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Press Release 11/14/2008
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Company Contact:
Pet DRx Corporation
Harry L. Zimmerman
(HZimmerman@petdrx.com)
(615) 369-1914 – www.petdrx.com
PET DRx REPORTS THIRD QUARTER REVENUE OF $17.7 MILLION
BRENTWOOD, Tenn. (November 14, 2008) – Pet DRx Corporation (Nasdaq:
VETS), a provider of veterinary primary care and specialized
services to companion animals, today announced financial results
for the third quarter and nine months ended September 30, 2008.
Revenue in the third quarter of 2008 was $17.7 million, compared
to revenue of $17.7 million in the third quarter of 2007. New
revenues from the acquisition of Valley Animal Medical Center
were offset primarily by lower volume in a small number of
hospitals. For the nine months ended September 30, 2008, Pet DRx
reported revenue of $53.4 million, up 16% compared with revenue
of $46.1 million for the first nine months of 2007. The revenue
increase was due to the acquisition of six veterinary hospitals
late in the first quarter of 2007, and the acquisition of Valley
Animal Hospital in July 2008. “Since starting with the new
management team two months ago, I have been encouraged by what
has and can be accomplished with this company” stated Gene E.
Burleson, interim chief executive officer. “We are focusing on
improving same store profitability and increasing cash flow,
while continuing to administer the highest quality animal care.
We expect to see positive results from a number of initiatives
currently underway.” “We are pleased with maintaining revenues
during these economically challenging times,” stated Mr.
Burleson. “Our results this quarter were impacted by challenges
at a few of our hospitals. Accordingly, we have made the recent
decision to close one hospital, which has experienced a
permanent decline in business. Additionally, as one benefit of
our “hub and spoke” strategy, the consolidations of four of our
facilities into two during the second quarter of 2008 have begun
to show improving results.” Hospital contribution margin in the
third quarter declined to 4.6%, from 8.3% in the prior-year
third quarter, but for the first nine months of 2008 it was
7.1%, compared to 5.7% in the first nine months of 2007. The
margin contraction in the third quarter was primarily due to the
temporary interruption of services at one of our hospitals and
the continuing poor performance of the facility that has been
recently closed, along with increased costs related to the
hiring of several additional veterinarians, partially offset by
a reduction in cost of goods sold and non-veterinarian staff
costs at hospitals. Selling, general and administrative expenses
as a percent of revenue decreased to 20.8% during the third
quarter of 2008, from 21.0% in the same quarter a year ago. The
improvement was primarily the result of a decrease in the amount
of professional fees incurred as compared to the prior year when
significant amounts were spent in connection with the merger,
which reductions were offset by non-cash charges for stock
compensation and asset impairment in the third quarter of 2008.
For the nine months of 2008, selling, general and administrative
expenses as a percent of revenue were 21.3%, compared to 20.2%
for the same period in 2007. The increase during 2008 is
primarily due to expenses incurred during the first part of the
year when the company was relocating its office from San Jose,
California to Brentwood, Tennessee and the aggregate $0.8
million non-cash charges for stock compensation and asset
impairment. The net loss in the third quarter of 2008 was $3.2
million, or $0.13 per share, compared with a net loss in the
third quarter of 2007 of $3.4 million, or $0.80 per share
(adjusted for merger share conversion ratio). The net loss in
the third quarter of 2008 includes interest expense of
approximately $292,000, compared with $1.1 million in the
prior-year third quarter. The net loss for the first nine months
of 2008 was $11.4 million, or $0.49 per share, compared with a
net loss of $9.2 million, or $2.25 per share, in the first nine
months of 2007.
Conference Call
Pet DRx management will host a conference call on Monday,
November 17, 2008 beginning at 10:30 a.m. Eastern time to
discuss third quarter results and to answer questions.
Individuals interested in participating in the call should dial
(888) 463-4487 from the U.S. or (706) 634-5615 from outside the
U.S. The live call also will be available in the Investors
section of the Company’s Web site at www.petdrx.com. A telephone
replay will be available for 48 hours beginning approximately
one hour after the conclusion of the call by dialing (800)
642-1687 from the U.S. or (706) 645-9291 from outside the U.S.,
and entering reservation code 72735297. The webcast will be
available in the Investors section of the Company’s Web site for
14 days following the completion of the call.
About Pet DRx
Pet DRx Corporation provides veterinary primary care and
specialized services to companion animals through a network of
fully-owned veterinary hospitals. The Company currently owns and
operates 24 leading veterinary hospitals in the state of
California, which it has organized into unique, regional “hub
and spoke” networks. Pet DRx provides a full range of general
medical treatments for companion animals, including (i)
preventive care, such as examinations, vaccinations,
spaying/neutering and dental care and (ii) a broad range of
specialized diagnostic and medical services, such as internal
medicine, surgery, cardiology, ophthalmology, dermatology,
oncology, neurology, x-ray, ultrasound and other services.
SAFE HARBOR STATEMENT
Certain statements and information included in this press
release, including statements as to the expected operations of
the Company, its prospects for growth, and future product and
service offerings constitute “forward-looking statements” within
the meaning of the Federal Private Securities Litigation Reform
Act of 1995. These forward-looking statements are subject to
risks and uncertainties that may cause actual results to differ
materially, including, but not limited to, the ability of the
Company to successfully acquire, integrate and operate
veterinary hospitals and clinics, requirements or changes
affecting the businesses in which the Company is engaged,
veterinary services trends, including factors affecting supply
and demand, the effect of competition, decline in demand for the
Company’s products or services, dependence on acquisitions for
growth, labor and personnel relations, changing interpretations
of generally accepted accounting principles, the Company’s
ability to service its substantial indebtedness, the level of
direct costs and the Company’s ability to maintain revenue at a
level necessary to maintain expected operating margins, the
level of selling, general and administrative costs, any
impairment in the carrying value of the Company’s goodwill and
other intangible assets, changes in prevailing interest rates,
and general economic conditions. These and other risks and
uncertainties are described in greater detail in the Company’s
filings with the Securities and Exchange Commission, including
its reports on Form 10-K and 10-Q, as well as its current report
on Form 8-K/A (Amendment No. 1) filed on April 4, 2008, and the
foregoing information should be read in conjunction with these
filings. These forward-looking statements speak only as of the
date hereof and the Company disclaims any intention or
obligation to update or revise any forward-looking statements,
either as a result of new information, future events or
otherwise.
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