OAKVILLE, ONTARIO--(Marketwire - Nov. 11, 2008) - Pethealth Inc. ("Pethealth" or "the Company") (TSX:PTZ) today announced its financial results for the quarter and nine months ended September 30, 2008.
Financial Highlights
Quarter ended September 30, 2008
- Total revenue for the three months ended September 30, 2008 was a record $6.9 million, up 27% over the three months ended September 30, 2007.
- EBITDA for Q3 2008 was $439,632 inclusive of a non-cash $267,612 accounting charge related to the translation of $US denominated long-term debt, compared to an EBITDA of $581,204 for the same period in the prior year.
- Operating cash flow (EBITDA plus stock option expenses and non-cash foreign currency accounting translation gains and losses) was $761,180 for the three months ended September 30, 2008, a 20% increase.
- Net income for the three months ended September 30, 2008 was $105,602 ($0.004 per share), inclusive of a non-cash accounting charge of $267,612 related to the translation of $US denominated long-term debt as well as $66,591 related to the amortization of intangible assets related to the Company's Pet Protect acquisition, compared to prior year net income of $431,731 ($0.015 per share).
- 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"). The Company began to report the results of Pet Protect on a consolidated basis from July 28, 2008.
Nine Months ended September 30, 2008
- Total revenue for the nine months ended September 30, 2008 was a record $18.1 million, up 12% over the nine months ended September 30, 2007.
- EBITDA for the nine months ended September 30, 2008 was $1,909,443 inclusive of a non-cash $267,612 accounting charge related to the translation of $US denominated long-term debt, compared to an EBITDA of $2,040,923 for the same period in the prior.
- Operating cash flow was $2,351,964 for the nine months ended September 30, 2008, a 6% increase.
- Net income for the nine months ended September 30, 2008 was $1,188,890 ($0.020 per share after giving effect to the $600,000 dividend payment made in the first quarter of 2008) inclusive of a non-cash accounting charge of $267,612 related to the translation of $US denominated long-term debt as well as $66,591 related to the amortization of intangible assets related to the Company's Pet Protect acquisition, compared to prior year net income of $1,616,689 ($0.035 per share after giving effect to the $600,000 dividend payment made in the first quarter of 2007).
- The 8.5% appreciation of the Canadian dollar had a significant impact on the Company's reported nine month results reducing revenue by approximately $1,072,000 and net income by approximately $415,000 ($0.015 per share).
- Loss ratio for the nine months ended September 30, 2008 for the U.S. core pet insurance book of business was 44.7% . The Company participates in a portion of its programs' underwriting results in the United States.
- Administration costs were 11.6% 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, Pet Protect, pet Pals, ShelterCare, QuickCare, 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 and the development and distribution of PetPoint, its animal shelter management software program. The following table details the operational results from each segment:
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For the Three Months Ended
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('000) September 30, 2008
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Insurance Non-Insurance Total
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Operating revenue $5,446 $1,425 $6,871
Interest and other income 26 - 26
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Total revenue $5,472 $1,425 $6,897
Employment 1,403 554 1,957
Marketing 1,775 102 1,877
General & administration 1,099 252 1,351
Cost of sales - 935 935
Interest Expense on L/T Debt 56 - 56
Foreign exchange 284 - 284
Other 200 132 332
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Total expenses $4,817 $1,975 $6,792
Operating income (loss) $ 655 $ (550) $ 105
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Add:
Capital asset amortization 146 133 279
Interest Expense on L/T Debt 56 - 56
Operating EBITDA $ 857 $ (417) $ 440
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Add:
Stock option expense 54 - 54
Non operating f/x(i) 268 - 268
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Operating cash flow $1,179 $ (417) $ 762
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For the Three Months Ended
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('000) September 30, 2007
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One-Time
Insurance Non-Insurance Listing Costs Total
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Operating revenue $4,257 $1,152 - $5,409
Interest and other income 30 - - 30
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Total revenue $4,287 $1,152 - $5,439
Employment 942 444 - 1,386
Marketing 1,399 54 - 1,453
General & administration 872 178 - 1,050
Cost of sales - 836 - 836
Interest Expense on L/T Debt - - - -
Foreign exchange 79 - - 79
Other 131 73 - 204
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Total expenses $3,423 $1,585 - $5,008
Operating income (loss) $ 864 $ (433) - $ 431
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Add:
Capital asset amortization 77 73 - 150
Interest Expense on L/T Debt - - - -
Operating EBITDA 941 $ (360) - $ 581
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Add:
Stock option expense 54 - - 54
Non operating f/x(i) - - - -
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Operating cash flow $ 995 $ (360) - $ 635
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For the Nine Months Ended
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('000) September 30, 2008
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Insurance Non-Insurance Total
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Operating revenue $14,150 $ 3,898 $18,048
Interest and other income 82 - 82
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Total revenue $14,232 $ 3,898 $18,130
Employment 3,505 1,633 5,138
Marketing 4,264 381 4,645
General & administration 2,707 644 3,351
Cost of sales - 2,616 2,616
Interest Expense on L/T Debt 56 - 56
Foreign exchange 296 - 296
Other 470 369 839
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Total expenses $11,298 $ 5,643 $16,941
Operating income (loss) $ 2,934 $(1,745) $ 1,189
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Add:
Capital asset amortization 295 369 664
Interest Expense on L/T Debt 56 - 56
Operating EBITDA $ 3,285 $(1,376) $ 1,909
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Add:
Stock option expense 175 - 175
Non operating f/x(i) 268 - 268
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Operating cash flow $ 3,728 $(1,376) $ 2,352
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For the Nine Months Ended
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('000) September 30, 2007
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One-Time
Insurance Non-Insurance Listing Costs Total
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Operating revenue $12,932 $ 3,186 - $16,118
Interest and other income 101 - - 101
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Total revenue $13,033 $ 3,186 - $16,219
Employment 2,791 1,313 - 4,104
Marketing 3,970 180 - 4,150
General & administration 2,632 515 125 3,272
Cost of sales - 2,333 - 2,333
Interest Expense on L/T Debt - - - -
Foreign exchange 143 - - 143
Other 396 204 - 600
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Total expenses $ 9,932 $ 4,545 $ 125 $14,602
Operating income (loss) $ 3,101 $(1,359) $ (125) $ 1,617
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Add:
Capital asset amortization 220 204 - 424
Interest Expense on L/T Debt - - - -
Operating EBITDA $ 3,321 $ (1,155) $ (125) $ 2,041
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Add:
Stock option expense 176 - - 176
Non operating f/x(i) - - - -
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Operating cash flow $ 3,497 $(1,155) $ (125) $ 2,217
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(i) Non operating f/x is the accounting loss (gain) associated with the
translation of the Company's long term debt denominated in United
States dollars.
"Our third quarter results continued to demonstrate the successful expansion of our business and the execution of our strategy," said Mark Warren, President and Chief Executive Officer of Pethealth. "The successful acquisition and transition of the Pet Protect business during the quarter positions the Company for significant revenue and earnings growth through 2009 over and above what we expect to achieve through our current North American businesses. Net income reported in the quarter disguises the operational and cash flow benefits of remaining unhedged as the Canadian dollar falls.
