Vision: Result 2015

Vision Eye Institute, Australia's largest network of ophthalmology clinics, performed 9% more cataract surgeries in the year to June, which was ahead of the 4% growth achieved by the industry as a whole. A 12% rise in the number of eye injections was also slightly ahead of the industry average, in part due to higher availability of doctors in Queensland as well as an expansion of the service in two Victorian clinics.

Unfortunately, the growing volume of injections and cataract surgeries was offset by an 8% decline in laser eye surgeries. Because refractive laser surgery is often performed to correct issues that a patient could alternatively manage using glasses, it is more discretionary than cataract surgery. Revenue from laser surgery tends to be volatile and is tied to the fitness of the overall economy, so we don't expect this division to show significant improvement any time soon.   

Surgical and Consulting revenue was roughly unchanged at $63m. A volume decline in Queensland due to the departure of three doctors – which together accounted for around $1.9m in revenue – was partially offset by the addition of new doctors in Victoria. 'Pressure on fees remains with the continued Medicare freeze,' management said.

Operating theatre revenue was up 10% to $41m due to higher utilisation, particularly at the Rivercity Day Surgery which had more visiting doctors and won a public health contract.

Net profit fell 9% to $12.0m, which included a write-off of goodwill. According to the announcement: 'Goodwill allocated to Gold Coast clinics was $3.5 million and the goodwill component of the Gold Coast sale proceeds was $1 million. Accordingly $2.5 million was written-down. Otherwise there has been no impairment of goodwill during FY15'. Sure. And I'm vegetarian, other than bacon-wrapped steak. 

As we explained in New takeover offer for Vision, Chinese interior decoration and wall manufacturer Jangho Group has made an all-cash takeover offer of $1.10 per share for Vision – far superior to the offer Pulse Health made last month. As there doesn't appear to be much strategic sense behind Jangho's bid, there's probably a higher than usual chance that the takeover will fall through.

Vision's current share price of $1.08 is slightly above our estimate of Vision's intrinsic value. We don't think it's worth holding out for an extra few cents and recommend that you forgo the offer and sell your holding on the market instead. Vision's share price is unchanged since New takeover offer for Vision from 14 Aug 15 (Sell – $1.08) and has increased 85% since Vision upgraded to Speculative Buy from 3 Mar 14 (Speculative Buy – $0.58). SELL.

Disclosure: Staff own shares in Vision Eye Institute but they do not include the author.