U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549

Form  10-Q

(Mark One)

|[ X ] | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934.
|----- | -----------------------------------------------------------------------------------
|     

For the quarterly period ended March 31, 2001.

|[    ] | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT.
|------ | ----------------------------------------------------------------------------
|      

For the transition period from __________ to __________

Commission file number 0-27610

LCA-Vision Inc.

(Exact name of registrant as specified in its charter)

| | Delaware

(State or other jurisdiction of

incorporation or organization) |  |  |  | 11-2882328

(IRS Employer

Identification No.)
| | ------------------------------------------------------------------------- |  |  |  | ----------------------------------------------
| |                                                                           |  | 

7840 Montgomery Road, Cincinnati, Ohio  45236

(Address of principal executive offices)

(513) 792-9292

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13
or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.

|Yes | X |  | No______ |  |  |  |  | 
|--- | - |  | -------- |  |  |  |  | 

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest
practicable date:  46,650,108 shares as of April 30, 2001.

LCA-Vision Inc.

INDEX

|Facing Sheet | 1                    
|------------ | ---------------------
|Index        |                      
|Part I.      | Financial Information
|             | Item 1.              
|             |                      
|             |                      
|             |                      
|             |                      
|             | Item 2.              
|             | Item 3.              
|Part II.     | Other Information    
|             | Item 1.              
|             | Item 2.              
|             | Item 3.              
|             | Item 4.              
|             | Item 5.              
|             | Item 6.              
|Signatures   |                      

2

|LCA-Vision Inc.                                                                                                                               
|----------------------------------------------------------------------------------------------------------------------------------------------
|Condensed Consolidated Balance Sheets                                                                                                         
|(Dollars in thousands except per share data)                                                                                                  
|Assets                                                                                                                                        
|2001(1)                                                                                                                                       
|Current Assets                                                                                                                                
|Cash and cash equivalents                                                                                                                     
|Short-term investments                                                                                                                        
|Accounts receivable, net                                                                                                                      
|Receivable from vendor                                                                                                                        
|Deferred tax asset                                                                                                                            
|Prepaid expenses, inventory and other                                                                                                         
|                                                                                                                                              
|Total current assets                                                                                                                          
|                                                                                                                                              
|Property and Equipment                                                                                                                        
|Accumulated depreciation and amortization                                                                                                     
|Property and equipment, net                                                                                                                   
|Goodwill, net                                                                                                                                 
|Deferred tax asset                                                                                                                            
|Obligations due from shareholders                                                                                                             
|Investment in unconsolidated businesses                                                                                                       
|Other assets                                                                                                                                  
|                                                                                                                                              
|Total assets                                                                                                                                  
|Liabilities and Shareholders' Investment                                                                                                      
|Current liabilities                                                                                                                           
|Accounts payable                                                                                                                              
|Accrued liabilities and other                                                                                                                 
|Debt maturing in one year                                                                                                                     
|                                                                                                                                              
|Total current liabilities                                                                                                                     
|                                                                                                                                              
|Long-term debt                                                                                                                                
|Commitments and contingencies                                                                                                                 
|Minority equity interest                                                                                                                      
|                                                                                                                                              
|Shareholders' investment                                                                                                                      
|Preferred stock                                                                                                                               
|Common stock ($0.01 par value; 52,156,004 and 52,046,528 shares and
    46,927,308 and 52,035,619 shares issued and outstanding, respectively)
|Contributed capital                                                                                                                           
|Warrants                                                                                                                                      
|Notes receivable from shareholders                                                                                                            
|Common stock in treasury, at cost (5,228,696 shares and 4,718,896 shares)                                                                     
|Accumulated deficit                                                                                                                           
|Foreign currency translation adjustment                                                                                                       
|                                                                                                                                              
|Total shareholders' investment                                                                                                                
|                                                                                                                                              
|Total liabilities and shareholders' investment                                                                                                
|(1)Unaudited                                                                                                                                  
|The notes to the Condensed Consolidated Financial Statements are an integral part of this statement.                                          
|3                                                                                                                                             

