LOS ANGELES, California, February 11, 2015 - VCA Inc. (NASDAQ: WOOF), a leading animal healthcare company in the United States and Canada, today reported financial results for the fourth quarter ended December 31, 2014, as follows: revenue increased 10.2% to a fourth quarter record of $479.9 million; gross profit increased 13.2% to $99.0 million; operating income increased 14.7% to $52.7 million; net income increased 16.3% to $29.9 million and diluted earnings per common share increased 17.9% to $0.33. Non-GAAP diluted earnings per common share, which excludes acquisition-related amortization, increased 19.4% to $0.37.
We also reported our financial results for the twelve months ended December 31, 2014 as follows: revenue increased 6.4% to $1.9 billion; gross profit increased 8.6% to $444.6 million; operating income decreased 0.7% to $247.3 million; net income decreased 1.6% to $140.7 million and diluted earnings per common share increased 0.7% to $1.54. Our financial results for the twelve months ended December 31, 2014, on a Non-GAAP basis, are as follows: gross profit increased 8.7% to $465.4 million; operating income increased 9.6% to $295.3 million; net income increased 10.3% to $166.3 million and Non-GAAP diluted earnings per common share increased 12.5% to $1.89.
Our financial results for the twelve months ended December 31, 2014 included a non-cash impairment charge of $27.0 million, $17.0 million net of tax, or $0.19 per diluted common share, related to the write-down of goodwill and other long-lived assets in our Vetstreet business, included in our All Other segments category. Our results also included debt retirement costs of $1.7 million, $1.0 million net of tax, or $0.01 per common share related to the refinancing of our senior credit facility. Our results for the twelve months ended December 31, 2013 included charges of $3.8 million, $2.3 million net of tax, or $0.03 per diluted common share related to vacated properties that were consolidated into the then - newly constructed, VCA West Los Angeles Animal Hospital as well as a non-cash inventory credit adjustment of $2.8 million, $1.7 million net of tax, or $0.02 per diluted common share.
Bob Antin, Chairman and CEO, stated, "We had another terrific quarter. We experienced solid internal revenue growth of 4.4% and 5.1% in our core Animal Hospital and Laboratory business segments, respectively. Our same-store Animal Hospital gross profit margins increased 80 basis points and our Laboratory gross profit margins increased an impressive 170 basis points. The positive momentum in our business has continued from the third quarter to the end of the year and we are optimistic about our overall growth prospects in 2015.
"Animal Hospital revenue in the fourth quarter of 2014 increased 10.9%, to $380.7 million, driven by acquisitions made in the past twelve months and same-store revenue growth of 4.4%. Our same-store gross profit margin increased to 13.5% from 12.7% and our total gross margin increased to 13.2%, from 12.5% in the prior-year quarter. During the quarter, we acquired a record 24 independent animal hospitals which had historical combined annual revenue of $68.5 million, bringing our year to date total to $122.5 million.
"Laboratory internal revenue in the fourth quarter of 2014 increased 5.1% to $83.9 million, driven by an increase in the average revenue per requisition of 5.2%. Our Laboratory gross profit margin increased to 46.0% from 44.3% and our operating margin increased to 35.8% from 34.4%.
"During the fourth quarter, we purchased 2.6 million shares of our common stock for $112.8 million. Since the Board authorized our share repurchase program, we have acquired 7.4 million shares of our common stock for $278.5 million from April 2013 through December 31, 2014."
2015 Financial Guidance
We provide the following financial guidance for the full year 2015:
Non-GAAP Financial Measures
We believe investors' understanding of our total performance is enhanced by disclosing Non-GAAP financial measures including Non-GAAP net income, Non-GAAP gross profit, Non-GAAP operating income and Non-GAAP diluted earnings per common share. We define these adjusted measures as the reported amounts, adjusted to exclude certain significant items and amortization of intangibles acquired in acquisitions.
Management believes these adjusted measures are useful to management and investors in evaluating the Company's operational performance and their use provides an additional tool for evaluating the Company's operating results and trends. 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 related trends.
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."
We will discuss our fourth quarter 2014 financial results during a conference call today, February 11th, at 9:00 a.m. Eastern Time. A live broadcast of the call may be accessed by visiting our website at investor.vca.com. The call may also be accessed by dialing (877) 293-5492. Interested parties should call at least ten minutes prior to the start of the call to register. Replay of the webcast will be available for ninety days by visiting the company's website.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Among the forward-looking statements in this press release are 2015 Financial Guidance and other statements addressing our plans, expectations, future financial position and results of operation. These forward-looking statements are not historical facts and are inherently uncertain and out of our control. Any or all of our forward-looking statements in this press release may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Actual future results may vary materially. Among other factors that could cause our actual results to differ from this forward-looking information are: our ability to execute on our growth strategy and to manage acquired operations; changes in demand for our products and services; fluctuations in our revenue adversely affecting our gross profit, operating income and margins; and the effects of the other factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2013, reports on Form 10-Q and our other filings with the SEC.
About VCA Inc.
We own, operate and manage the largest networks of freestanding veterinary hospitals and veterinary-exclusive clinical laboratories in the country, additionally we are the largest provider of online communication, professional education and marketing solutions to the veterinary community. We also supply diagnostic imaging equipment to the veterinary industry.
Chief Financial Officer