 90% of stockholder
value, you should vote to keep the current Board and management
team
|
·
|
You
are satisfied with losing national market share while at the same time
much of your money has been spent to open 19 more vision centers, you
should vote to keep the current Board and management
team
|
·
|
You
are satisfied with the Board continuing to significantly dilute
shareholders with generous equity awards to themselves and the management
team, including approximately
2%
of the outstanding
shares in a single grant just last Monday that we believe may have been a
violation of the caps in the Company’s own stock incentive plans, you
should vote to keep the current Board and management
team
|
·
|
You
are satisfied with the Company’s same store procedure volume
lagging
the industry as
it has done for the last seven quarters, you should vote to keep the
current Board and management team
|
·
|
You
are satisfied with the Company continuing to rapidly burn through its
remaining cash reserves, which it appears they will do far more rapidly
than they have told you, you should vote to keep the current Board and
management team
|
·
|
You
are comfortable with the Company diversifying into new business lines with
questionable revenues and uncertain margins while at the same time the
core LASIK business is hemorrhaging $2.5 million of cash per month, you
should vote to keep the current Board and management
team
|
·
|
You
want to suffer the same fate as the stockholders of MSO Medical (Mr.
Straus’s last venture) which filed for bankruptcy, you should vote to keep
the current Board and management
team
|
·
|
You
are comfortable with the Company continuing to promise you a rosy future
while yet again justifying its subpar performance, you should vote to keep
the current Board and management
team
|
You may
have seen that a proxy advisory firm recently recommended that shareholders not
replace the current Board at this time. Naturally, we are
disappointed that this firm - which does not have any in-depth knowledge of LCAV
or the laser correction industry and is not an LCAV investor - took this
position. You should know, however, that their support of the current
Board was tepid, at best, acknowledging the Company’s decline under Steve
Straus’s management, as well as expressing concerns regarding Board compensation
and the poison pill that the Board adopted without shareholder approval, among
other issues.
If
on the other hand, you’re ready for a change, the time is now.
Under Mr.
Straus and the Board, LCAV has missed consensus estimates every single quarter
of 2008 and six of the eight quarters that Mr. Straus has served as
CEO. Needless to say, the unbroken record of over-promising and
under-delivering has severely damaged the value of all of our LCAV
investments. Although they acknowledge there were some mishaps in the
past, the Board and Mr. Straus would now like you to believe that business has
“stabilized,” implying that LCAV will be able to achieve 2008 procedural volume
levels in 2009, a prospect we find highly unrealistic.
In
addition, they have told you that LCAV has a three-year cash position at the
90,000 annual procedural level. Yet, deep within a filing with the
Securities and Exchange Commission, they recently acknowledged for the first
time that the Company now expects that the first quarter 2009 procedural volume
will be down “about 35%” from the first quarter of 2008, seriously jeopardizing
their own prediction of a three-year cash position.
What
else is the Company not telling stockholders? As you decide how to
vote your shares, consider the following concerns, which are based on our
intimate understanding of the business and the industry:
·
|
We
believe the Company’s first quarter 2009 procedure volume will decline
well in excess of the
35%
projected by management, compared to the first quarter
2008.
|
·
|
We
believe the Company’s new marketing initiatives are NOT
working. In fact, we believe the Company may report one of its
highest marketing costs per procedure in the first quarter 2009, ever,
possibly even exceeding $500.
|
·
|
We
believe that for the first time in over a decade, LCAV will likely report
a significant adjusted
loss
in the first quarter 2009, seasonally the Company’s strongest and most
profitable quarter. If so, this does not bode well for the rest
of the year and management’s latest set of
promises.
|
Everything
we have heard from the current Board and management demonstrates that they lack
a fundamental understanding of LCAV’s business and the core drivers of the
Company’s profitability. They lack an understanding of the major
problems confronting our Company, and have minimal insight into how to fix
them. As they make vapid promises of future performance, they are
asking stockholders for more time and patience.
But
for stockholders, there can be no more time, there can be no more
patience. In the race between the cash running out and the key
physician and employee asset base crumbling, on the one hand, and the Board and
management scrambling to learn the business, on the other, the stockholders
stand to be the ultimate losers.
Time is
of the essence. Please sign date and return your
WHITE
consent card as soon as
possible with a vote to remove the existing members of the Board and to replace
them with our highly qualified nominees. As the Company’s largest
shareholders, with unique insights and unparalleled industry and
Company-specific knowledge,
we
can tell you the status quo is NOT working.
We believe the
Company’s very existence as a going concern may soon be in question unless
stockholders act NOW.