TLCVision Achieves Record Profitability of $0.61 Per Share in 2004

TLCVision Achieves Record Profitability of $0.61 Per Share in 2004

    News Editors

    ST. LOUIS--(BUSINESS WIRE)--March 7, 2005--TLC Vision Corporation (NASDAQ:TLCV)(TSX:TLC), North America's premier eye care services company, today announced its financial results for the three and twelve month periods ended December 31, 2004. All Dollar amounts are expressed in U.S. currency and results are reported in accordance with U.S. generally accepted accounting principles (U.S. GAAP) unless otherwise noted.

    2004 Highlights

    - Revenues improved 24% year-over-year, to $242.2 million

    - Net income increased $53.1 million for the year and generated EPS of $0.61 compared to a loss of ($0.15) per share in 2003

    -- 2004 includes a favorable impact from OccuLogix IPO
    participation

    - Cash position rose 179%, year-over-year, to $84.5 million

    -- $144 million after consolidating OccuLogix's cash balance of
    $60 million

    Revenue

    Revenues for the 4th quarter and the year increased as a result of higher refractive procedure volumes, growing custom mix and continued strong performance from the other healthcare services segment.

    Full year total revenues for 2004 increased 24% to $242.2 million from $195.7 million in 2003. Total revenues for the 4th quarter 2004 rose 15% to $55.7 million compared to $48.5 million for the same period a year ago.

    For the full year, refractive revenues were up 21% to $177.4 million. Refractive revenues for the 4th quarter 2004 increased 13% to $39.2 million compared to $34.7 million in 2003.

    Other healthcare revenues continued to demonstrate steady growth of 19% for the 4th quarter year-over-year comparisons and an increase of 31% for the full year. This was led by ambulatory surgery center (ASC) business revenues which increased 84% over 2003 levels, due to additional investments in surgery centers combined with higher surgical volume. Overall, revenues from other healthcare services generated 27% of total net revenues compared to 25% in the 2003 twelve-month period.

    Earnings

    TLCVision experienced record earnings for the quarter and the year which is attributable to refractive and cataract procedure volume increases, higher gross margins and the contribution from the Company's participation in the initial public offering of OccuLogix Inc. in December 2004.

    Net income increased $53.1 million for the year to $43.7 million or $0.61 per share. For the same twelve month period in 2003, TLCVision recorded a net loss of ($9.4 million) or ($0.15) per share. Net income rose $29 million in the 4th quarter to achieve $26.1 million or $0.36 per share. TLCVision reported a net loss of ($2.9 million) or ($0.04) per share for the same period a year ago. Without the impact from our age-related macular degeneration (AMD) business segment, earnings per share reached $0.29 for the year compared to a loss of ($0.11) for 2003, and $0.02 for the 4th quarter compared to a loss of ($0.03) for the same period last year.

    "This has been an outstanding year for the Company as we achieved record earnings and all of our business segments grew at an impressive rate," commented Jim Wachtman, President and Chief Executive Officer. "TLCVision is well positioned to grow the business for the long term with strong financials, extensive geographic coverage and a disciplined operating system."

    Other Refractive Operating Metrics

    Volume: The 4th quarter refractive procedure volumes from the same store centers business increased 12.6% year-over-year, which out-performed the estimated industry average of 11.5%. Total paid laser procedures increased to 42,200 compared to 38,600 in the same period a year ago. Overall procedures grew 9.3% and access procedures were up by 5.2%. The procedure volume mix in Q4-04 was 60% centers and 40% access.

    For the full year, 196,000 refractive procedures were performed, which is 11.5% higher than the 2003 results. The centers business procedure volume grew 18.3% for the year, on a same store basis, and out-performed the industry average of 16.7%.

    CustomLASIK: Higher pricing and gross margins associated with CustomLASIK procedures continue to support TLCVision's strong operating performance. CustomLASIK procedures represented approximately 58% of Q4-04 center volumes, up from 55% in the prior quarter and 43% in the same period in 2003.

    Margins: Refractive gross profit margins, for 2004, increased 5.6% to 29.4% due to higher refractive volume and improved custom and centers mix. Refractive margins, in the 4th quarter, increased 3.6% to 23.3%.

    Cash

    The Company ended the twelve-month period in a strong financial position with cash and short-term investments totaling $84.5 million on December 31, 2004, 179% higher than the level in 2003. With consolidation of OccuLogix's cash position, TLCVision's cash balance totaled $144.5 million.

    Operating cash flow per share, fully diluted, for the full year increased significantly to $0.50 compared to $0.07 in 2003. For the 4th quarter, operating cash flow per share rose 212% to $0.09 from $0.03 in the same prior year period.

    Q1 2005 Financial Outlook

    For Q1-05, based on preliminary financial analysis, the Company expects to report net earnings per fully diluted share in an approximate range of $0.13-$0.15, excluding the impact of the AMD business. The Company expects operating cash flow per share to be in the range of $0.14-$0.16. Actual Q1-05 results could vary and will be announced in early May.

