OAKVILLE, ONTARIO -- (Marketwire) -- 08/11/08 -- Pethealth Inc. ("Pethealth" or "the Company") (TSX: PTZ) today announced its financial results for the quarter and six months ended June 30, 2008.
Financial Highlights
Quarter ended June 30, 2008
- Total revenue for the three months ended June 30, 2008 was a record $5.7 million, up 6% over the three months ended June 30, 2007 despite the 8.2% appreciation of the Canadian dollar to its US counterpart.
- Net income for the three months ended June 30, 2008 was $358,777 ($0.013 per share) compared to prior year net income of $581,086 ($0.017 per share)
- The 8.2% appreciation of the Canadian dollar had a significant impact on the Company's reported results reducing revenue by approximately $370,000 and net income by approximately $140,000 ($0.005 per share).
- During the quarter, the Company invested approximately $120,000 in revamping its ShelterCare insurance program. Non-cash capital asset amortization, associated with the Company's significant investment in its platforms, increased by 42% to $198,000.
- EBITDA for Q2 2008 was $556,982 compared to an EBITDA of $721,071 for the same period in the prior year.
- On July 28, 2008 the Company announced that it had completed its acquisition of Pet Protect Limited ("Pet Protect"), a pet insurance intermediary operating in the United Kingdom, from Domestic & General Group Limited ("D&G"). Pet Protect placed Pounds Sterling 13.4 million ($26.8 million) in gross written premiums during its fiscal 2007 year.
Six Months ended June 30, 2008
- Total revenue for the six months ended June 30, 2008 was a record $11.2 million, up 4% over the six months ended June 30, 2007 despite the 10.9% appreciation of the Canadian dollar to its US counterpart.
- Net income for the six months ended June 30, 2008 was $1,083,288 ($0.016 per share after giving effect to the $600,000 dividend payment made in the first quarter of 2008) compared to prior year net income of $1,184,958 ($0.020 per share after giving effect to the $600,000 dividend payment made in the first quarter of 2007).
- The 10.9% appreciation of the Canadian dollar had a significant impact on the Company's reported results reducing revenue by approximately $1,067,000 and net income by approximately $330,000 ($0.009 per share).
- Non Cash Capital asset amortization, associated with the Company's significant investment in its platforms, increased by 41% to $387,000.
- EBITDA for the six months ended June 30, 2008 was $1,469,811 compared to an EBITDA of $1,459,719 for the same period in the prior year.
- The 2008 loss ratio for the U.S. core pet insurance book of business was 43.1%. The Company participates in a portion of its programs' underwriting results in the United States.
- Administration costs were 11.1% as a percentage of premiums.
Results of Operations
Pethealth Inc. reports its financial results in two reportable segments, its insurance operations and its non-insurance operations. The insurance operations currently consist of the distribution and administration of the PetCare, ShelterCare, QuickCare, Max, CherryBlue and other co-branded, white labelled or private labelled pet insurance programs while non-insurance operations are made up of its 24PetWatch manufacturer-neutral pet registry and recovery service, the distribution of RFID microchip technology, the development and distribution of PetPoint, its animal shelter management software program and the operation of its on-line social networking site and on-line pet community, PawsConnect.com. The following table details the operational results from each segment:
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For the Three Months Ended
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June 30, 2008
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Insurance Non-Insurance Total
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Operating revenue $4,415,011 $1,247,123 $5,662,134
Interest and other income 25,903 - 25,903
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Total revenue $4,440,914 $1,247,123 $5,688,037
Employment 1,033,930 595,945 1,629,875
Marketing 1,339,463 220,561 1,560,024
General & administration 919,102 151,575 1,070,677
Cost of sales - 801,816 801,816
Other 143,973 122,895 266,868
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Total expenses $3,436,468 $1,892,792 $5,329,260
Operating income (loss) $1,004,446 $ (645,669) $ 358,777
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Add:
Capital asset amortization 75,310 122,895 198,205
Operating EBITDA $1,079,756 $ (522,774) $ 556,982
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For the Three Months Ended
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June 30, 2007
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One-Time
Insurance Non-Insurance Listing Costs Total
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Operating
revenue $4,302,493 $1,033,167 - $5,335,660
Interest and
other income 42,579 - - 42,579
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$4,345,072 $1,033,167 - $5,378,239
Employment 954,799 449,317 - 1,404,116
Marketing 1,163,833 59,264 - 1,223,097
General &
administration 866,582 169,716 125,611 1,161,909
Cost of sales - 758,842 - 758,842
Other 181,637 67,552 - 249,189
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Total expenses $3,166,851 $1,504,691 $ 125,611 $4,797,153
Operating
income (loss) $1,178,221 $ (471,524) $ (125,611) $ 581,086
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Add:
Capital asset
amortization 72,433 67,552 - 139,985
Operating EBITDA $1,250,654 $ (403,972) $ (125,611) $ 721,071
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For the Six Months Ended
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June 30, 2008
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Insurance Non-Insurance Total
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Operating revenue $8,704,171 $2,472,582 $11,176,753
Interest and other income 55,806 - 55,806
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Total revenue $8,759,977 $2,472,582 $11,232,559
Employment 2,101,579 1,079,000 3,180,579
Marketing 2,388,290 379,141 2,767,431
General & administration 1,659,423 341,494 2,000,917
Cost of sales - 1,680,656 1,680,656
Other 282,939 236,749 519,688
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Total expenses $6,432,231 $3,717,040 $10,149,271
Operating income (loss) $2,327,746 $(1,244,458) $1,083,288
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Add:
Capital asset amortization 149,774 236,749 386,523
Operating EBITDA $2,477,520 $(1,007,709) $1,469,811
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For the Six Months Ended
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June 30, 2007
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One-Time
Insurance Non-Insurance Listing Costs Total
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Operating
revenue $8,675,127 $2,033,649 - $10,708,776
Interest and
other income 70,857 - - 70,857
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Total revenue $8,745,984 $2,033,649 - $10,779,633
Employment 1,848,615 869,936 - 2,718,551
Marketing 2,571,255 125,437 - 2,696,692
General &
administration 1,759,997 336,681 125,611 2,222,289
Cost of sales - 1,496,456 - 1,496,456
Other 329,005 131,682 - 460,687
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Total expenses $6,508,872 $2,960,192 $ 125,611 $9,594,675
Operating
income (loss) $2,237,112 $ (926,543) $(125,611) $1,184,958
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Add:
Capital asset
amortization 143,079 131,682 - 274,761
Operating EBITDA $2,380,191 $ (794,861) $(125,611) $1,459,719
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"Our second quarter results continued to demonstrate the success of our business model and the successful execution of our strategy," said Mark Warren, President and Chief Executive Officer of Pethealth. "Notwithstanding the uphill battle against the Canadian dollar which dampened earnings by 28% for the quarter and 24% for the first six months, and our decision in Q2 to make significant investments in both our platforms and our ShelterCare insurance program, we have delivered solid earnings over the first half of the year. With the Canadian dollar's appreciation over the last year having now worked its way through our operations, the overall build-out of our business and our successful acquisition of Pet Protect which grows our insurance operations by over 50%, will mean robust revenue and earnings growth over the next several quarters."
During the quarter and six month periods ended June 30, 2008, the Company generated approximately 75% of its revenue in the United States and incurred approximately 80% of its administrative costs in Canada. As the Company reports in Canadian dollars, the 8.2% and 10.9% respective appreciations of the Canadian dollar against its U.S. counterpart had a significant impact on the Company's reported results.
