Fourth quarter revenue increased 6.7% to $303.2 million
LOS ANGELES, California, February 19, 2009 - VCA Antech, Inc. (NASDAQ NM SYMBOL: WOOF), a leading animal healthcare company in the United States, today reported financial results for the quarter ended December 31, 2008, as follows: revenue increased 6.7% to a fourth quarter record of $303.2 million; gross profit increased 6.6% to $73.9 million; operating income increased 6.5% to $50.9 million; net income increased 4.3% to $25.7 million; and diluted earnings per share increased 3.4% to $0.30. Each fourth quarter of 2008 and 2007 included a benefit of $3.3 million and $3.5 million, respectively related to a decline in our estimated workers' compensation liability for previous years' policy periods. The benefit totaled $2.0 million and $2.2 million on an after-tax basis or $0.02 and $0.03 per diluted common share in 2008 and 2007, respectively.
We also reported our financial results for the year ended December 31, 2008, as follows: revenue increased 10.5% to a twelve-month record of $1.28 billion; gross profit increased 6.6% to $342.6 million; operating income increased 7.9% to $251.7 million; net income increased 9.9% to $133.0 million; and diluted earnings per share increased 9.9% to $1.55. The years ended December 31, 2008 and 2007 each included a benefit of $3.3 million and $3.5 million, respectively, or $0.02 per diluted share on an after-tax basis related to a decline in our estimated workers' compensation liability, as mentioned previously.
Bob Antin, Chairman and CEO, stated, "Although the challenging economic environment has impacted our ability to maintain historical organic growth rates, we have extended our long record of revenue and earnings growth. We remain focused on our clients and their pets, and we are proud of the professionals and staff in our hospitals who continue to have the trust of the pet owning community.
"Animal hospital revenue in the fourth quarter increased 9.4% to $229.0 million driven by acquisitions. Our consolidated animal hospital gross margin increased to 17.5% compared to 16.0% and the operating margin increased to 15.2% compared to 13.3% primarily due to the implementation of cost controls and synergies achieved from the larger revenue base. Although our same-store revenue remained essentially flat during the quarter, our same-store gross profit margin increased to 18.3% compared to 16.2%.
"We continue to focus on our hospital acquisition program. During the fourth quarter we acquired eight animal hospitals with over $31.7 million of annualized revenue, bringing the twelve-month total to $118.0 million.
"Laboratory revenue in the fourth quarter increased 1.0% to $69.3 million driven by acquisitions as internal revenue remained essentially flat. Laboratory margins in the fourth quarter continued to be impacted by the aforementioned economic environment. Our laboratory gross profit margin declined to 42.3% from 45.9% for the quarter ended December 31, 2008 and 2007, respectively, and our laboratory operating margin declined to 34.3% from 38.9% for the quarter ended December 31, 2008 and 2007, respectively."
2009 Financial Guidance
Our financial guidance for 2009 is as follows:
Revenue from $1.36 billion to $1.39 billion;
We will discuss our company's fourth quarter and annual 2008 financial results during a conference call today, February 19, 2009, 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 (800) 259-2693. Interested parties should call at least ten 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, including our financial guidance for fiscal year 2009. 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 and expenses 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 September 30, 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