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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Petco Health and Wellness Company Inc | NASDAQ:WOOF | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.01 | -0.63% | 1.59 | 1.59 | 1.61 | 508 | 13:39:18 |
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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95-4097995
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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Large accelerated filer [X]
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Accelerated filer [ ]
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Non-accelerated filer [ ]
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Smaller reporting company [ ]
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(Do not check if a smaller reporting company)
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Page
Number
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PART I.
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FINANCIAL INFORMATION
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ITEM 1.
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FINANCIAL STATEMENTS
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March 31, 2016
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December 31, 2015
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||||
Assets
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||||
Current assets:
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|
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||||
Cash and cash equivalents
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$
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74,480
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$
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98,888
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Trade accounts receivable, less allowance for uncollectible accounts of $21,236 and $21,775 at March 31, 2016 and December 31, 2015, respectively
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79,540
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76,634
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Inventory
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54,961
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51,523
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Prepaid expenses and other
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33,090
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30,521
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Prepaid income taxes
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7,798
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24,598
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Total current assets
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249,869
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282,164
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Property and equipment, net
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540,017
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507,753
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Goodwill
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1,656,389
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1,517,650
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Other intangible assets, net
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114,469
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97,377
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Notes receivable
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5,472
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2,194
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Other
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97,459
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93,994
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Total assets
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$
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2,663,675
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$
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2,501,132
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Liabilities and Equity
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Current liabilities:
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||||
Current portion of long-term debt
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$
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33,947
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$
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33,623
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Accounts payable
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46,573
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52,337
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Accrued payroll and related liabilities
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88,510
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75,519
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Other accrued liabilities
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77,418
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70,828
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Total current liabilities
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246,448
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232,307
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Long-term debt, net
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918,622
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832,718
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Deferred income taxes
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131,150
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131,478
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Other liabilities
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39,167
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36,084
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Total liabilities
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1,335,387
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1,232,587
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Commitments and contingencies
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Redeemable noncontrolling interests
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11,787
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11,511
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Preferred stock, par value $0.001, 11,000 shares authorized, none outstanding
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—
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—
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VCA Inc. stockholders’ equity:
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Common stock, par value $0.001, 175,000 shares authorized, 80,801 and 80,764 shares outstanding as of March 31, 2016 and December 31, 2015, respectively
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81
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81
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Additional paid-in capital
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22,681
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19,708
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Retained earnings
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1,321,434
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1,275,207
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Accumulated other comprehensive loss
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(37,789
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)
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(50,034
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)
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Total VCA Inc. stockholders’ equity
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1,306,407
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1,244,962
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Noncontrolling interests
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10,094
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12,072
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Total equity
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1,316,501
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1,257,034
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Total liabilities and equity
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$
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2,663,675
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$
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2,501,132
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Three Months Ended
March 31, |
||||||
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2016
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2015
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Revenue
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$
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563,439
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$
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499,453
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Direct costs
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426,659
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385,591
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Gross profit
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136,780
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113,862
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Selling, general and administrative expense
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50,128
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44,398
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Net loss on sale or disposal of assets
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563
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335
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Operating income
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86,089
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69,129
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Interest expense, net
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7,095
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4,837
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Other (income) expense
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(264
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)
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66
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Income before provision for income taxes
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79,258
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64,226
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Provision for income taxes
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31,536
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24,673
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Net income
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47,722
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39,553
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Net income attributable to noncontrolling interests
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1,495
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1,252
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Net income attributable to VCA Inc.
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$
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46,227
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$
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38,301
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Basic earnings per share
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$
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0.57
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$
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0.47
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Diluted earnings per share
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$
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0.57
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$
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0.46
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Weighted-average shares outstanding for basic earnings per share
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80,776
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82,347
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Weighted-average shares outstanding for diluted earnings per share
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81,523
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83,373
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Three Months Ended
March 31, |
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2016
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2015
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Net income
(1)
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$
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47,722
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$
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39,553
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Other comprehensive income:
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Foreign currency translation adjustments
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12,598
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(15,680
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)
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Other comprehensive income (loss)
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12,598
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(15,680
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)
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Total comprehensive income
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60,320
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23,873
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Comprehensive income attributable to noncontrolling interests
(1)
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1,848
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780
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Comprehensive income attributable to VCA Inc.
