June 25, 2008 / 12:25 PM / 9 years ago

UPDATE 2-LCA-Vision sees lower Q2 procedure volume, shares slide

(Adds details, analyst comments, updates share movement)

By Aradhana Aravindan

BANGALORE, June 25 (Reuters) - LCA-Vision Inc LCAV.O, a provider of laser vision correction services, expects a 40 percent fall in total procedure volume in the second quarter from a year ago, partly due to a panel recommending U.S. health regulators make clearer the risks of LASIK procedures.

The company, whose shares sank 31 percent to their lowest in more than four years, also said that macro-economic conditions continued to hurt consumer discretionary spending, leading to softness in appointments at its LasikPlus centers.

RBC Capital Markets analyst Kevin Ellich said the company's outlook was worse than his estimate of a 15 percent to 20 percent decline in volume. LCA-Vision's total procedure volumes were 48,668 in the second quarter last year.

Ellich said the outlook was mostly due to the weaker economy. "Yes, it is possible the FDA panel might have had a small impact but other operators that we have spoken to really haven't noticed that."

However, LCA-Vision said its business in May and June had been hurt by the media coverage leading up to and following the panel recommendation on April 25.

In mid-May, LCA-Vision had cut its quarterly dividend by two-thirds and said bookings of pre-operative appointments had fallen 20 percent during the month since late April.

The company operates LasikPlus vision centers that offer eye-sight correction services in the United States.

LASIK, or laser-assisted in-situ keratomileusis, is a procedure which cuts a flap in the eye then uses a laser to reshape the cornea, helping people with their vision problems.

BATTLING LOWER VOLUMES

The company, which posted a weak first-quarter profit, has been battling lower procedure volumes as an ailing credit market has forced consumers to tighten their purse strings.

The company, whose rivals include Advanced Medical Optics Inc EYE.N and TLC Vision Corp TLCV.O TLC.TO, had cut almost a fifth of its U.S. work force earlier this year to combat lower procedure volumes and reduce costs.

RBC's Ellich said further job cuts were likely, although management had not explicitly talked about it.

On Tuesday, the Cincinnati-based company announced the resignation of its finance chief of eight years, Alan Buckey. It did not specify the reason for Buckey's resignation.

LCA-Vision shares, which have lost more that 70 percent of their value since the beginning of the year, were down about 21 percent at $5.20 in midday trade on Nasdaq. They hit a low of $4.54 earlier in the session. (Editing by Himani Sarkar)

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