OAKVILLE, ONTARIO -- (Marketwire) -- 08/12/09 -- Pethealth Inc. (TSX: PTZ) ("Pethealth" or "the Company") today announced its financial results for the three and six months ended June 30, 2009.
Financial Highlights
Quarter ended June 30, 2009
- Total revenue for the quarter ended June 30, 2009 was $8.66 million, up 52% over Q2 2008.
- Net income for Q2 2009 was a record $1,675,000 ($0.059 per share) inclusive of a non-cash accounting gain of $541,878 related to the translation of $US denominated long-term debt, compared to net income of $359,000 ($0.013 per share) for the same period in the prior year.
- EBITDA for Q2 2009 was $2.1 million, inclusive of a non-cash $542,000 accounting gain related to the translation of $US denominated long-term debt, compared to an EBITDA of $557,000 for the same period in the prior year.
- Operating cash flow (EBITDA plus stock option expenses and adjusted for non-cash foreign currency accounting translation gains and losses) was $1.6 million for the quarter, a 164% increase from the same period in the prior year.
- The Company has now become the second most popular destination on the internet for adoptable pet search in terms of unique visitors where over 600,000 were recorded for the month of July 2009 alone.
On May 6, 2009, the Company announced that it had launched Petango.com, its new and technologically advanced adoptable search site for pet owners looking to adopt a dog or cat. Today, over 1,200 animal welfare organizations representing over 725,000 adoptions annually can have their adoptable animals made available through Petango.
Six months ended June 30, 2009
- Total revenue for the six months ended June 30, 2009 was $17.4 million, up 55% from the six months ended June 30, 2008.
- EBITDA for the six months ended June 30, 2009 was $3.5 million inclusive of a non-cash accounting gain of $332,689 related to the translation of $US denominated long-term debt, compared to an EBITDA of $1.5 million for the same period in the prior year.
- Operating cash flow was $3.2 million for the six months ended June 30, 2009, a 102% increase over the same period in the prior year.
- Net income for the six months ended June 30, 2009 was $2,576,286 ($0.069 per share after giving effect to the $600,000 dividend payment made in the first quarter of 2009) inclusive of a non-cash accounting gain of $332,689 resulting from the translation of $US denominated long-term debt related to the Company's Pet Protect acquisition, compared to the prior year's net income of $1,083,288 ($0.016 per share after giving effect to the $600,000 dividend payment made in the first quarter of 2008).
- The 17% depreciation of the Canadian dollar over the prior year had a significant impact on the Company's reported six month results increasing revenue by approximately $1,871,799 and net income by approximately $754,360 ($0.065 per share).
- Year to date loss ratio for the aggregate U.S. / U.K. core pet insurance book of business underwritten by QBE Insurance Group subsidiaries ("QBE") was 44.3%. The Company participates in a portion of its programs' U.S. / U.K. core policy underwriting results for those policies underwritten by QBE.
- Administration costs were 10.5% as a percentage of earned 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, 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, the development and distribution of PetPoint, its animal shelter management software program and the operation of Petango, it's on-line adoptable pet search site. 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, 2009
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Non-
Insurance Insurance Total
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Operating revenue $6,794,130 $1,858,247 $8,652,377
Interest and other income 9,735 - 9,735
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Total revenue $6,803,865 $1,858,247 $8,662,112
Employment 1,595,350 760,115 2,355,465
Marketing 1,532,554 168,607 1,701,161
General & administration 1,456,552 281,229 1,737,781
Cost of sales - 1,196,553 1,196,553
Interest Expense on L/T Debt 69,997 - 69,997
Foreign exchange (486,078) - (486,078)
Other 252,180 160,339 412,519
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Total expenses $4,420,555 $2,566,843 $6,987,398
Operating income (loss) $2,383,310 $(708,596) $ 1,674,714
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Add:
Capital asset amortization 210,180 160,339 370,519
Interest Expense on L/T Debt 69,997 - 69,997
Operating EBITDA $2,663,487 $(548,257) $2,115,230
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Add:
Stock option expense 42,000 - 42,000
Non operating f/x(i) (541,878) - (541,878)
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Operating cash flow 2,163,609 (548,257) 1,615,352
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For the Three Months Ended
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June 30, 2008
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Non-
Insurance 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 1,439,463 120,561 1,560,024
General & administration 868,657 202,020 1,070,677
Cost of sales - 801,816 801,816
Interest Expense on L/T Debt - - -
Foreign exchange 12,691 - 12,691
Other 131,282 122,895 254,177
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Total expenses $3,486,023 $1,843,237 $5,329,260
Operating income (loss) $954,891 $(596,114) $358,377
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Add:
Capital asset amortization 75,310 122,895 198,205
Interest Expense on L/T Debt - - -
Operating EBITDA $1,030,201 $(473,219) $556,982
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Add:
Stock option expense 55,972 - 55,972
Non operating f/x(i) - - -
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Operating cash flow 1,086,173 (473,219) 612,954
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For the Six Months Ended
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June 30, 2009
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Non-
Insurance Insurance Total
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Operating revenue $13,659,748 $3,709,007 $17,368,755
Interest and other income 24,794 - 24,794
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Total revenue $13,684,542 $3,709,007 $17,393,549
Employment 3,110,828 1,466,388 4,577,216
Marketing 3,385,116 315,947 3,701,063
General & administration 2,835,555 566,069 3,401,624
Cost of sales - 2,408,109 2,408,109
Interest Expense on L/T Debt 152,446 - 152,446
Foreign exchange (232,668) - (232,668)
Other 500,255 309,218 809,473
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Total expenses $9,751,532 $5,065,731 $14,817,263
Operating income (loss) $3,933,010 $(1,356,724) $ 2,576,286
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Add:
Capital asset amortization 416,129 309,218 725,347
Interest Expense on L/T Debt 152,446 - 152,446
Operating EBITDA $4,501,585 $(1,047,506) $3,454,079
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Add:
Stock option expense 84,126 - 84,126
Non operating f/x(i) (332,689) - (332,689)
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Operating cash flow 4,253,022 (1,047,506) 3,205,516
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For the Six Months Ended
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June 30, 2008
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Non-
Insurance 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 2,488,290 279,141 2,767,431
General & administration 1,608,978 391,939 2,000,917
Cost of sales - 1,680,656 1,680,656
Interest Expense on L/T Debt - - -
Foreign exchange 12,192 - 12,192
Other 270,747 236,749 507,946
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Total expenses $6,481,786 $3,667,485 $10,149,271
Operating income (loss) $2,278,191 $(1,194,903) $1,083,288
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Add:
Capital asset amortization 149,774 236,749 386,523
Interest Expense on L/T Debt - - -
Operating EBITDA $2,427,965 $(958,154) $1,469,811
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Add:
Stock option expense 120,973 - 120,973
Non operating f/x(i) - - -
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Operating cash flow 2,548,938 (958,154) 1,590,784
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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.
"Q2 represented another outstanding performance by the Pethealth team," said Mark Warren, President and Chief Executive Officer of Pethealth. "While I think the numbers largely speak for themselves, two parts of the business deserve special mention. Our acquisition of Pet Protect in the U.K. continues to meet or exceed expectations and is representative of the strength of our current operations.
