Economy gets blame for LASIK slippage

WORLDWIDE—The laser-assisted in situ keratomileusis (LASIK) eye-surgery market is experiencing a decline.

WORLDWIDE—The laser-assisted in situ keratomileusis (LASIK) eye-surgery market is experiencing a decline. While Advanced Medical Optics’ (AMO; Santa Ana, CA) Q2 2008 financial results reported a 44% increase in international sales, the news was not all good. The equipment maker says weak U.S. economic conditions and corresponding significant declines in consumer discretionary spending drove down its U.S. excimer procedures nearly 40% in June. As a result, AMO now expects its 2008 U.S. excimer procedures to be approximately 25% below 2007 levels.

AMO holds approximately 64% of the excimer laser procedure share according to MarketScope data, and a recent Associated Press report noted that the laser vision correction franchise is a key revenue driver for the company, bringing in $367.8 million in 2007.

Asked what the company foresees for 2009, AMO’s manager of corporate communications Steve Chesterman told Optoelectronics Report, “We can’t speculate but we’re working to minimize the downside where we can, while ensuring that we’re well positioned to capitalize when things turn around. This includes aggressively promoting the benefits of our proprietary iLASIK technology suite which combines the IntraLase and CustomVue procedures, to fortify our market leadership position, and to expand internationally reducing our exposure to any single market.”

Primarily because of its revised outlook for U.S. refractive procedures, AMO reduced its adjusted 2008 earnings-per-share (EPS) guidance to a range of $1.00 to $1.15 (versus prior guidance of $1.25 to $1.45). This summer, the company’s share price ran in the high teens to low 20s—about where it was at the start of 2004; in 2006, shares hit an all-time high of just over 50 dollars.

The services side

Similarly, TLC Vision Corp. (Mississauga, ON, Canada) announced a loss of $2.2 million for its second quarter, which ended June 30. The $300 million eye-care services company, which provides “eye doctors with the tools and technologies needed to deliver high-quality patient care” through nearly 60 centers across the U.S. and Canada, is likewise blaming its loss on the decline in vision-correction procedures. “Our results this quarter in our LASIK businesses were significantly impacted by the weak economy, as evidenced by a consumer confidence index that has declined to a level not seen since the early 1990s,” said company president and CEO Jim Wachtman. A year earlier, the company reported a profit of $876,000 for the same quarter. Q2 revenue was $74.1 million for 2008, down 7.5% from $80.1 million in 2007.

“Although our performance was ahead of the overall industry that experienced a decline estimated at 25% to 30%” in Q2, said Wachtman, “we experienced a significant weakening in procedure volume.” In the first quarter of 2008, the company reported strong growth and record results. Still, said Wachtman, “We continue to gain market share despite lower volumes, with our same-store, majority-owned centers posting a 6.2% procedure decline through the first half of 2008 compared to an industry that is estimated to have declined 20% during the same six month period.”

FDA, competition

Neither of the companies blames for its declines the April U.S. Food and Drug Administration (FDA) hearing that took input from disgruntled patients and their families concerning failed LASIK procedures. “Recent consumer market research through Iconoculture indicated that less than 2% of those surveyed recalled seeing, hearing, or reading any news related to the FDA and LASIK. Therefore, we feel it had little to no affect on our business,” Chesterman said. “AMO did not make a presentation at April’s FDA meeting. However, the FDA reaffirmed yet again that LASIK is safe and effective and for the vast majority of people,” added Chesterman. “The FDA panel was able to hear powerful public testimony from physicians and the military on more than a decade’s worth of clinically sound data, which supported the procedure’s safety and effectiveness.”

According to the American Society of Cataract and Refractive Surgery, 95.4% of LASIK patients worldwide are satisfied with the results of their surgery. But for the minority that aren’t, the resulting blurred vision and dry eyes can be devastating.

In any case, STAAR Surgical Company (Monrovia, CA) says Q2 U.S. sales for its Visian ICL (Implantable Collamer Lens) exceeded the total sales for both the first quarter of 2008 and the second quarter of 2007. STAAR markets Visian ICL as an alternative to LASIK. But AMO’s Chesterman says, “We don’t see this as competition. LASIK is the number one elective procedure for vision correction worldwide.”

—Barbara Goode

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