|LCA-Vision Inc.                                                                                     
|----------------------------------------------------------------------------------------------------
|Condensed Consolidated Statements of Income                                                         
|(Dollars in thousands except per share data)                                                        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Revenues                                                                                            
|Laser refractive surgery                                                                            
|Other                                                                                               
|                                                                                                    
|Total revenues                                                                                      
|                                                                                                    
|Operating costs and expenses                                                                        
|Medical professional and license fees                                                               
|Direct costs of services                                                                            
|General and administrative expenses                                                                 
|Marketing and advertising                                                                           
|Depreciation                                                                                        
|                                                                                                    
|Operating income (loss)                                                                             
|                                                                                                    
|Equity in earnings from unconsolidated businesses                                                   
|Minority equity interest                                                                            
|Interest (expense)                                                                                  
|Interest income                                                                                     
|Other income                                                                                        
|                                                                                                    
|Income before taxes on income                                                                       
|                                                                                                    
|Income tax expense                                                                                  
|                                                                                                    
|Net income                                                                                          
|Income per common share                                                                             
|Basic                                                                                               
|Diluted                                                                                             
|                                                                                                    
|Weighted average shares outstanding                                                                 
|Basic                                                                                               
|Diluted                                                                                             
|                                                                                                    
|                                                                                                    
|                                                                                                    
|(1)Unaudited                                                                                        
|                                                                                                    
|The notes to the Condensed Consolidated Financial Statements
are an integral part of this statement.

4

|LCA-Vision Inc.                                                                                     
|----------------------------------------------------------------------------------------------------
|Condensed Consolidated Statements of Cash Flow                                                      
|(Dollars in thousands except per share data)                                                        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Cash flow from operating activities:                                                                
|Net income                                                                                          
|Adjustments to reconcile net income to net cash provided by operating activities                    
|Depreciation                                                                                        
|Warrant amortization                                                                                
|Deferred income taxes                                                                               
|Equity in earnings of unconsolidated affiliates                                                     
|Changes in working capital:                                                                         
|Accounts receivable                                                                                 
|Receivable from vendor                                                                              
|Prepaid expenses, inventory and other                                                               
|Accounts payable                                                                                    
|Accrued liabilities and other                                                                       
|                                                                                                    
|Net cash provided by operations                                                                     
|                                                                                                    
|Cash flow from investing activities:                                                                
|Purchase of property and equipment                                                                  
|Purchase of short-term investments                                                                  
|Maturity of short-term investments                                                                  
|Loans to shareholders                                                                               
|Other, net                                                                                          
|                                                                                                    
|Net cash used in investing activities                                                               
|                                                                                                    
|Cash flows from financing activities:                                                               
|Principal payments of long-term notes, debt and capital lease obligations                           
|Shares repurchased for treasury stock                                                               
|Exercise of stock options                                                                           
|Distribution of minority equity investees                                                           
|                                                                                                    
|Net cash provided (used) by financing activities                                                    
|                                                                                                    
|Increase in cash and cash equivalents                                                               
|                                                                                                    
|Cash and cash equivalents at beginning of period                                                    
|                                                                                                    
|Cash and cash equivalents at end of period                                                          
|                                                                                                    
|                                                                                                    
|(1)Unaudited                                                                                        
|                                                                                                    
|The notes to the Consolidated Condensed Financial Statements
are an integral part of this statement.

5

LCA-Vision Inc.

Notes to Condensed Consolidated Financial Statements

for the Three Months Ended March 31, 2001 and 2000

1.  Summary of Significant Accounting Policies

The March 31, 2001 and 2000 financial data are unaudited; however, in the opinion of the Company, such data
includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the
interim periods. The December 31, 2000 Condensed Consolidated Balance Sheet has been derived from audited
financial statements but does not include all disclosures required by generally accepted accounting principles. We
suggest that these financial statements be read together with the financial statements and notes included in our
annual report on Form 10-K.

Business

We are a leading developer and operator of value-priced laser vision correction centers. Our laser vision correction
centers provide the facilities, equipment and support services for performing laser vision correction procedures
using state-of-the-art laser technologies to correct nearsightedness, farsightedness and astigmatism.   The Company
currently utilizes two primary excimer lasers:  The Bausch & Lomb Technolas 217 and the VISX Star S2 laser.
Substantially all of the revenues from our laser vision correction procedures are derived from our U.S. centers.

