|VCA CEO Bob Antin|
Pet hospital chain VCA ($WOOF) was in a precarious position in the third quarter, missing revenue forecasts despite a beat on earnings. The company found its footing in Q4, though, finishing the year strong with Street-beating numbers thanks to standout performances from its animal hospital and lab businesses.
VCA's earnings rang in at 50 cents per share, topping analysts' estimates of 46 cents per share. The Los Angeles-based company posted $533.7 million in Q4 revenue. Full-year 2015 revenue shot up 11.2% to $2.1 billion, VCA said in its earnings statement. The news sent VCA's shares up to $50 Thursday morning after the company announced earnings.
The win could partly be attributed to the success of VCA's animal hospital and lab businesses, CEO Bob Antin said in a statement. The two units "experienced solid organic revenue growth," Antin said. Animal hospital brought in $427.5 million in Q4 driven by last year's dealmaking and same-store revenue growth of 7.4%. VCA also picked up 13 animal hospitals with combined revenues of $31.7 million last year, Antin said, bringing its year-to-date total to $122 million.
"The positive momentum in our business has continued from the third quarter to the end of the year and accordingly, we are optimistic about our overall growth prospects in 2016," Antin said. VCA expects full year 2016 revenue to ring in between $2.37 billion to $2.39 billion, setting the stage for expansion in the year to come.
Positive earnings come as music to VCA's ears, especially after a disappointing third quarter. The company missed on revenues in Q3 due to a decline in same-store gross profit, Antin said at the time.
But VCA remained "very optimistic" about the company's ability to bounce back, Antin said. The company is still reaping the benefits of recent M&A and its hospital services push. Last year, VCA's Antech Diagnostics division snatched up Abaxis' ($ABAX) Veterinary Reference Laboratory for $21 million, helping the company tap into a growing pet testing market.
The company is also expanding its offerings to generate growth. VCA last year introduced a wellness program called CareClub and rolled out mobile communications options for clients to boost its top-line haul.
Investors seem confident in VCA's prospects. In early July, shares of VCA gained 4.3% in one day after a Stifel Nicolaus & Co. analyst published survey results from vets working with the company who said that business was good at their practices. Out of 150 vets who responded, more than half said that they didn't have a single bad month in Q2, marking the fifth straight quarter where more than a third of VCA vets didn't contribute negative feedback.
The report has only increased investor hype, which was already growing. VCA's stock gained 24% last year.
- read the statement