Date: Jun 21, 1998 Author: Margie Manning Source: bizjournals (
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A new report from A.G. Edwards & Sons suggests Laser Vision Centers Inc. could be the target of a takeover by an excimer laser manufacturer.
Analyst Greg Simpson, who wrote the report, said Bausch & Lomb, which bought laser maker Chiron Corp. last year, is a likely candidate to acquire Laser Vision, a St. Louis-based provider and operator of excimer lasers used for eye surgery.
Robert May, general counsel at Laser Vision, said although talks with a laser manufacturer are not under way now, the company always has thought it would make sense for a manufacturer to purchase a laser operator.
"If you look at where the projected revenues are in this business, it's not in selling lasers, it's in doing procedures," May said.
Laser Vision's own procedure volume has been growing rapidly, with more surgeries performed in the United States in April than in any previous month. The company said total U.S. case volume for its fourth quarter, which ended April 30, was up 30 percent over the previous quarter and 375 percent over the same quarter a year ago.
Revenue was up 180 percent in April compared to the same month a year ago, and Laser Vision is poised to announce that the fourth quarter will be its first profitable quarter when it releases financial results the week of June 22, Simpson said.
That would make Laser Vision the first laser excimer operator to post a profit. The company has 36 lasers in operation in the United States, Canada and Europe -- 14 fixed-site lasers and 22 mobile lasers that travel from site to site.
Simpson said Laser Vision's commanding presence in the market would make it attractive to Bausch & Lomb, one of the next companies expected to bring a laser to market, pending approval by the U.S. Food and Drug Administration.
The FDA already has approved lasers made by industry leaders Visx Inc. and Summit Technology Inc. A laser made by Autonomous Technologies Corp. has been approved by an FDA panel but still requires approval by the full FDA.
"We believe it highly likely that new players on the manufacturing side will aggressively approach companies like (Laser Vision) in an effort to gain an important foothold in the market," Simpson wrote in his June 8 report.
The report was issued after Visx and Summit dissolved Pillar Point, a patent-pooling partnership. Under the partnership, laser operators such as Laser Vision had to pay a $250 fee to Pillar Point for each procedure. Now, the royalty fee will be paid to the company that built the machines they use.
Laser Vision, which uses Visx machines, is poised to benefit from the dissolution of Pillar Point, Simpson said. He said Visx would be free to negotiate a lower royalty fee in order to hang on to the volume provided by the Laser Vision business.
For now, May said, Laser Vision continues to pay the $250 per-procedure fee, plus $10 for a software card that enables the company to use the machines. But May said consumers ultimately could benefit if Laser Vision is able to negotiate a volume discount.
"If Visx or another manufacturer were to lower the royalty fees, I'm not certain we would not be able to pass that through to our customers (the surgeons who use the machines)," May said. "That's kind of speculative right now and would be dictated on a market-by-market basis."