Operating costs and expenses consist of:

-  Medical professional and license fees, including per procedure fees for the ophthalmologist performing laser
vision correction and the license fee of $110 per procedure paid to VISX and Bausch & Lomb,

-  Direct costs of services, including center rent and utilities, equipment lease and maintenance costs, surgical
supplies, center staff expense, costs related to other revenue, and all other costs associated with providing services in
our centers,

-  General and administrative associated with corporate overhead costs,

-  Marketing and advertising costs, and

-  Depreciation and amortization of equipment and intangible assets recorded in the balance sheet.

Consolidation Policy

We use two different methods to report our investments in our subsidiaries and other companies - consolidation and
the equity method.

Consolidation

We use consolidation when we own a majority of the voting stock of the subsidiary. This means the accounts of our
subsidiaries are combined with our accounts. We eliminate intercompany balances and transactions when we
consolidate these accounts. Our condensed consolidated financial statements include the accounts of:

-  LCA-Vision Inc.,

-  LCA-Vision (Ohio), Inc.,

-  Refractive Centers International, Inc. and Subsidiaries

-  LCA-Vision (Canada) Inc. and Subsidiaries, and

-  The Baltimore Laser Sight Center, Ltd.

Equity Method

We use the equity method to report investments in businesses where we hold a 20% to 50% voting interest, giving
us the ability to exercise significant influence, but not control, over operating and financial policies. Under the
equity method we report:

-  our interest in the entity as an investment in our Condensed Consolidated Balance Sheets, and

-  our percentage share of the earnings (losses) in our Condensed Consolidated Statements of Operations.

We own 43% of Silmalaseri Oy and 50% of Cole LCA Vision LLC and report our investments under the equity
method.

Use of Estimates

Management makes estimates and assumptions when preparing financial statements under generally accepted
accounting principles. These estimates and assumptions affect various matters including:

-  our reported amounts of assets and liabilities in our Condensed Consolidated Balance Sheets at the dates of the
financial statements,

6

-  our disclosure of contingent liabilities at the dates of the financial statements, and

-  our reported amounts of revenues and expenses in our Condensed Consolidated Statements of Income during the
reporting periods.

Actual amounts could differ from those estimates.

Per Share Data

Basic per share data is income applicable to common shareholders divided by the weighted average common shares
outstanding. Diluted per share data is income applicable to common shareholders divided by the weighted average
common shares outstanding plus the potential issuance of common shares if stock options or warrants were
exercised or convertible preferred stock were converted into common stock.

Following is a reconciliation of basic and diluted earnings per share for the three months ended March 31, 2001 and
2000 (in thousands, except per share amounts):

|                                                             | Three Months Ended
|------------------------------------------------------------ | ------------------
|                                                             | March 31,         
|                                                             | 2001              
|Basic earnings per share                                     |                   
|Net income                                                   | $1,299            
|Weighted average shares outstanding                          | 47,045            
|Basic earnings (loss) per share                              | $0.03             
|                                                             |                   
|Diluted earnings per share                                   |                   
|Net income                                                   | $1,299            
|Weighted average shares outstanding                          | 47,045            
|Effect of dilutive securities                                |                   
|Stock options                                                | 539               
|Warrants                                                     | 23                
|Weighted average common shares and potential dilutive shares | 47,607            
|Diluted earnings per share                                   | $0.03             

2. Shareholders' Investment

Common Stock

During the three months ended March 31, 2001, 49,100 shares of common stock were issued to individuals who
exercised stock options. The average exercise price was $1.18 per share.

Warrants

Warrants to purchase 800,000 shares were issued during the third quarter of 1999, of which 400,000 were
exercisable.  In the third quarter of 2000, the Company expensed $310,000 for the repurchase of 400,000 unvested
warrants from Cole National Corporation.

Generally accepted accounting principles requires us to assign a value to the warrants for the services to be
rendered. We used the Black-Scholes method to determine the amount, or expected amount, of compensation for
each block of warrants as it becomes exercisable. The amount calculated is recorded as part of other assets and
amortized over the three-year term of the agreement with Cole National Corporation to market laser vision
correction as a managed care benefit. Amortization expense of $175,000 was recorded for the first quarter of 2001.

