VCA Antech's first-quarter 2010 revenue up 4.7% to $330.7M

• First quarter revenue increased 4.7% to $330.7 million
• First quarter gross profit increased to $82.8 million
• First quarter diluted earnings per common share remained flat at $0.37

VCA Antech, Inc. (Nasdaq:WOOF), a leading animal healthcare company in the United States, today reported financial results for the first quarter ended March 31, 2010 as follows: revenue increased 4.7% to a first quarter record of $330.7 million; gross profit increased to $82.8 million and diluted earnings per common share of $0.37.

Bob Antin, Chairman and CEO, stated, "We experienced relative improvement in our revenue growth rate in comparison to the previous four quarters. We continued to recover from the effects of the economic recession; however, we were confronted with record snowfall throughout the East Coast during February which impacted both our Animal Hospital and Laboratory business segments. As the economy continues to improve, we remain optimistic with respect to our results for the remainder of 2010.

"Animal hospital revenue in the first quarter increased 3.5% to $246.7 million driven by acquisitions made in the past twelve months. The combination of lower margins at acquired animal hospitals, and a decline in same-store margins due to a decline in same-store revenue, has caused our animal hospital gross margin to decrease to 16.9% compared to 18.1% for the comparable prior year quarter, and our animal hospital operating margin to decline to 14.6% compared to 16.0% for the comparable prior year quarter. Our same-store revenue declined by 1.6% and our same-store gross profit margin declined to 17.4% from 18.3%. We acquired four animal hospitals during the quarter with historical combined annual revenue of $9.0 million. 

"Laboratory revenue in the first quarter increased 0.4% to $78.2 million with internal revenue growth of 0.2%. Our laboratory gross profit increased 1.4% to $36.5 million. Our laboratory gross profit margin and operating margin were essentially flat at 46.7% and 38.9%, respectively, for the current and comparable prior year quarters.

"Sound-Eklin revenue in the first quarter increased 79.8% to $15.8 million and gross profit increased 49.7% to $4.8 million. Gross profit margin was 30.6% compared to 36.7% in the prior year primarily due to product mix and the operating margin increased to 8.1% from 4.7%." 

2010 Financial Guidance

We affirm our 2010 financial guidance as follows:

• Revenue from $1.39 billion to $1.42 billion;
• Net income from $140.0 million to $147.2 million; and
• Diluted earnings per common share from $1.60 to $1.68.

Current uncertainty in the economy and the lack of visibility regarding the timing and degree of any recovery in our business sector makes it particularly difficult to predict consumer demand for our services and makes it more likely that our actual results could differ materially from expectations. Our senior term notes are scheduled to mature in 2011, although they may be refinanced in 2010. The guidance above is based upon our current capital structure and, accordingly, does not include the effect of any debt refinancing.