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$
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58,472
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$
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23,093
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(1)
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Includes approximately
$1.0 million
and
$0.8 million
of net income related to redeemable and mandatorily redeemable noncontrolling interests for the
three
months ended
March 31, 2016
and
2015
, respectively.
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Common Stock
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Additional
Paid-In
Capital
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Retained
Earnings
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Accumulated
Other
Comprehensive
Income
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Noncontrolling
Interests
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Total
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|||||||||||||||
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Shares
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Amount
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||||||||||||||||||
Balances, December 31, 2014
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82,937
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$
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83
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$
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155,802
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$
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1,064,158
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$
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(19,397
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)
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$
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10,975
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$
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1,211,621
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Net income (excludes $417 and $359 related to redeemable and mandatorily redeemable noncontrolling interests, respectively)
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—
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—
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—
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38,301
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—
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476
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|
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38,777
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||||||
Other comprehensive loss (excludes $195 related to mandatorily redeemable noncontrolling interests)
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—
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—
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—
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—
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|
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(15,208
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)
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(277
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)
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(15,485
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)
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||||||
Formation of noncontrolling interests
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—
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—
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—
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—
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—
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(14
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)
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(14
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)
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||||||
Distribution to noncontrolling interests
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—
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—
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—
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—
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—
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(598
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)
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(598
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)
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||||||
Purchase of noncontrolling interests
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—
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—
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(217
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)
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—
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—
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(473
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)
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(690
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)
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||||||
Share-based compensation
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—
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—
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4,132
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—
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—
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—
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4,132
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||||||
Issuance of common stock under stock incentive plans
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76
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—
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404
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—
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—
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—
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|
404
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||||||
Stock repurchases
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(878
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)
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(1