3.  Segment Information

We operate in one segment - laser refractive surgery.

4.  Commitments and Contingencies

In the opinion of management there are no actions which will have a material adverse effect on our financial
position or results of operations.

7

Item 2.  Management's Discussion and Analysis of Financial Condition Results of Operations.

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Actual results could differ
materially from those projected in the forward-looking statements as a result of a number of important factors. For a
discussion of important factors that could affect our results, refer to the Overview and financial statement line item
discussions set forth in Management's Discussion and Analysis of Financial Condition and Results of Operations
("MD&A").

"MD&A" is an analysis of our operating results for the three months ended March 31, 2001 and 2000 and our
financial condition as of March 31, 2001. It explains why our revenues and costs changed, our overall financial
condition, and other matters.

Results of Operations - Revenues

Laser refractive surgery

Laser refractive surgery revenue generally includes three components: facility fee, royalty fee, and medical
professional fees. Certain states prohibit us from practicing medicine, employing physicians to practice medicine on
our behalf or employing optometrists to render optometry services on our behalf. Revenues and direct costs from
centers in such states do not include the medical professional fee component. The contribution from laser refractive
surgery procedures for each of the three months ended March 31, 2001 and 2000 were (dollars in thousands):

|                                      | Three Months Ended
|------------------------------------- | ------------------
|                                      | March 31,         
|                                      | 2001              
|Revenue                               | $22,445           
|Less:                                 |                   
|Medical professional and license fees | 4,497             
|                                      |                   
|Contribution                          | $17,948           

The following table illustrates the growth of laser vision correction procedures performed at our centers.

|     | 2001   | 2000  
|---- | ------ | ------
|Q1   | 25,061 | 12,504
|Q2   |        | 13,888
|Q3   |        | 16,341
|Q4   |        | 16,411
|Year |        | 59,144

Medical professional and license fees

License fees decreased by $593,000 in the first quarter of 2001 from the first quarter of 2000.  The reduction of the
laser per procedure license fee from $260 to $110 that occurred in February 2000 more than offset the increase in
license fees associated with the growth in procedure volume from 12,504 in the first quarter of 2000 to 25,061 in the
first quarter of 2001.  Medical fees decreased by approximately $763,000 in the first quarter of 2001 from the first
quarter of 2000, despite a 100 percent increase in procedure volume.  Physician contracts were renegotiated during
the second quarter of 2000 to enable the company to be competitive at the lower pricing levels.

Direct costs of services

Direct costs of services include the salary component of physician compensation, staffing, equipment, medical
supplies, and facility costs to operate laser vision correction centers.  These direct costs increased in the first quarter
of 2001 by $3,648,000 over the first quarter of 2000 as a result of the growth in the number of centers in operation,
higher procedure volumes, and an increase in the average direct costs of services per center per month.

Medical supplies increased by $481,000 in the first quarter of 2001 as a result of higher procedure volumes.
Exclusive of medical supplies, the average cost to operate a center increased to approximately $80,500 per month in
the first quarter of 2001 from $74,100 per month in the first quarter of 2000.  This cost increase is attributable to
increased staffing levels associated with the growth in number of procedures per center per month, and because of
annual performance-based increases in staff salaries.

8

General and administrative

General and administrative expenses decreased by $157,000 in the first quarter of 2001 from the first quarter of
2000.  The amortization of warrants decreased general and administrative expenses by $71,000 in the first quarter of
2001 from the first quarter of 2000, because 400,000 unvested warrants were repurchased from Cole National
Corporation in the third quarter of 2000.  Travel expenses were reduced by $32,000 in the first quarter of 2001 from
the first quarter of 2000.  The remaining decrease in general and administrative expenses came from lower spending
on outside professional services.

Marketing and advertising expenses

Marketing and advertising expenses decreased by $716,000 in the first quarter of 2001 from the first quarter in
2000.   Compared to the fourth quarter of 2000, marketing and advertising expenditures decreased by $78,000 while
growing procedure volume by over fifty percent sequentially from the fourth quarter of 2000.  The average cost of
marketing and advertising decreased to $136 per procedure in the first quarter of 2001 from $330 per procedure in
the first quarter of 2000 and $213 per procedure in the fourth quarter of 2000.

