OAKVILLE, ONTARIO--(Marketwire - March 11, 2009) - Pethealth Inc. (TSX:PTZ) ("Pethealth" or "the Company") today announced its financial results for the year and three months ended December 31, 2008.
Financial Highlights
Year ended December 31, 2008
- Total revenue for the year ended December 31, 2008 was a record $26.3 million, up 22% over 2007.
- EBITDA for 2008 was $1.9 million, inclusive of a non-cash $1.4 million accounting charge related to the translation of $US denominated long-term debt, compared to an EBITDA of $2.8 million 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 $3.5 million for the year, a 15% increase.
- Net income for 2008 was $0.7 million ($0.003 per share after giving effect to the $0.6 million dividend paid during the first quarter of 2008 to holders of the Company's convertible preferred shares), inclusive of a non-cash accounting charge of $1.4 million related to the translation of $US denominated long-term debt as well as $0.2 million related to the amortization of intangible assets related to the Company's Pet Protect acquisition, compared to prior year net income of $2.2 million ($0.055 per share after giving effect to the $0.6 million dividend paid during the first quarter of 2007 to holders of the Company's convertible preferred shares).
- Loss ratio for 2008 for the U.S. / U.K. core pet insurance book of business underwritten by QBE Insurance Group subsidiaries ("QBE") was 41.5%. The Company participates in a portion of its programs' aggregate core policy underwriting results in the United States and the United Kingdom for policies underwritten by QBE.
- Administration costs were 11.2% as a percentage of earned premiums.
Three Months ended December 31, 2008
- Total revenue for the three months ended December 31, 2008 was a record $8.2 million, up 54% over the three months December 31, 2007 and up 19% sequentially from Q3 2008.
- EBITDA for the three months ended December 31, 2008 was ($40,075) inclusive of a non-cash $1.1 million accounting charge related to the translation of $US denominated long-term debt, compared to an EBITDA of $0.7 million for the same period in the prior year.
- Operating cash flow was $1.1 million for the three months ended December 31, 2008, a 41% increase from the same period in the prior year.
- Net loss for the three months ended December 31, 2008 was ($0.5) million (($0.017) 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 $1,118,741 related to the translation of $US denominated long-term debt as well as $127,310 related to the amortization of intangible assets related to the Company's Pet Protect acquisition, compared to prior year net income of $0.6 million ($0.020 per share after giving effect to the $600,000 dividend payment made in the first quarter of 2007).
- The 25% decline of the Canadian dollar, over Q4 2007, had a significant impact on the Company's reported three month operating results increasing operating revenues by $1.038-million and operating earnings by $373,000. Q4 2008 was dampened however by a non-cash currency translation accounting charge of $1.1-million associated with carrying U.S. denominated debt.
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, petPals, 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 Year Ended
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December 31, 2008
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Insurance Non-Insurance Total
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Operating revenue $20,640,136 $5,580,024 $26,220,160
Interest and other income 121,907 - 121,907
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Total revenue $20,762,043 $5,580,024 $26,342,067
Employment 5,273,055 2,335,670 7,608,725
Marketing 6,220,253 511,568 6,731,821
General & administration 4,030,512 896,417 4,926,929
Cost of sales - 3,655,547 3,655,547
Interest Expense on L/T Debt 145,136 - 145,136
Foreign exchange 1,332,309 - 1,332,309
Other 721,596 510,930 1,232,526
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Total expenses $17,722,861 $7,910,132 $25,632,993
Operating income (loss) $3,039,182 $(2,330,108) $709,074
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Add:
Capital asset amortization 504,229 510,930 1,015,159
Interest Expense on L/T Debt 145,136 - 145,136
Operating EBITDA $3,688,547 $(1,819,178) $1,869,369
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Add:
Stock option expense 217,367 - 217,367
Non operating f/x(i) 1,386,353 - 1,386,353
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Operating cash flow 5,292,267 (1,819,178) 3,473,089
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For the Year Ended
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December 31, 2007
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One-Time
Insurance Non-Insurance Listing Costs Total