    Full Year 2005 Operating Metrics

    For full year 2005, the Company expects to achieve the following growth trends and target ranges, before considering the impact of the AMD business:

    - Refractive Procedure Growth:

--	Industry: 6.2%-8.5%
--	Centers: 8-10%
--	Access: flat to low single digits

    - Refractive Seasonality: Follows historical trends, Q1 is highest volume and decreases each sequential quarter

    - Custom: 65-70% in Centers business by end of 2005

    - Revenue Growth in Other Heathcare Services: 20% to 25%

    - Operating Expenses: $3.5-$4.0 million additional spend, due principally to additional marketing, staffing and $1.4 million of stock option expense in the last half of 2005

    - Operating Cash Flow: Continued cash generation well in excess of earnings

    Conference Call

    TLCVision is pleased to invite all interested parties to participate in a conference call during which these results will be discussed. The call will be held today, March 7, at 5:15 p.m. Eastern Time at 1-800-443-6324. The call will also be broadcast live and archived on the Company's web site at www.tlcv.com under the "Webcasts" link in the Investor Relations section. In addition, the live web cast will be available at various other popular portals and financial web sites.

    About TLCVision

    TLCVision is North America's premier eye care services company, providing eye doctors with the tools and technologies needed to deliver high-quality care. We maintain leading positions in Refractive, Cataract and Optometric Services markets, plus the AMD market through our significant ownership in OccuLogix, Inc (NASDAQ: RHEO, TSX: RHE). The key drivers of TLCVision's strategy are our affiliated network of over 13,000 eye doctors, proven corporate and consumer marketing and education programs, and access to state of the art clinical technologies. We are supported by strong financial performance, a culture of operational excellence and an experienced management team.. The Company's common shares trade on the Nasdaq National Market under the symbol 'TLCV' and on the Toronto Stock Exchange under the symbol 'TLC'. More information about the Company can be found on the TLCVision web site at www.tlcv.com.

    Forward Looking Statements

    This press release contains certain forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934, which statements can be identified by the use of forward looking terminology, such as "may", "will", "expect", "intend", "anticipate", "estimate", "predict", "plans" or "continue" or the negative thereof or other variations thereon or comparable terminology referring to future events or results. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of numerous factors, including the timing of expenditures, effects of competition, changes to pricing, acquisitions and expansion opportunities, any of which could cause actual results to vary materially from current results or TLCVision's anticipated future results. See the Company's reports filed with the Canadian Securities Regulators and the U.S. Securities and Exchange Commission from time to time for cautionary statements identifying important factors with respect to such forward looking statements, including certain risks and uncertainties, that could cause actual results to differ materially from results referred to in forward looking statements. TLCVision assumes no obligation to update the information contained in this press release.

TLC VISION CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands except per share amounts)

THREE MONTHS TWELVE MONTHS ENDED DECEMBER 31, ENDED DECEMBER 31, 2004 2003 2004 2003 --------------------------------------------------------------------- Revenues Refractive Centers $30,563 $ 27,960 136,730 $ 110,052 Access 8,676 6,703 40,659 36,140 Other healthcare services 16,476 13,881 64,806 49,488 --------------------------------------------------------------------- Total revenues 55,715 48,544 242,195 195,680 ---------------------------------------------------------------------

Cost of revenues Refractive Centers 23,438 22,627 96,388 86,045 Access 6,646 5,223 28,863 25,424 Other healthcare services 10,751 8,654 40,435 31,836 --------------------------------------------------------------------- Total cost of revenues 40,835 36,504 165,686 143,305 --------------------------------------------------------------------- Gross margin 14,880 12,040 76,509 52,375 ---------------------------------------------------------------------

General and administrative 9,675 7,333 33,128 31,688 Marketing 3,706 3,819 13,385 14,094 Amortization of intangibles 1,013 1,670 4,098 6,685 Research and development -- 623 849 1,598 Adjustment to the fair value of investments and long-term receivables -- 11 (1,206) (206) Restructuring and other charges -- 320 2,755 2,040 --------------------------------------------------------------------- 14,394 13,776 53,009 55,899 --------------------------------------------------------------------- Operating income (loss) 486 (1,736) 23,500 (3,524) Other income and (expense): Other income, net 26,078 29 26,367 669 Interest expense, net 198 (278) (663) (1,364) Minority interests (951) (1,060) (6,953) (4,672) Earnings from equity investments 490 -- 2,057 -- --------------------------------------------------------------------- Earnings (loss) before income taxes 26,301 (3,045) 44,308 (8,891) Income tax expense (206) 119 (600) (508) --------------------------------------------------------------------- Net income (loss) $26,095 $ (2,926) $ 43,708 $ (9,399) --------------------------------------------------------------------- ---------------------------------------------------------------------

Earnings (loss) per share - diluted $ 0.36 $ 0.04 $ 0.61 $ (0.15) --------------------------------------------------------------------- --------------------------------------------------------------------- Weighted average number of common shares outstanding - diluted 71,846 66,046 71,088 64,413

COMPONENTS OF NET INCOME: Consolidated, as reported $26,095 $(2,926) $43,708 $(9,399) Gain from Occulogix IPO 25,792 -- 25,792 -- AMD business excluding IPO gain (783) (778) (2,592) (2,071) --------------------------------------------------------------------- Net income before AMD $ 1,086 $(2,148) $20,508 $(7,328) --------------------------------------------------------------------- ---------------------------------------------------------------------

