|VCA CEO Bob Antin|
Pet hospital chain VCA ($WOOF) has been on a winning streak this year, with sales and profits soaring thanks to dealmaking and expanded offerings. But the company tripped a bit in the third quarter, missing revenue forecasts despite beats on earnings.
VCA's earnings rang in at 68 cents per share, topping analysts' estimates of 67 cents per share. But the Los Angeles-based company also posted revenue of $551.7 million in Q3, falling short of the Street's forecast of $552.9 million, according to estimates compiled by Zacks Investment Research and reported by the Associated Press. The news was enough to push shares down to $54.78 Wednesday morning after VCA announced earnings.
The revenue miss could partly be explained by a decline in same-store gross profit, CEO Bob Antin said in a statement. Same-store gross profit margin for the quarter was 17.3%, slightly lower than 17.5% in Q2. VCA's total gross margin dropped as a result to 17% from 17.3% in the last quarter.
Still, the company "continued to experience robust organic revenue growth rates" in its animal hospital and laboratory business units, Antin said, as VCA reaps the benefits of M&A and its hospital services push. In March, the company's Antech Diagnostics division snatched up Abaxis' ($ABAX) Veterinary Reference Laboratory for $21 million. And VCA acquired 19 independent animal hospitals during the third quarter with combined annual revenues of $43.6 million, Antin said.
The company is also beefing up its hospital services to boost its top-line haul, introducing a wellness program called CareClub and mobile communications options for clients to spur revenue growth.
Overall, it looks like VCA's efforts are paying off. Animal hospital revenue for the third quarter jumped 11.6% to $441.9 million "driven by acquisitions made during the past 12 months and same-store revenue growth of 5.4%," Antin said. Lab revenue also increased during Q3 to $100.3 million, a 9.1% hop from the previous quarter.
VCA is "very optimistic" about the company's progress in the months ahead, Antin said. The company is keeping its full-year 2015 revenue forecast of $2.12 billion to $2.13 billion.
Investors also seem to think the company is poised for big things. In early July, shares of VCA gained 4.3% in one day, after an analyst at Stifel Nicolaus & Co. published survey results from vets who said business was good at their practices. Out of 150 who responded, 55% said that they didn't have a single bad month in the second quarter, marking the fifth straight quarter where more than a third of VCA vets didn't voice any qualms.
The report only increased investor hype, which was already on the rise. VCA's stock has gained 24% in the last 12 months.
- here's VCA's earnings statement
- read the AP story