LOS ANGELES, California, April 25, 2013 - VCA Antech, Inc. (NASDAQ: WOOF), a leading animal healthcare company in the United States and Canada, today reported financial results for the first quarter ended March 31, 2013 as follows: revenue increased 7.1% to a first quarter record of $438.6 million; gross profit increased 3.8% to $96.9 million; net income was $30.5 million and diluted earnings per common share was $0.34.
For the three months ended March 31, 2013 and 2012, adjusted diluted earnings per share were $0.37 and $0.34, respectively. Adjusted diluted earnings per share for the three months ended March 31, 2013, excludes $3.8 million of charges related to properties vacated during the quarter. We vacated properties of two animal hospitals whose operations were consolidated into the newly constructed, newly opened VCA West Los Angeles Animal Hospital.
With this release, we are also reporting Adjusted diluted earnings per share excluding amortization of intangible assets associated with acquisitions (Adjusted EPS Excluding Amortization). As we continue to grow our business through acquisitions, we will use Adjusted EPS Excluding Amortization as a measure of operational performance, growth and shareholder returns. We believe that by providing this non-GAAP financial measure we will provide our investors better insight into the operating performance of the business. Adjusted EPS Excluding Amortization for the three months ended March 31, 2013 and 2012 was $0.40 and $0.37, respectively.
Bob Antin, Chairman and CEO, stated, "We are encouraged with the improvement in revenue in both our core Animal Hospitals and Laboratory business segments. We experienced improving margins in our Laboratory business segment and are encouraged by our ability to manage margins in our Animal Hospitals business segment.
"We are also pleased to announce, that the Company will initiate a purchase of up to $125.0 Million of our common stock. We believe the repurchase represents a good opportunity to provide shareholder value while maintaining our acquisition goals in the market.
"Animal Hospital revenue in the first quarter of 2013 increased 7.7%, to $340.6 million, driven by acquisitions made in the past twelve months and same-store revenue growth of 1.8%. Our same-store gross profit margin decreased to 13.7%, from 14.7%, while our consolidated gross margin decreased to 13.3%, compared to 14.4%, for the prior-year quarter. Our Animal Hospital operating margin decreased to 10.3%, compared to 12.0%, for the prior-year quarter. As mentioned above, we recorded $3.8 million of charges related to vacated properties. Excluding these charges, our adjusted same-store gross profit margin decreased only 30 bps to 14.4%, from 14.7%; adjusted consolidated gross margin decreased to 13.9%, compared to 14.4%, for the prior-year quarter; and adjusted operating margin decreased to 11.4%, compared to 12.0%, for the prior-year quarter. During the quarter, we acquired three independent animal hospitals which had historical combined annual revenue of $7.2 million.
"Laboratory internal revenue in the first quarter increased 4.3%, to $87.3 million, driven by both an increase in the number of requisitions and the average revenue per requisition. Our Laboratory gross profit margin increased to 48.6%, from 47.9%, and our operating margin increased to 39.5% from 38.9%.
"Revenue from our other operations reported in our All Other segment increased $2.2 million in the first quarter, to $28.5 million, primarily as a result of the full quarter impact of the acquisition of ThinkPets on February 1, 2012."
Adjusted EPS Excluding Acquisition-Related Amortization
Our acquisition-related amortization expense for the years ended December 2012 and 2011 was $22.7 million, or $13.8 million net of tax, and $13.4 million, or $8.2 million net of tax, respectively. Adjusted EPS Excluding Amortization was $1.52 for the full year ended December 31, 2012, as compared to $1.45 for the full year ended December 31, 2011. In February of this year, we provided guidance for 2013. Adjusting for amortization of acquisition-related intangibles, our guidance range (based on the assumptions stated in that prior release) for Adjusted EPS Excluding Amortization is $1.59 to $1.69 per share.
Adjusted EPS Excluding Amortization is the measure we request analysts to use in compiling 2013 EPS estimates.
Share Repurchase Program
Our Board of Directors has authorized a new share repurchase program, authorizing the Company to repurchase up to $125 million of our common shares from time to time in open market purchases, pursuant to trading plans established in accordance with SEC rules or through privately negotiated transactions. The extent and timing of our repurchases will depend upon market conditions, our cash requirements to fund the long-term growth investments in our business and other corporate considerations. The repurchases will be funded by existing cash balances and by our revolving credit facility. The share repurchase program has no expiration date. The repurchase program may be suspended or discontinued at any time.
Non-GAAP Financial Measures
We believe investors' understanding of our total performance is enhanced by disclosing adjusted net income, adjusted diluted earnings per common share and adjusted diluted earnings per common share excluding acquisition-related amortization. We define these adjusted measures as the reported amounts, adjusted to exclude certain significant items and amortization of intangibles acquired in acquisitions.
Management believes these adjusted measures are useful to management and investors in evaluating the Company's operational performance and their use provides an additional tool for evaluating the Company's operating results and trends. 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.
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 first quarter 2013 financial results during a conference call today, April 25th, at 4:30 p.m. Eastern Time. A live broadcast of the call may be accessed by visiting our website at investor.vcaantech.com. The call may also be accessed by dialing (877) 293-5492. Interested parties should call at least 10 minutes prior to the start of the call to register. Replay of the webcast will be available for ninety days by visiting the company's website.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Among the forward looking statements in this press release are statements addressing our 2013 guidance and plans, expectations, future financial position and results of operation. These forward-looking statements are not historical facts and are inherently uncertain and out of our control. Any or all of our forward-looking statements in this press release may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Actual future results may vary materially. Among other factors that could cause our actual results to differ from this forward-looking information are: the continued effects of the economic uncertainty prevailing in regions in which we operate; our ability to execute on our growth strategy and to manage acquired operations; changes in demand for our products and services; fluctuations in our revenue adversely affecting our gross profit, operating income and margins; and the effects of the other factors discussed in our Annual Report on Form 10-K, Reports on Form 10-Q and our other filings with the SEC.
About VCA Antech
We own, operate and manage the largest networks of freestanding veterinary hospitals and veterinary-exclusive clinical laboratories in the country, additionally we are the largest provider of online communication, professional education and marketing solutions to the veterinary community. We also supply diagnostic imaging equipment to the veterinary industry.
Chief Financial Officer