LOS ANGELES, California, July 23, 2009 - VCA Antech, Inc. (NASDAQ NM SYMBOL: WOOF), a leading animal healthcare company in the United States, today reported diluted earnings per share of $0.44 for the second quarter ended June 30, 2009.
The second quarter of 2009 included a non-cash charge of $5.3 million, or $3.2 million after tax, and $0.04 per diluted share related to the write-off of an internal-use software project due to the failure of the project to reach development milestones and the company's decision to pursue alternative solutions. Excluding this charge, adjusted diluted earnings per share increased 2.1% to $0.48.
For the six months ended June 30, 2009 diluted earnings per share was $0.81. Excluding the write-off, adjusted diluted earnings per share increased 2.4% to $0.85.
Bob Antin, Chairman and CEO, stated, "I am pleased with our company's performance in the second quarter of 2009. Despite the ongoing challenges presented by the current economic environment, we have upheld our long history of revenue and earnings growth as a result of our continued focus on our core business strategy and successful efforts to manage expenses. Our revenue increased 3.1%, our adjusted net income increased 1.6% and our adjusted diluted earnings per share increased 2.1%.
"Animal hospital revenue in the second quarter increased 4.1% to $261.3 million driven by acquisitions made in the past twelve months. Our animal hospital gross margin was 20.3% compared to 21.0% in the prior year and our operating margin was 18.2% compared to 18.7% in the prior year. Our same-store revenue declined 3.3% during the quarter however we successfully held our same-store gross profit margin of 20.9% to a decline of only 30 basis points.
"We made five acquisitions during the quarter with historical combined annual revenue of $12.1 million. In addition, on July 1, 2009, we completed the merger of Eklin Medical Systems, Inc., with our Sound Technologies business. Eklin is a leading seller of digital radiology, ultrasound and practice management software systems in the veterinary market.
"Laboratory revenue in the second quarter increased 1.2% to $82.8 million. Our laboratory internal revenue growth was 0.6%. Our laboratory gross profit margin was 49.5% compared to 49.9% in the prior year and our operating margin was 42.7% compared to 43.6% in the prior year."
2009 Financial Guidance
We revise our financial guidance as follows:
Non-GAAP Financial Measures
We believe investors' understanding of our total performance is enhanced by disclosing adjusted operating income, adjusted net income and adjusted diluted earnings per common share. We define these adjusted measures as the reported amounts, adjusted to exclude certain significant items. Adjusted diluted earnings per common share is adjusted net income divided by diluted common shares outstanding.
Management uses adjusted measures because they exclude the effect of significant items that we believe are not representative of our core operations for the periods presented. As a result, these non-GAAP financial measures help to provide meaningful comparisons of our overall performance from one reporting period to another and meaningful assessments of related trends. For the three and six months ended June 30, 2009, we adjusted our reported amounts for the aforementioned write-off of $5.3 million, or $3.2 million after tax.
There is a material limitation associated with the use of these non-GAAP financial measures: our adjusted measures exclude the impact of these significant items and as a result, our computation of adjusted diluted earnings per common share does not depict diluted earnings per common share in accordance with GAAP.
To compensate for the limitations in the non-GAAP financial measures discussed above, our disclosures provide a complete understanding of all adjustments found in non-GAAP financial measures, and we reconcile the non-GAAP financial measures to the GAAP financial measures in the attached financial schedules titled "Supplemental Operating Data."
We will discuss our company's second quarter 2009 financial results during a conference call today, July 23, 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 (888) 318-7470. 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 this forward looking information. 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 increase 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 any 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, 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