LOS ANGELES, California, April 28, 2011 - VCA Antech, Inc. (NASDAQ NM SYMBOL: WOOF), a leading animal healthcare company in the United States, today reported financial results for the first quarter ended March 31, 2011 as follows: revenue increased 7.4% to a first quarter record of $355.1 million, net income was $28.8 million, and diluted earnings per common share was $0.33.
Bob Antin, Chairman and CEO, stated, "We are pleased that our results for the quarter exceeded our expectations primarily due to better than expected internal growth rates in our Animal Hospital and Laboratory segments. Although the persistent weakness in the economy continues to put pressure on our internal growth rates and our operating results, we are encouraged by the stability we are seeing in our internal growth rates and the sequential improvement in our operating results compared to fourth quarter of 2010.
"Animal Hospital revenue in the first quarter increased 9.4% to $269.9 million driven by acquisitions made in the past twelve months. The combination of a decline in same-store margins due to a decline in same-store revenue and lower margins at acquired animal hospitals has caused our Animal Hospital gross margin to decrease to 14.7% compared to 16.9% for the comparable prior year quarter. Our Animal Hospital operating margin declined to 12.4% compared to 14.6% for the comparable prior year quarter. Our same-store revenue declined by 2.2% and our same-store gross profit margin declined to 14.9% from 16.9%. During the quarter, we acquired two animal hospitals which had historical combined annual revenue of $4.8 million.
"Laboratory revenue in the first quarter increased 1.8% to $79.5 million. Internal revenue growth was 1.7%. Our Laboratory gross profit margin decreased by 50 basis points to 46.2% and our operating margin decreased 110 basis points to 37.8%.
"Medical Technology revenue in the first quarter increased 20.9% to $19.1 million and gross profit decreased 7.7% to $4.5 million. Both our revenue and related cost were impacted by a $4.0 million one-time cumulative adjustment. Gross profit margin was 23.3% compared to 30.6% in the prior year primarily due to the impact of the adjustment mentioned above, in addition to a change in our product mix. The operating margin decreased to 4.7% from 8.1% as SG&A expenses decreased to 18.6% from 22.3%."
2011 Financial Guidance
While we experienced continued weakness in the first quarter, as noted above, our results for the quarter exceeded our internal budget and we continue to be on track to meet our full year guidance.
Accordingly, we affirm our FY 2011 guidance as follows:
The continued uncertainty and lack of visibility regarding the timing and degree of the recovery in our business sector is making it particularly difficult to predict consumer demand for our services and to provide guidance relative to future results. Further, the preceding factors make it more likely that our actual results could differ from expectations.
We will discuss our company's first quarter 2011 financial results during a conference call today, April 28th, 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 by dialing (877) 293-5492. 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. Our Animal Hospital and Laboratory revenues have been materially adversely impacted by the current economic recession. We are unable to forecast accurately the timing or degree of any economic recovery. Further, trends in the general economy may not be reflected in our business at the same time or in the same degree as in the general economy. The timing and degree of any economic recovery, and its impact on our business, are among the important factors that could cause actual results to differ from this forward-looking information. Among other factors that could cause our actual results to differ from this forward-looking information are: an increase in the level of direct costs or a failure to increase revenue at a level necessary to maintain our expected operating margins, a material adverse change in our financial condition or operations; the level of selling, general and administrative costs; the effects of our recent and future 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 risks are discussed in our Report on Form 10-K for the year ended December 31, 2010 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