LOS ANGELES, California, July 26, 2012 - VCA Antech, Inc. (NASDAQ: WOOF), a leading animal healthcare company in the United States and Canada, today reported financial results for the second quarter ended June 30, 2012 as follows: revenue increased 16.6% to a second quarter record of $438.4 million; gross profit increased 3.9% to $100.6 million; net income was $34.3 million and diluted earnings per common share was $0.39.
The second quarter of 2012 included a depreciation adjustment of $3.1 million related to acquired capital leases. Excluding the depreciation adjustment, adjusted gross profit, adjusted net income and adjusted diluted earnings per common share were $103.7 million, $36.2 million and $0.41 per common share.
For the six months ended June 30, 2012 and 2011, diluted earnings per common share were $0.79 and $0.78 respectively. The first quarter of 2012 included a gain of $5.7 million on our 20% interest in Associate Veterinary Clinics ("AVC") held at the time we became the sole non-veterinarian shareholder of AVC. Excluding the gain on our interest in AVC and the depreciation adjustment noted above, adjusted diluted earnings per common share for the six months ended June 30, 2012 and 2011 were $0.74 and $0.78.
Bob Antin, Chairman and CEO, stated, "We continued to grow revenue during the quarter as a result of both acquisitions and same-store results. The pace of the economic recovery however, slowed during the quarter which primarily impacted our Animal Hospital business segment's organic growth rates and related margins. Looking forward to the second half of 2012, we are focusing our efforts on maintaining margins through various expense management related initiatives. We remain optimistic with respect to our overall revenue growth during the remainder of 2012.
"Animal Hospital revenue in the second quarter of 2012 increased 17.5%, to $342.3 million, driven by acquisitions made in the past twelve months and same-store revenue growth of 0.2%. Our Animal Hospital adjusted gross margin decreased to 15.3%, compared to 18.2%, for the prior year quarter. Our Animal Hospital adjusted operating margin declined to 13.0%, compared to 16.1%, for the prior-year quarter. Our same-store adjusted gross profit margin decreased to 15.5%, from 18.3%. During the quarter, we acquired five independent animal hospitals which had historical combined annual revenue of $10.8 million.
"Laboratory revenue in the second quarter increased 2.6%, to $86.6 million, driven by both an increase in the number of requisitions and the average revenue per requisition. Our Laboratory gross profit margin increased from 48.2% to 48.8% and our operating margin increased from 40.1% to 40.2%.
"Revenue from our other operations reported in our All Other segment increased $11.2 million in the second quarter to $27.4 million, which related primarily to the acquisition of Vetstreet and ThinkPets."
2012 Financial Guidance
With respect to our outlook for the remainder of the year, we continue to assess the trends in the second quarter, but given the results of the quarter we expect that our results for year will be closer to the bottom end of the range of our previously issued guidance.
We will discuss our second quarter 2012 financial results during a conference call today, July 26th, 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 ten 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 is our statement of optimism about our outlook for 2012 and other statements in this press release addressing our 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 (including Vetstreet); 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 and we provide the largest online communication, professional education and marketing solution to the veterinary community. We also supply diagnostic imaging equipment to the veterinary industry.
Chief Financial Officer