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Operating revenue $17,213,361 $4,202,044 - $21,415,405
Interest and other
income 134,329 - - 134,329
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Total revenue $17,347,690 $4,202,044 - $21,549,734
Employment 3,741,492 1,758,017 - 5,499,509
Marketing 5,387,260 323,185 - 5,710,445
General & administration 3,397,616 593,187 125,611 4,116,414
Cost of sales - 3,033,369 - 3,033,639
Interest Expense on
L/T Debt - - - -
Foreign exchange 114,337 - - 114,337
Other 598,587 302,178 - 900,765
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Total expenses $13,239,292 $6,010,206 $125,611 $19,375,109
Operating income
(loss) $4,108,398 $(1,808,162) $ (125,611) $2,174,625
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Add:
Capital asset
amortization 296,760 302,178 - 598,938
Interest Expense on
L/T Debt - - - -
Operating EBITDA $4,405,158 $(1,505,984) $(125,611) $2,773,563
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Add:
Stock option expense 237,650 - - 237,650
Non operating f/x(i) - - - -
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Operating cash flow 4,642,808 (1,505,984) (125,611) 3,011,213
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For the Three Months Ended
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December 31, 2008
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Insurance Non-Insurance Total
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Operating revenue $6,489,893 $1,682,341 $8,172,234
Interest and other income 40,280 - 40,280
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Total revenue $6,530,173 $1,682,341 $8,212,514
Employment 1,768,336 702,844 2,471,180
Marketing 1,956,559 130,436 2,086,995
General & administration 1,322,986 252,846 1,575,832
Cost of sales - 1,039,746 1,039,746
Interest Expense on L/T Debt 88,825 - 88,825
Foreign exchange 1,036,377 - 1,036,377
Other 251,680 141,695 393,375
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Total expenses $6,424,763 $2,267,567 $8,692,330
Operating income (loss) $105,410 $(585,226) $(479,816)
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Add:
Capital asset amortization 209,222 141,695 350,917
Interest Expense on L/T Debt 88,825 - 88,825
Operating EBITDA $403,457 $(443,531) $(40,074)
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Add:
Stock option expense 42,458 - 42,458
Non operating f/x(i) 1,118,741 - 1,118,741
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Operating cash flow 1,564,656 (443,531) 1,121,125
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For the Three Months Ended
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December 31, 2007
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One-Time
Insurance Non-Insurance Listing Costs Total
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Operating revenue $4,281,497 $1,015,914 - $5,297,411
Interest and other
income 33,204 - - 33,204
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Total revenue $4,314,701 $1,015,914 - $5,330,615
Employment 950,560 444,637 - 1,395,197
Marketing 1,417,119 143,427 - 1,560,546
General &
administration 765,796 78,624 - 844,420
Cost of sales - 700,698 - 700,698
Interest Expense on
L/T Debt - - - -
Foreign exchange 35,132 - - 35,132
Other 138,825 97,861 - 236,686
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Total expenses $3,307,432 $1,465,247 - $4,772,679
Operating income (loss) $1,007,269 $(449,333) - $557,936
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Add:
Capital asset
amortization 76,843 97,861 - 174,704
Interest Expense on
L/T Debt - - - -
Operating EBITDA $1,084,112 $(351,472) - $732,640
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Add:
Stock option expense 61,982 - - 61,982
Non operating f/x(i) - - - -
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Operating cash flow 1,146,094 (351,472) - 794,622
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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.
"We are extremely pleased with our overall results for 2008 and in particular our Q4 results," said Mark Warren, President and Chief Executive Officer of Pethealth. "Sequential growth has accelerated over the last six months mainly on the back of the Pet Protect acquisition in the U.K. We are benefiting in the United States from margin expansion and the creation of greater economies in our shelter platform. While we do not claim our business to be recession-proof, we certainly believe that we are operating in a consumer space that is recession-resistant."
Foreign Exchange:
The Company operates in the Canadian, the United States and the United Kingdom markets and is exposed to unpredictable foreign exchange markets.
The United States subsidiaries generate 100% of their revenues in U.S.