EPS BEFORE AMD - DILUTED $ 0.02 $ (0.03) $ 0.29 $ (0.11) --------------------------------------------------------------------- ---------------------------------------------------------------------

TLC VISION CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands)

DECEMBER 31, 2004 2003 --------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents $ 144,450 $ 29,580 Short-term investments -- 748 Accounts receivable 17,443 15,617 Prepaid expenses, inventory and other 13,555 11,646 --------------------------------------------------------------------- Total current assets 175,448 57,591

Restricted cash 932 1,376 Investments and other assets 10,482 3,102 Goodwill 53,774 48,829 Other intangible assets 18,140 22,959 Fixed assets 46,465 56,891 --------------------------------------------------------------------- Total assets $ 305,241 $ 190,748 --------------------------------------------------------------------- ---------------------------------------------------------------------

LIABILITIES Current liabilities: Accounts payable $ 8,716 $ 10,627 Accrued liabilities 27,139 25,811 Current maturities of long-term debt 8,664 10,285 --------------------------------------------------------------------- Total current liabilities 44,519 46,723

Other long-term liabilities 2,722 2,607 Long-term debt, less current maturities 9,991 19,242 Minority interests 37,222 10,907

STOCKHOLDERS' EQUITY Common stock, no par value; unlimited number authorized 458,959 397,878 Option and warrant equity 2,872 8,143 Accumulated deficit (251,044) (294,752) --------------------------------------------------------------------- Total stockholders' equity 210,787 111,269 --------------------------------------------------------------------- Total liabilities and stockholders' equity $ 305,241 $ 190,748 --------------------------------------------------------------------- ---------------------------------------------------------------------

TLC VISION CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) YEAR ENDED DECEMBER 31, 2004 2003 --------------------------------------------------------------------- OPERATING ACTIVITIES Net income (loss) $ 43,708 $ (9,399) Adjustments to reconcile net income (loss) to net cash from operating activities: Depreciation and amortization 17,681 22,593 Write-off of investment in research and development arrangements 849 1,598 Minority interests 6,953 4,672 Gain on sale of subsidiary stock (25,792) -- Gain on sale of interest in subsidiary (1,143) -- Earnings from equity investments (2,057) -- Loss (gain) on sale of fixed assets 839 (484) Non-cash compensation expense 484 125 Adjustment to the fair value of investments and long-term receivables and impairment of fixed assets (1,206) (206) Non-cash restructuring and other costs -- 677 Changes in operating assets and liabilities, net of acquisitions and dispositions Accounts receivable (1,449) (489) Prepaid expenses, inventory and other current assets (1,535) (964) Accounts payable and accrued liabilities (1,706) (13,831) --------------------------------------------------------------------- Cash from operating activities 35,626 4,292 ---------------------------------------------------------------------

INVESTING ACTIVITIES Purchases of fixed assets (5,457) (4,433) Proceeds from sale of fixed assets 1,565 578 Proceeds from divestitures of investments and subsidiaries, net of cash 729 221 Distributions and loan payments received from equity investments 2,518 -- Investment in research and development arrangements (849) (1,598) Acquisitions and investments, net of cash acquired (10,067) (8,015) Proceeds from sale of short-term investments 313 809 Other 60 (229) --------------------------------------------------------------------- Cash from investing activities (11,188) (12,667) ---------------------------------------------------------------------

FINANCING ACTIVITIES Restricted cash movement 444 2,599 Proceeds from debt financing -- 3,450 Principal payments of debt financing and capital leases (13,669) (8,018) Proceeds from sale of subsidiary stock, net 25,792 -- Distributions to minority interests (7,216) (4,901) Proceeds from issuance of subsidiary stock, net and cash acquired upon reorganization 59,850 -- Proceeds from issuance of common stock 25,231 8,744 --------------------------------------------------------------------- Cash from financing activities 90,432 1,874 ---------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents during the period 114,870 (6,501) Cash and cash equivalents, beginning of period 29,580 36,081 --------------------------------------------------------------------- Cash and cash equivalents, end of period $ 144,450 $ 29,580 --------------------------------------------------------------------- ---------------------------------------------------------------------

COMPONENTS OF OPERATING CASH FLOW: Consolidated, as reported $ 35,626 $ 4,292 AMD Business (2,523) (2,024) --------------------------------------------------------------------- Operating cash flow before AMD $ 38,149 $ 6,316 --------------------------------------------------------------------- ---------------------------------------------------------------------

--30--KT/na*

CONTACT: TLC Vision Corporation Anna Austin, EVP, Corporate Communications (314) 523-8354 OR TLC Vision Corporation Ian Chadsey, Manager, Investor Relations (905) 238-3904 investor.relations@tlcvision.com

KEYWORD: MISSOURI NEW YORK INTERNATIONAL CANADA INDUSTRY KEYWORD: MEDICAL BIOTECHNOLOGY EARNINGS SOURCE: TLC Vision Corporation

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