LOS ANGELES, California, July 24, 2008 - VCA Antech, Inc. (NASDAQ NM SYMBOL: WOOF), a leading animal healthcare company in the United States, today reported financial results for the second quarter ended June 30, 2008, as follows: revenue increased 11.4% to a second quarter record of $334.4 million; gross profit increased 7.9% to $97.0 million; operating income increased 9.8% to $74.0 million; net income increased 12.5% to $40.3 million; and diluted earnings per share increased 11.9% to $0.47.
We also reported our financial results for the six months ended June 30, 2008, as follows: revenue increased 13.6% to a six-month record of $642.3 million; gross profit increased 8.6% to $180.0 million; operating income increased 10.1% to $134.1 million; net income was $71.5 million; and diluted earnings per share increased 10.7% to $0.83.
Bob Antin, Chairman and CEO, stated, "I am pleased with our company's performance in the second quarter of 2008. In spite of the challenging economy and the difficulties being felt by the consumer, our team met those challenges and we continued our long record of revenue and earnings growth.
"Current economic conditions prevailing in the nation's economy have had an adverse impact on our internal revenue growth rates. However, we have been able to counteract the affects of the general economy and continue to grow our bottom line results without compromising our high standard of animal healthcare by increasing our rate of acquisitions to drive revenue growth, and by implementing cost controls.
"In the second quarter, we acquired 15 animal hospitals with combined annual revenue of over $30 million. Year-to-date, we have acquired 36 animal hospitals with combined annual revenue of over $75 million. Historically we have targeted acquisition activity at approximately $50 million to $60 million of acquired revenue per year (excluding the acquisitions of any animal hospital chains).
"Laboratory revenue in the second quarter increased 3.3% to $81.8 million, driven primarily by internal revenue growth of 2.5%. Laboratory margins in the second quarter were essentially flat: our gross margin declined to 49.9% compared to 50.5% and our operating margin declined to 43.6% compared to 44.0%.
"Animal hospital revenue in the second quarter increased 14.9% to $251.0 million driven by acquisitions. While same-store revenue declined 0.2% during the quarter, our animal hospital margins in the second quarter remained essentially flat: same-store gross margin was 21.6% compared to 21.5%; gross margin was 21.0% compared to 21.2% and operating margin was 18.7% compared to 18.6%."
We reaffirm our 2008 financial guidance as follows:
We will discuss our company's second quarter 2008 financial results during a conference call today, July 24, 2008 at 4:30 p.m. Eastern Time. You can access a live broadcast of the call by visiting our website at http://investor.vcaantech.com. You can also access the call via telephone by dialing (877) 440-5785. Interested parties should call at least 10 minutes prior to the start of the call to register.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may and likely will differ materially from the guidance provided in this release. Among the important factors that could cause actual results to differ are a material adverse change in our financial condition or operations; the impact of adverse trends in the general economy on the rate of our laboratory internal revenue growth and animal hospital same-store revenue growth; the level of direct costs and our ability to maintain revenue at a level necessary to maintain expected operating margins; the level of selling, general and administrative costs; the effects of our recent acquisitions and our ability to effectively manage our growth and achieve operating synergies; a decline in demand for some of our products and services; any disruption in our information technology systems or transportation networks; the effects of competition; any impairment in the carrying value of our goodwill and other intangible assets; changes in prevailing interest rates; our ability to service our debt; and general economic conditions. These and other risk factors are discussed in our Report on Form 10-K for the year ended December 31, 2007, and our Report on Form 10-Q for the quarter ended March 31, 2008, and the reader is directed to these statements for a further discussion of important factors that could cause actual results to differ materially from those in the forward-looking statements.
We own, operate and manage the largest networks of freestanding veterinary hospitals and veterinary-exclusive clinical laboratories in the country, and we supply diagnostic imaging equipment to the veterinary industry.
Chief Financial Officer