ROCHESTER, N.Y. and ALISO VIEJO, Calif. — Bausch & Lomb, the global eye health company, today announced that it has entered into a definitive agreement to acquire eyeonics, inc., a rapidly growing, privately held ophthalmic medical device company headquartered in Aliso Viejo, Calif. Financial terms of the transaction, which is expected to close during the first quarter of 2008 subject to standard regulatory approval, were not disclosed.
Upon completion of the acquisition, eyeonics’ operations will become part of Bausch & Lomb’s surgical business, which offers a complete line of standard intraocular lenses, phacoemulsification equipment, vitreoretinal and refractive products to ophthalmologists worldwide. The U.S. surgical business will be led by J. Andy Corley, eyeonics’ co-founder, chairman, and chief executive officer.
eyeonics, founded in 1998, developed and markets the crystalens intraocular lens (IOL), the first and only U.S. Food and Drug Administration-approved accommodating IOL for the treatment of cataracts. The crystalens IOL replaces the eye’s natural lens and has been implanted in more than 95,000 eyes worldwide.
Accommodation is the eye’s method to achieve near-distance focusing by altering the curvature of the natural crystalline lens, allowing a person to easily read small type used in books, restaurant menus, and on computer monitors. As the natural lens ages, accommodation decreases. This results in a condition known as presbyopia for most people over age 40, for which reading glasses are commonly required. Other approved IOLs only permit focusing at a fixed distances, while the crystalens IOL mimics the accommodating characteristics of a natural lens.
“This represents our first acquisition since Bausch & Lomb became a private company in a transaction led by Warburg Pincus,” said Ronald L. Zarrella, chairman and CEO, Bausch & Lomb. “We are excited to enter a new phase of growth and innovation, and believe the eyeonics acquisition is another sign of our commitment to delivering innovative, high-quality products to ophthalmologists and patients worldwide.”
Zarrella continued, “This acquisition immediately places Bausch & Lomb into the rapidly expanding premium IOL market. The crystalens technology complements our existing cataract surgical business, including our Stellaris™ Vision Enhancement System and our portfolio of monofocal IOLs. The acquisition also adds leadership depth, as Andy and his team bring a strong track record of product innovation and growth to the company. We look forward to their contributions as part of the Bausch & Lomb family.”
The global premium IOL market is growing in excess of 20 percent annually. This growth rate is fueled by an increasing demand for technological advancements by cataract patients worldwide. In 2007, eyeonics generated revenues of approximately $34 million, an increase of 100 percent over the prior year revenues of approximately $17 million. Its crystalens IOL is estimated to represent approximately 30 percent of the presbyopic IOL market in the United States.
“We expect that this transaction will lead to accelerated adoption of the crystalens IOL, given Bausch & Lomb’s global sales and marketing reach and brand equity,” said Andy Corley. “Through the extensive Bausch & Lomb sales and marketing organization, we expect to quickly and significantly expand the appreciation for the distinct patient benefits offered by the crystalens. In addition, the unsurpassed optics R&D expertise of Bausch & Lomb will help further advance our technology. Our entire management team is excited about becoming part of the Bausch & Lomb organization at the outset of its new partnership with Warburg Pincus. We believe Bausch & Lomb’s deepened commitment to ophthalmology will further drive the crystalens IOL’s market acceptance as well as growth of the entire surgical product portfolio.”
“I’ve been using the crystalens accommodating IOL for several years, and continue to be impressed with the positive impact it makes on my patients’ lifestyles and quality of life,” said Dr. Richard Lindstrom, the founder of Minnesota Eye Consultants and an internationally-recognized ophthalmologist. “Now, with the crystalens IOL carrying the globally-known Bausch & Lomb brand, surgeons can be even more confident in presenting this option to their patients. I fully expect to see even further evolution of the crystalens IOL and related technologies, considering the esteemed reputations and innovative cultures of both companies.”
The crystalens IOL was approved by the FDA in November 2003.