Depreciation

Depreciation and amortization expense increased by $610,000 in the first quarter of 2001 from the first quarter of
2000 because of the depreciation of capitalized costs of new center openings, and the addition of Bausch & Lomb
lasers to all markets.

Non-operating income and expenses

Interest expense decreased due to the reduction in debt. Interest income decreased due to lower interest rates and
lower average cash and investments on hand.

Liquidity and Capital Resources

Net cash provided by operating activities in the first three months of 2001 was $2,719,000.  Proceeds from stock
options exercised in the first three months were $53,000.  The sum of these two sources of cash were more than
sufficient to finance our capital expenditures, debt repayments and stock repurchases in the first three months of the
year.

On June 6, 2000 the Board of Directors authorized the repurchase of up to five million shares of the company's
common stock.  In January 2001, the company completed the repurchase at an average price of $2.08 per share.  In
December 2000, the Board of Directors authorized the repurchase of an additional five million shares of the
company's common stock.  Through April 30, 2001, the company has repurchased 504,687 shares of common stock
at an average price of $2.60 per share.  In total for the first quarter of 2001, the company repurchased 509,800
shares of common stock at an average price of $2.09 per share.

As of March 31, 2001 we have cash and cash equivalents of $24,173,000.  In addition, we have short-term
investments of $4,378,000.

During the second quarter of 2000, the directors initiated a program to encourage additional direct stock ownership
by senior management of the company.  The Company offered loans to nine key managers and directors for the
purpose of purchasing shares in the open market.  Each loan is a personal obligation of the borrower, and is
evidenced by a promissory note.  The interest rate on the notes is prime less one and one-half percent.  The notes
have a maximum term of three years, and contain provisions for early repayment.  A total of $1,434,000 has been
loaned under this program.

As of March 31, 2001 we maintained a $10,000,000 revolving credit facility with The Provident Bank.  In addition
to the $10,000,000 of unused credit under this facility, the Company has a $10,000,000 credit commitment for
funding acquisitions.  Both of these credit arrangements expire June 30, 2001.  It is our intent to renew this credit
facility for another 12 months on comparable terms.

Factors That May Affect Future Results and Market Price of Stock

For a detailed discussion that may affect future results, please refer to the Company's last 10-K and 10-Q.  No
material new risks have developed since the filing of these reports.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

The carrying values of financial instruments including cash and cash equivalents, accounts receivable and accounts
payable approximate fair value because of the short maturity of these instruments.

We have historically had very low exposure to changes in foreign currency exchange rates, and as such, have not
used derivative financial instruments to manage foreign currency fluctuation risk.

9

|Part II. | Other Information                                  
|-------- | ---------------------------------------------------
|        
|Item 1.  | Legal Proceedings                                  
|         | None                                               
|        
|Item 2.  | Changes in Securities and Use of Proceeds.         
|         | None                                               
|        
|Item 3.  | Defaults upon Senior Securities.                   
|         | None                                               
|        
|Item 4.  | Submission of Matters to a Vote of Security Holders
|         | None                                               
|        
|Item 5.  | Other Information.                                 
|         | None                                               
|        
|Part II. | Other Information (continued)                      
|        
|Item 6.  | Exhibits and Reports on Form 8-K.                  
|        
|         | (a)                                                
|         |                                                    
|        
|         | (b)                                                
|        
|         | 1)                                                 
|         | 2)                                                 
|         | 3)                                                 

10

Signatures

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed
on its behalf by the undersigned, thereto duly authorized.

LCA-VISION INC.

|Date:  5/3/01 |  |  | /s/ Stephen N. Joffe

Stephen N. Joffe

Chairman     
|------------- |  |  | -----------------------------------------------------
|              |  |  |                                                      
|              |  |  |                                                      
|             
|Date:  5/3/01 |  |  | /s/ Alan Buckey

Alan Buckey

Chief Financial Officer
|              |  |  |                                                      
|              |  |  |                                                      

11