VCA ($WOOF), which manages the largest network of veterinary hospitals and labs in the U.S., announced Thursday night that its revenues grew 7.7% to a record $499.6 million in the third quarter. The company credited the positive results to a variety of events that occurred during the quarter, including its acquisition of 13 independent animal hospitals with combined annual revenues of $26 million.
The company's existing hospitals performed well, too, charting a 4.1% increase in same-store revenue growth and an improvement in gross profit margin of 110 basis points, according to the earnings release. VCA's laboratory business saw sales growth of 5.5% and a 180 basis point increase in gross profit margin.
VCA's adjusted earnings per share of 56 cents blew past the average analyst estimate of 52 cents, according to the Associated Press. The company's shares closed Thursday at $41.15 fueling a one-year share price gain of 51%.
|VCA CEO Bob Antin|
VCA CEO Bob Antin said in the earnings release that the third-quarter results made the company "extremely optimistic" about the rest of the year. "We have a robust pipeline of acquisition transactions in current discussions and we expect to acquire a total of $120 million of annual revenue for the entire year, which is significantly over our previous guidance of $60 to $70 million," Antin said.
The company's acquisition program continues to pick up speed, even while hospital M&A on the human side of the healthcare industry is slowing. During a conference call after the release, VCA executives declined to elaborate on their acquisition plans going forward, despite the suggestion from some analysts that Antin's forecast seemed a bit excessive. He simply replied, "We have a very aggressive program of acquisition."
VCA executives were much more forthcoming about the initiatives they've added to existing hospitals that are helping turbo-charge their growth. Chief Financial Officer Tomas Fuller said the company is rolling out a mobile initiative that includes using tablet computers to check in patients and sending mobile text reminders to pet owners.
VCA has also launched a wellness program, CareClub, which Tomas said would be in 300 hospitals by the end of the year. CareClub members get a basket of services, including vaccines, veterinary visits, and lab tests. Analysts were eager to hear how the new program was selling, but Antin said it was too early to provide hard numbers. "I think the receptivity, both on our staff and our doctors, is very, very positive," he said. "As you well know, wellness isn't a short-term game-changer. It is something over time that has a lasting impact on the hospital, if it's successful."