Preliminary and Estimated Unaudited Selected Fourth-Quarter and Full-Year 2007
Bausch & Lomb also today announced certain preliminary and unaudited fourth-quarter and full-year 2007 financial metrics. While the Company has not yet finalized its financial close process, including purchase accounting associated with the recently completed merger with affiliates of Warburg Pincus, it currently projects it will report fourth-quarter net sales of between $654 million and $660 million, compared to $597.6 million in the same period in 2006. That would represent an increase of approximately 10 percent, or approximately 4 percent growth excluding the effects of changes in foreign currency exchange rates. The Company currently projects fourth-quarter Adjusted EBITDA of between $120 million and $126 million, compared to $85.7 million in the year-ago period.
For the full year, Bausch & Lomb currently projects it will report net sales between $2.513 billion and $2.519 billion, compared to $2.292 billion in 2006. That would represent an increase of approximately 10 percent, or approximately 6 percent growth excluding the effects of changes in foreign currency exchange rates. The Company currently projects full-year Adjusted EBITDA of between $408 million and $414 million, compared to $338.5 million in 2006.
These selected financial metrics are estimates and subject to change. Bausch & Lomb has not completed its financial close processes or allocation of purchase price and its auditors have not completed their audit procedures for the year ended December 29, 2007. Therefore, there can be no assurance that final audited results will not differ from these estimates, including as a result of year-end closing procedures, purchase accounting or audit adjustments, and any such changes could be material. In addition, these estimates should not be viewed as a substitute for full audited financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) or as a measure of the Company’s performance. As a result of the foregoing considerations, investors are cautioned not to place undue reliance on this preliminary financial information.
As used in this news release, EBITDA means earnings before interest expense (net of interest income), income taxes and depreciation and amortization. Adjusted EBITDA means EBITDA further adjusted to exclude items consistent with those that were described in the Company’s Current Report on Form 8-K dated October 5, 2007. These items include: non-cash stock compensation expense; direct charges associated with the MoistureLoc® lens care solution recall; the impact of the 2007 reversal of certain Brazilian tax reserves based on amnesty granted by the tax authority; expenses incurred in connection with brand rebuilding efforts subsequent to the MoistureLoc recall; fees and other costs associated with the merger between the Company and affiliates of Warburg Pincus; fees associated with the defense of product liability cases related to the MoistureLoc recall and shareholder lawsuits, as well as the cost of actual MoistureLoc claims settled; fees related to accounting investigation and enhanced audit procedures; and other adjustments. Estimated adjustments to EBITDA included in the Company’s current projections for the fourth quarter and full-year 2007 totaled approximately $93 million and $132 million, respectively. Such adjustments to EBITDA totaled $19.4 million and $98.4 million for the fourth quarter and full-year 2006, respectively.
Neither EBITDA nor Adjusted EBITDA are GAAP measures. EBITDA and Adjusted EBITDA may differ in the method of calculation from similarly titled measures used by other companies. EBITDA and Adjusted EBITDA should be considered in addition to, but not as substitutes for or superior to, operating income, net income, operating cash flow and other measures of financial performance or liquidity prepared in accordance with GAAP. In particular, Adjusted EBITDA should not be viewed as a reliable predictor of the Company’s ability to generate cash to service its debts because certain of the items added to net income to determine Adjusted EBITDA involve outlays of cash and, in some cases, the Company expects these cash outlays to continue. As a result, actual cash available to service debts will be different from Adjusted EBITDA.
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About Bausch & Lomb
Bausch & Lomb is the eye health company dedicated to perfecting vision and enhancing life for consumers around the world. Its core businesses include soft and rigid gas permeable contact lenses and lens care products, and ophthalmic surgical and pharmaceutical products. The Bausch & Lomb name is one of the best known and most respected healthcare brands in the world. Founded in 1853, the company is headquartered in Rochester, N.Y. With revenues in excess of $2 billion, it employs more than 13,000 people worldwide and its products are available in more than 100 countries. More information can be found at www.bausch.com.
Stellaris and MoistureLoc are trademarks of Bausch & Lomb Incorporated. Eyeonics and Crystalens are trademarks of eyeonics, inc. All other trademarks are the property of their respective owners.