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OptiCare Health Systems Inc. (AMEX: OPT)
OptiCare Health Systems Inc. (AMEX: OPT)
87 Grandview Avenue, Waterbury 06708
Chairman and CEO:
Dean J. Yimoyines, M.D.
Revenues (FYE December 31, 1999): $94.6 million
Net Loss (FYE December 31, 1999): ($1.97 million)
Market Capitalization: $34.3 million
Employees: 300
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Business New Haven
3/20/2000
By: Kristine Hansen
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OptiCare Health Systems is one company that certainly started from the ground up. Its predecessor publicly traded company, Saratoga Resources Inc., was in the oil business before 1999. Unable to sustain profitability, the company decided to spin off its oil assets. With a shell remaining, Saratoga searched to find merger candidates interested in the company's public status.
Enter Prime Vision Health Inc. of North Carolina and 19-year-old Connecticut-based OptiCare Eye Health Centers Inc., two companies in the eye-care business but neither profitable in 1998. Prime also had not been profitable for the two years before, either.
Last August 13, OptiCare Eye Health and Prime Vision were merged into separate shell subsidiaries of Saratoga, and the name of the company changed to OptiCare Health Systems, which today provides professional eye-care services including laser vision correction and managed care.
Believing in the near- and long-term growth potential of the company's laser vision-correction business and its managed-care prospects, OptiCare's board of directors approved a growth strategy focusing on these two businesses. To facilitate this strategy the company reorganized into three divisions.
OptiCare owns and operates laser and day-surgery centers for vision correction through its Laser Correction & Professional Services Division. Consistent with its growth strategy, the company announced last fall that it planned to open a Laser Vision Correction site in Rocky Mount, N.C.
Seizing other opportunities, OptiCare has developed its own OptiCare Laser Advantage strategy for the development of third-party laser surgery sites for ophthalmology groups. Revenues from this endeavor will derive from multi-year fixed fee/procedure agreements.
The division also provides software systems and other services to eye-care professionals. OptiCare recently acquired Cohen Systems Inc., a provider of software systems that specializes in point-of-sale and Internet-based solutions for optical manufacturers and retail stores.
In the Managed Care Division, OptiCare provides eye care to enrolled participants and management services to health plans with which the company contracts covering more than five million lives. Last October Opticare announced that it had signed a letter of intent to provide eye-care coverage and medical/surgical managed care to ConnectiCare Inc.
For traditional eye care,the company operates retail optical stores and eye-care centers through its Integrated Services Division. Besides its retail and dispensary locations in North Carolina and Connecticut, OptiCare also operates a manufacturing facility in Connecticut.
Results for the fourth quarter and year ended December 31 were quite positive considering the company underwent a merger just a few months before. Total revenues of $31.7 million for the quarter were more than double that of the prior year's fourth quarter. Positive trends were exhibited for fourth quarter earnings as well, with operating and net earnings moving into a positive position at $139,000 (one cent per diluted share).
Revenues of $94.6 million for 1999 represented a 47-percent hike over 1998. (Performance prior to September 30, 1999 is based upon predecessor company results.) 1999 year-end operating earnings of $351,000 compared to an operating loss of $3.2 million for 1998. A net 1999 loss of $2 million (54 cents per diluted share,) including a $2.3 million charge related to discontinued operations, was a substantial improvement over the 1998 net loss of $38.1 million ($17.99 per diluted share, pre-merger).
The company's stock is trading closer to the low end of its 52-week range (2 3/4 to 12 1/2). But is has been inching up to close at 3 3/8, up 1/8, on March 3, the day following its earnings announcement, and up another 1/2 to close at 3 7/8 on March 9.
A January sale of 3.6 million shares of the company's common stock at $3.50 per share with proceeds of $12.5 million will reduce some debt on the company's balance sheet. But the deal has been dwarfed by something much larger. OptiCare recently announced its entrance into a merger agreement with Florida-based Vision Twenty-One Inc. (NASDAQ: EYES).
The company announced that the deal will require regulatory and shareholder approval as well as meeting other closing requirements. It also will require restructuring of debt by both OptiCare and Vision Twenty One, as well as necessitate financing and the raising of capital.
If it goes through, the deal will bring OptiCare's reach to more than ten million managed-care lives and bring its participating ophthalmologist and optometrist count to approximately 11,000. The news would serve to prove that OptiCare is truly up and off the ground.
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