VCA Inc.
Feb 21, 2008

VCA Antech, Inc. Reports 4th Quarter 2007 Results and Affirms its Financial Guidance for 2008

LOS ANGELES, California, February 21, 2008 - VCA Antech, Inc. (NASDAQ NM SYMBOL: WOOF), a leading animal healthcare company in the United States, today reported financial results for the quarter ended December 31, 2007, as follows: revenue increased 17.3% to a fourth quarter record of $284.2 million; gross profit increased 12.5% to $69.3 million; operating income increased 17.5% to $47.8 million; net income was $24.6 million; and diluted earnings per common share was $0.29. The fourth quarter of 2007 included a benefit of $3.5 million, or $2.2 million after tax, related to a decrease in our estimated workers' compensation insurance liability for policy periods prior to 2007. Excluding this benefit from 2007, adjusted diluted earnings per common share increased 13.0% to $0.26.

We also reported our financial results for the year ended December 31, 2007, as follows: revenue increased 17.6% to a twelve-month record of $1.16 billion; gross profit increased 18.8% to $321.4 million; operating income increased 21.1% to $233.2 million; net income was $121.0 million; and diluted earnings per share was $1.41. The fourth quarter of 2007 included a benefit of $3.5 million, or $2.2 million after tax, related to a decrease in our estimated workers' compensation insurance liability for policy periods prior to 2007. The first quarter of 2006 included a tax benefit of $6.8 million due to a favorable outcome of an income tax audit that resulted in a change to our estimated tax liabilities. Excluding these benefits from 2007 and 2006, adjusted diluted earnings per common share increased 19.8% to $1.39.

Bob Antin, Chairman and CEO, stated, "VCA Antech had a very strong year highlighted by organic growth in each of its business segments and the execution of a very successful acquisition program. In 2007, laboratory internal revenue growth, adjusted for differences in billing days, was 13.5% and animal hospital same-store revenue growth was 5.2%. In the fourth quarter of 2007, laboratory internal revenue growth, adjusted for differences in billing days, and animal hospital same-store revenue growth, adjusted for differences in business days, was 9.1% and 2.5%, respectively.

"Laboratory revenue in the fourth quarter increased 8.4% to $68.6 million driven primarily by internal revenue growth. Gross profit and operating margins in the fourth quarter of 2007 were 45.9% and 38.9%, respectively. Laboratory results for the fourth quarter of 2007 included a benefit of $597,000 related to a decrease in our workers' compensation insurance liability for policy periods prior to 2007. Excluding this benefit, laboratory adjusted gross profit and operating margins were 45.1% and 38.0%, respectively.

"Animal hospital revenue in the fourth quarter increased 21.8% to $209.3 million driven by acquisitions, including Healthy Pet Corp. acquired on June 1, 2007, and same-store revenue growth. Gross profit and operating margins in the fourth quarter of 2007 were 16.0% and 13.3%, respectively. Animal hospital results for the fourth quarter of 2007 included a benefit of $2.8 million related to a decrease in our workers' compensation insurance liability as previously discussed. Excluding this benefit, animal hospital adjusted gross profit and operating margins were 14.8% and 12.0%, respectively. Animal hospital same-store gross profit margin in the fourth quarter of 2007 was 16.7%. Excluding the impact for the decrease in our workers' compensation insurance liability, same-store adjusted gross profit margin declined to 15.2% compared to 16.9% in the comparable prior year quarter."

2008 Financial Guidance

We affirm our 2008 financial guidance previously provided on February 4, 2008. Our 2008 financial guidance is as follows:

Non-GAAP Financial Measures

We believe investors' understanding of our total performance is enhanced by disclosing adjusted gross profit, adjusted gross margin, adjusted operating income, adjusted operating margin, adjusted net income and adjusted diluted earnings per common share. We define these adjusted measures as the reported amounts, adjusted to exclude certain significant items. Adjusted diluted earnings per common share is adjusted net income divided by diluted common shares outstanding.

Management uses adjusted measures because they exclude the effect of significant items that we believe are not representative of our core operations for the periods presented. As a result, these non-GAAP financial measures help to provide meaningful comparisons of our overall performance from one reporting period to another and meaningful assessments of our future performance and related trends. For the year and quarter ended December 31, 2007, we adjusted our reported amounts for a benefit in the amount of $3.5 million, or $2.2 million after tax, related to a decrease in our estimated workers' compensation insurance liability recorded during the fourth quarter of 2007. For the year ended December 31, 2006, we adjusted our reported amounts for a $6.8 million tax benefit recorded during the first quarter of 2006.

There is a material limitation associated with the use of these non-GAAP financial measures: our adjusted measures exclude the impact of these significant items and as a result, our computation of adjusted diluted earnings per common share does not depict diluted earnings per common share in accordance with GAAP.

To compensate for the limitations in the non-GAAP financial measures discussed above, our disclosures provide a complete understanding of all adjustments found in non-GAAP financial measures, and we reconcile the non-GAAP financial measures to the GAAP financial measures in the attached financial schedules titled "Supplemental Operating Data."

Conference Call

We will discuss our company's fourth quarter and annual 2007 financial results and our 2008 financial guidance during a conference call today, February 21, 2008, at 4:30 p.m. Eastern Time. You can access a live broadcast of the call by visiting our website at http://investor.vcaantech.com. You can also access the call via telephone by dialing (877) 675-4753. Interested parties should call at least 10 minutes prior to the start of the call to register.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including our financial guidance for fiscal year 2008. Actual results may and likely will differ materially from the guidance provided in this release. Among the important factors that could cause actual results to differ are: a material adverse change in our financial condition or operations; the impact of adverse trends in the general economy on the rate of our laboratory internal revenue growth and animal hospital same-store revenue growth; the level of direct costs and our ability to maintain revenue at a level necessary to maintain expected operating margins; the level of selling, general and administrative costs; the effects of our recent acquisitions (including Healthy Pet Corp.) and our ability to effectively manage our growth and achieve operating synergies; a decline in demand for some of our products and services; any disruption in our information technology systems or transportation networks; the effects of competition; any impairment in the carrying value of our goodwill and other intangible assets; changes in prevailing interest rates; our ability to service our debt; and general economic conditions. These and other risk factors are discussed in our Report on Form 10-K for the year ended December 31, 2006, and our Report on Form 10-Q for the quarter ended September 30, 2007, and the reader is directed to these statements for a further discussion of important factors that could cause actual results to differ materially from those in the forward-looking statements.

We own, operate and manage the largest networks of freestanding veterinary hospitals and veterinary-exclusive clinical laboratories in the country, and we supply diagnostic imaging equipment to the veterinary industry.

Media contact
Tomas Fuller, Chief Financial Officer
(310) 571-6505