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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 Quarter over Quarter Improvement
with 2009 Third Quarter Results
BRENTWOOD, Tenn. (November 16, 2009) - 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 ended September 30, 2009, and its results
for the first nine months of 2009, which showed continued
progress and improvement over its prior year results.
Revenues for the three and nine month periods ended September
30, 2009 from continuing operations were $15.7 million and $49.2
million, respectively, compared to revenues of $17.3 million and
$52.2 million, respectively, in the same time periods one year
ago. The decrease in revenues of 9.0% and 5.8%, respectively,
continues to be primarily due to decreased volume of traffic at
the Company’s clinics as the California economy remained weak
during the first nine months of 2009. Revenue decreases for the
nine months ended September 30, 2009 from our same stores were
partially offset by acquisition revenues of Valley Animal
Medical Center which was not acquired until the beginning of the
third quarter of 2008.
The Company’s hospital contribution margin in the third quarter
of 2009 from continuing operations improved to 7.9% when
compared with 5.5% in the prior-year third quarter. For the nine
months ended September 30, 2009, hospital contribution margin
was 9.7% versus 7.9% for the same time period in 2008. The
increase in hospital contribution margin continues to be driven
by lowered veterinarian and staff payroll expenses which
resulted from improvements made in aligning staff levels with
revenues, coupled with the elimination of certain cost
redundancies from the three hospital consolidations that took
place during 2008.
"While we’re concerned about the continuing effect the
California economy is having on our revenues, we are pleased
that we continue to show stronger hospital financial performance
over the previous year," said Gene Burleson, Chief Executive
Officer of Pet DRx Corporation. "All of our hospitals have
continued to achieve positive Hospital EBITDA for the nine
months ended September 30, 2009, so while the top line sales are
not where we would like them to be, our hospitals are performing
more efficiently this year and we are encouraged that when the
California economy begins its recovery we will be in a position
to capitalize on the increased revenues."
Selling, general, and administrative expenses ("SG&A"), which
was $1.6 million and $6.2 million in the three and nine months
ended September 30, 2009, respectively, decreased by $2.0
million and $5.2 million, respectively, over the same time
periods one year ago. The decrease in SG&A for the nine months
of 2009 compared with 2008 was a result of the Company not
having incurred certain expenses in 2009 that were incurred in
2008 including completing the relocation of its headquarters
from California to Tennessee, charges incurred for reductions in
corporate and executive level staff, and a one-time impairment
charge of $0.3 million on the carrying value of its vacant
building that was later sold in 2009. Also leading to the
decreased SG&A were reduced expenses from outside professional
fees and stock compensation costs as compared to the same time
periods one year ago.
For the third quarter of 2009, Pet DRx had an operating loss of
$398,000 compared to an operating loss in the third quarter of
2008 of $2.7 million. For the nine months ended September 30,
2009, the operating loss was $1.4 million as compared to an
operating loss of $7.2 million for the nine months ended
September 30, 2008.
The net loss from continuing operations in the three and nine
months ended September 30, 2009 was $1.8 million and $9.2
million, or a loss per share of ($0.08) and $(0.39),
respectively, compared with a net loss in the same time periods
in 2008 of $3.0 million and $11.1 million, or ($0.13) and
($0.47) loss per share, respectively. The net loss in the third
quarter of 2009 includes interest expense of $1.5 million,
compared with $0.3 million in the prior-year third quarter. The
nine months ended September 30, 2009 includes a loss from the
change in fair value of warrant liabilities of $3.4 million and
interest expense of $4.3 million. Interest expense was $4.2
million in the prior year nine month period. There was no gain
or loss recognized in 2008 on the change in fair value of
warrant liabilities. Excluding the loss from the change in fair
value of warrant liabilities, the net loss from continuing
operations for the first nine months of 2009 would have been
$5.8 million.
Earnings before interest, loss on change in fair value of
warrant liabilities, income taxes, depreciation, and
amortization ("Adjusted EBITDA") for the three and nine months
ended September 30, 2009 was $0.3 million and $0.6 million,
respectively, as compared to negative Adjusted EBITDA of $2.2
million in the third quarter of 2008 and $5.6 million in the
nine months ended September 30, 2008. This is an increase of
$2.5 million and $6.2 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 as well as
improved hospital contribution margins. 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,
November 16, 2009, beginning at 3:00 p.m. Eastern time to
discuss third quarter 2009 results and to answer questions.
Individuals interested in participating in the call should dial
(888) 713-4214 from the U.S. or (617) 213-4866 from outside the
U.S and entering pass code 29319777. 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 23626058. 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 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 Forms 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.
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