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Company Contact:
Pet DRx Corporation
Harry L. Zimmerman
(HZimmerman@petdrx.com)
(615) 369-1914 – www.petdrx.com
Pet DRx Reports Continued Improvement with 2009 Second Quarter
Results
BRENTWOOD, Tenn. (August 17, 2009) - Pet DRx Corporation (Nasdaq:
VETS), a provider of veterinary primary care and specialized
services to companion animals, today announced financial results
for the second quarter ended June 30, 2009 which showed
continued progress and improvement over its prior year results.
Revenues for the three and six month periods ended June 30, 2009
from continuing operations was $16.7 million and $33.4 million,
respectively, compared to revenues of $17.5 million and $34.9
million, respectively, in the same time periods one year ago.
The decrease in revenues of 4.5% and 4.2%, respectively, was
primarily due to decreased volume of foot traffic at the clinics
as the California economy remained weak during the first six
months of 2009, partially offset by acquisition revenues of
Valley Animal Medical Center which was not acquired until the
beginning of the third quarter of 2008.
Hospital contribution margin in the second quarter of 2009 from
continuing operations was 11.1% compared with 8.2% in the
prior-year second quarter. For the six months ended June 30,
2009, hospital contribution margin was 10.6% versus 9.2% for the
same time period in 2008. The increase in hospital contribution
margin was primarily due to lower veterinarian and staff payroll
expenses driven by improvements made in aligning staff levels
with revenues. Further increasing hospital contribution was the
elimination of certain cost redundancies from the three hospital
consolidations that took place during 2008.
"The financial performance of our hospitals in 2009 has seen a
vast improvement over prior years" said Gene Burleson, Chief
Executive Officer of Pet DRx Corporation. "Even while revenues
remain lower than last year, all twenty-three of our hospitals
achieved positive Hospital EBITDA during the first six months of
2009. This marks the first time in our company’s history we have
achieved those results. We know we still have room for
improvement to obtain our ultimate annual goals, but this has
been a big step in the right direction."
Selling, general, and administrative expenses ("SG&A"), which
was $2.2 million and $4.6 million in the first three and six
months ended June 30, 2009, respectively, decreased by $1.7
million and $3.2 million, respectively, over the same time
periods one year ago. The decrease in SG&A was a result of the
Company completing the relocation of its headquarters from San
Jose, California to Nashville, Tennessee in 2008. Also leading
to the decreased SG&A were reduced expenses from outside
professional fees and stock compensation costs.
For the second quarter of 2009, Pet DRx had an operating loss of
$366,000 compared to an operating loss in the second quarter of
2008 of $2.5 million. For the first half of 2009, the operating
loss was $1.0 million as compared to an operating loss of $4.5
million in the first half of 2008.
The net loss in the three and six months ended June 30, 2009
from continuing operations was $7.4 million and $7.4 million, or
a loss per share of ($0.31) for both time periods, respectively,
compared with a net loss in the same time periods in 2008 of
$5.1 million and $8.1 million, or ($0.22) and ($0.35) loss per
share, respectively. A major component of this loss in 2009 was
a loss on the change in the fair value of our warrant
liabilities of $5.6 million in the second quarter of 2009 and
$3.6 million for the first six months of 2009, respectively,
from the Company’s adoption of EITF 07-5, "Determining Whether
an Instrument (or Embedded Feature) Is Indexed to an Entity’s
Own Stock" ("EITF 07-5") in 2009. These losses were not
recognized in 2008 as EITF 07-5 was not applicable in that time
period. The net loss in the second quarter of 2009 includes
interest expense of $1.5 million, compared with $2.7 million in
the prior-year second quarter. The six months ended June 30,
2009 and 2008 include interest expense of $2.8 million and $3.9
million, respectively.
Earnings before interest, loss on change in fair value of
warrant liabilities, income taxes, depreciation, and
amortization ("Adjusted EBITDA") for the three and six months
ended June 30, 2009 was $0.3 million and $0.3 million,
respectively, as compared to negative Adjusted EBITDA of $2.0
million in the second quarter of 2008 and $3.5 million in the
first half of 2008. This is an increase of $2.3 million and $3.8
million, respectively, in Adjusted EBITDA over the same periods
in the prior year. The increase in Adjusted EBITDA in 2009 was
primarily due to the reduced spending in selling, general, and
administrative expenses as compared to the same time period in
the previous year. See reconciliation of Adjusted EBITDA to Net
Loss from Continuing Operations in the table below.
Conference Call
Pet DRx management will host a conference call on Monday, August
17, 2009, beginning at 2:00 p.m. Eastern time to discuss second
quarter 2009 results and to answer questions. Individuals
interested in participating in the call should dial (888)
679-8040 from the U.S. or (617) 213-4851 from outside the U.S
and entering pass code 22046804. 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 (888) 286-8010 from the U.S. or (617) 801-6888 from
outside the U.S., and entering reservation code 85723227. 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 23 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, 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.
[Tables Included in Press Release Download]
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