Whether it's vanity or convenience, there's no doubting the ongoing demand for laser vision correction. By the same token, there's no denying the breakout growth that LCA-Vision (Nasdaq: LCAV) is producing these days.
An operator of centers devoted to vision correction, LCA-Vision reported that revenue climbed 53% in the second quarter. Procedure volumes climbed 49% from the year-ago level, and a 3% increase in revenue per procedure made up the rest of the growth.
Not only is LCA-Vision zapping more eyes, but it's also doing so more profitably. Operating margin improved by nearly 7% to 26.7%, and operating income was 106% higher in the second quarter. While net income, as reported, was down, the year-ago level includes $7.1 million in tax benefits that should be stripped out of the comparison.
LCA-Vision isn't the only game in town. Numerous private practices focus on vision correction, as do publicly traded companies such as TLC Vision (Nasdaq: TLCV) and NovaMed (Nasdaq: NOVA), but there's still plenty of room to grow. Of course, sooner or later all of the low-hanging fruit will have been picked and procedure-count growth will putter along, but that's a worry for the future -- not today.
This company does carry what I call the "Stone Philips risk." That is, the risk that a semi-sensationalized expose on the whole industry could unfairly tar a company like LCA, just because there are a few bad apples in the business. In fact, I can picture it right now: Imagine the camera panning into a procedure room, where you see a patient chair with two tiny, smoking holes spaced eye-width apart.
But even if that should happen, it would most likely prove to be a buying opportunity if LCA-Vision itself weren't implicated. Thus far, clinical data has shown these procedures to be safe when performed properly, and large numbers of people seem more than willing to accept the small risks involved for a chance at throwing away their glasses or contacts.
Despite the many times as I've kicked myself for not buying these shares a couple of years ago, I'm going to continue to let this ship sail by me without getting on board. It's not that I doubt that LCA-Vision will maintain a strong pace of growth for at least a few more years; I just don't enjoy the volatility that generally comes with these go-go momentum names. If I could buy on a nice, frightening dip, I might change my mind, but I'm not going to chase performance today.
More insight on vision care:
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that
means he's neither long nor short the shares).
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