Trupanion beats Q4 estimates, vet clinics snap up insurance product

Pet insurer Trupanion ($TRUP) spent much of 2015 signing veterinary clinics up for its service Express, which allows veterinarians to be reimbursed directly by the company, instead of collecting fees from pet owners and then sending them home to file claims themselves. By the end of the year, Trupanion Express was in 500 veterinary hospitals, handily outpacing the company's goal of 350.

Trupanion CEO Darryl Rawlings

The rapid rollout of Express seems to be paying off for the Seattle-based company. Trupanion announced after the market closed on February 11 that its revenues in the fourth quarter of 2015 jumped 31% year over year on a constant-currency basis to $40.2 million and that its net loss narrowed from $4.3 million to $3 million, or 11 cents per share. Revenues were in line with expectations and EPS beat estimates by 3 cents, according to Thomson Financial Network. For the year, Trupanion's sales grew 31% year over year to $147 million and its net loss fell from $21.2 million to $17.2 million.

During a conference call with analysts, Trupanion CEO Darryl Rawlings said he was thrilled that the rollout of the Express product was proceeding ahead of schedule, but he admitted the company still has some work to do to perfect the product. "What we've learned is the deployment and the demand [for] the product is high, but we need to continue to work on our implementation and it's going to be probably take several years of work towards … optimizing the entire experience from front to end," he said.

Trupanion is counting on Express to help it stand out from a rapidly growing field of competitors. In addition to stalwarts like Nationwide (formerly VPI), there are some newcomers in the pet insurance field. They include Figo, a Chicago-based company that raised $3.9 million in private funding last April. Figo doesn't facilitate direct payment from veterinarians but instead is setting itself apart with other features, such as a deductible that's charged annually, rather than on a per-diagnosis basis.

Still, only a small fraction of pet owners carry insurance, so Trupanion isn't competing with rivals so much as it's trying to change the status quo. "At any given time when we're adding pets, we are not stealing ... from a competitor and if we are losing pets [they] are not going to another competitor. We are trying to build a category," said Rawlings during the earnings call.

So far, so good: Trupanion reported that the number of pets enrolled in its insurance jumped 27% between 2014 and 2015 to 272,636. The company's shares were up 5% the morning after the earnings announcement to $8.80.

- here's the earnings release
- access a transcript of the earnings call at Seeking Alpha