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Law360 (June 1, 2020, 11:31 AM EDT ) The Florida-based company that runs The Lasik Vision Institute and TLC Laser Eye Centers filed for Chapter 11 protection in Delaware, saying the coronavirus pandemic shutdown on nonessential medical services exacerbated an already-existing liquidity crunch and forced the company into bankruptcy.
LVI Intermediate Holdings Inc., which is the corporate level management company for the two Lasik surgery brands, filed for Chapter 11 late Friday after several years of aggressive expansion left the company without the cash reserves to weather a pandemic-related complete shutdown of business, according to a declaration from LVI's interim CEO Lisa Melamed.
The West Palm Beach-based company says it owes more than $160 million to prepetition lenders that had been keeping it afloat as it tried to return to profitability. LVI was off to a good start in 2020 and hoped to right the ship until the pandemic forced it to shutter its 120 Lasik centers in 38 states, according to a declaration from LVI's interim CEO, Lisa Melamed.
"Existing liquidity constraints, which had already placed stress on the business, accelerated by the COVID-19 pandemic and the attendant government stay-at-home orders and edicts forbidding nonessential medical services and elective surgeries, precipitated the debtors' difficult decision to terminate approximately 833 employees and furlough another 19 employees," Melamed said.
The company says it has already reopened about 26 locations and plans to fully reopen with a leaner footprint of 93 centers. Melamed said the goal is for the Chapter 11 process to provide enough liquidity to reopen the profitable locations and pave the way for a sale of the company's assets.
LVI manages The Lasik Vision Institute and TLC Laser Eye Centers, as well as QualSight Lasik, which is the country's largest licensed preferred provider organization for Lasik providers, according to the declaration. The company also owns several general ophthalmology practices.
Beginning in 2014, the company embarked on an aggressive expansion with the acquisition of the TLC Laser Eye Centers. In 2015, LVI formed Total Vision Institute LLC in order to buy general ophthalmology practices and the Cataract Vision Institute LLC to develop the first national cataract surgery provider. That same year, the company also acquired QualSight, which manages a PPO of participating Lasik and other refractive surgery providers, according to the declaration.
The company took on significant debt to fund these expansions, but not all were successful. The general ophthalmology practices were difficult to integrate in the company and to operate profitably, and with the exception of one practice, all have performed poorly, according to Melamed.
The Cataract Vision Institute ceased operations in 2018 after what Melamed calls "unanticipated regulatory and operational challenges," while an expansion of the LVI concept proved difficult in smaller markets, and the company had to close locations in 2018 and 2019, according to the declaration.
The company also sustained losses from a reliance on Groupon as a primary marketing strategy. The surgery providers lost money on each patient that used a Groupon, and those patients made up about a quarter of the LVI patient population, according to Melamed.
Melamed said the industry as a whole was hit hard in late 2018, when Detroit meteorologist Jessica Starr committed suicide following a laser eye procedure. LVI's revenues fell 14% in 2019, while the percentage of patients from Groupon grew to 35%, according to the declaration.
Melamed said 2020 got off to a good start, with a 7% increase in revenues, but the pandemic changed everything.
"The company is hopeful that this situation is temporary, however, and that these bankruptcy proceedings will provide the liquidity to reopen most of our locations and pave the way to a successful sale of the company's assets," Melamed said.
LVI is represented by G. David Dean and Norman L. Pernick of Cole Schotz PC.
The case is In re: LVI Intermediate Holdings Inc. et al., case number 1:20-bk-11413, in the U.S. Bankruptcy Court for the District of Delaware.
--Editing by Katherine Rautenberg.
Update: This story has been updated with additional information about the filing.
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