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)
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(44,844
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)
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|
—
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|
—
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|
|
—
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|
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(44,845
|
)
|
||||||
Excess tax benefit from stock based compensation
|
—
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|
—
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|
791
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—
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—
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—
|
|
|
791
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|
||||||
Balances, March 31, 2015
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82,135
|
|
|
$
|
82
|
|
|
$
|
116,068
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|
|
$
|
1,102,459
|
|
|
$
|
(34,605
|
)
|
|
$
|
10,089
|
|
|
$
|
1,194,093
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|||||||||||||
Balances, December 31, 2015
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80,764
|
|
|
$
|
81
|
|
|
$
|
19,708
|
|
|
$
|
1,275,207
|
|
|
$
|
(50,034
|
)
|
|
$
|
12,072
|
|
|
$
|
1,257,034
|
|
Net income (excludes $641 and $365 related to redeemable and mandatorily redeemable noncontrolling interests, respectively)
|
—
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|
|
$
|
—
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|
|
$
|
—
|
|
|
$
|
46,227
|
|
|
$
|
—
|
|
|
$
|
489
|
|
|
$
|
46,716
|
|
Other comprehensive income (excludes $167 related to mandatorily redeemable noncontrolling interests)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,245
|
|
|
186
|
|
|
12,431
|
|
||||||
Distribution to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(637
|
)
|
|
(637
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)
|
||||||
Purchase of noncontrolling interests
|
—
|
|
|
—
|
|
|
(1,821
|
)
|
|
—
|
|
|
—
|
|
|
(1,909
|
)
|
|
(3,730
|
)
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
4,906
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|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,906
|
|
||||||
Issuance of common stock under stock incentive plans
|
55
|
|
|
—
|
|
|
286
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|
|
—
|
|
|
—
|
|
|
—
|
|
|
286
|
|
||||||
Stock repurchases
|
(18
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)
|
|
—
|
|
|
(843
|
)
|
|
—
|
|
|
—
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|
|
—
|
|
|
(843
|
)
|
||||||
Excess tax benefit from stock based compensation
|
—
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|
|
—
|
|
|
445
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|
|
—
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|
|
—
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|
|
—
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|
|
445
|
|
||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(107
|
)
|
|
(107
|
)
|
||||||
Balances, March 31, 2016
|
80,801
|
|
|
$
|
81
|
|
|
$
|
22,681
|
|
|
$
|
1,321,434
|
|
|
$
|
(37,789
|
)
|
|
$
|
10,094
|
|
|
$
|
1,316,501
|
|
VCA Inc. and Subsidiaries
Condensed, Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
|
|||||||
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
47,722
|
|
|
$
|
39,553
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
21,289
|
|
|
19,797
|
|
||
Amortization of debt issue costs
|
433
|
|
|
434
|
|
||
Provision for uncollectible accounts
|
851
|
|
|
1,183
|
|
||
Net loss on sale or disposal of assets
|
563
|
|
|
335
|
|
||
Share-based compensation
|
4,906
|
|
|
4,132
|
|
||
Excess tax benefits from share-based compensation
|
(445
|
)
|
|
(791
|
)
|
||
Other
|
4,489
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|
(989
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)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Trade accounts receivable
|
(3,339
|
)
|
|
(14,570
|
)
|
||
Inventory, prepaid expenses and other assets
|
(7,569
|
)
|
|
2,862
|
|
||
Accounts payable and other accrued liabilities
|
(4,801
|
)
|
|
(6,954
|
)
|
||
Accrued payroll and related liabilities
|
12,955
|
|
|
14,052
|
|
||
Income taxes
|
16,855
|
|
|
21,581
|
|
||
Net cash provided by operating activities
|
93,909
|
|
|
80,625
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Business acquisitions, net of cash acquired
|
(160,385
|
)
|
|
(33,652
|
)
|
||
Property and equipment additions
|
(25,806
|
)
|
|
(16,526
|
)
|
||
Proceeds from sale or disposal of assets
|
12
|
|
|
92
|
|
||
Other
|
(7,346
|
)
|
|
(576
|
)
|
||
Net cash used in investing activities
|
(193,525
|
)
|
|
(50,662
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Repayment of long-term obligations
|
(9,678
|
)
|
|
(5,165
|
)
|
||
Proceeds from revolving credit facility
|
90,000
|
|
|
—
|
|
||
Distributions to noncontrolling interest partners
|
(1,238
|
)
|
|
(1,325
|
)
|
||
Purchase of noncontrolling interests
|
(3,730
|
)
|
|
(1,483
|
)
|
||
Proceeds from issuance of common stock under stock incentive plans
|
286
|
|
|
404
|
|
||
Excess tax benefits from share-based compensation
|
445
|
|
|
791
|
|
||
Stock repurchases
|
(843
|
)
|
|
(44,845
|
)
|
||
Other
|
(333
|
)
|
|
(80
|
)
|
||
Net cash provided by (used in) financing activities
|
74,909
|
|
|
(51,703
|
)
|
||
Effect of currency exchange rate changes on cash and cash equivalents
|
299
|
|
|
(365
|
)
|
||
Decrease in cash and cash equivalents
|
(24,408
|
)
|
|
(22,105
|
)
|
||
Cash and cash equivalents at beginning of period
|
98,888
|
|
|
81,383
|
|
||
Cash and cash equivalents at end of period
|
$
|
74,480
|
|
|
$
|
59,278
|
|
|
|
|
|
||||
|
|
|
|
||||
|
|
|
|
||||
|
|
|
|
||||
|
|
|
|
VCA Inc. and Subsidiaries
Condensed, Consolidated Statements of Cash Flows (Continued)
(Unaudited)
(In thousands)
|
|||||||
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Interest paid
|
$
|
5,173
|
|
|
$
|
4,482
|
|
Income taxes paid
|
$
|
14,213
|
|
|
$
|
3,077
|
|
1.
|
Nature of Operations
|
2.
|
Basis of Presentation
|
3.
|
Goodwill and Other Long-Lived Assets
|
|
Animal
Hospital
|
|
Laboratory
|
|
All Other
|
|
Total
|
||||||||
Balance as of December 31, 2015
|
|
|
|
|
|
|
|
||||||||
Goodwill
|
$
|
1,402,106
|
|
|
$
|
101,269
|
|
|
$
|
144,332
|
|
|
$
|
1,647,707
|
|
Accumulated impairment losses
|
—
|
|
|
—
|
|
|
(130,057
|
)
|
|
(130,057
|
)
|
||||
Subtotal
|
1,402,106
|
|
|
101,269
|
|
|
14,275
|
|
|
1,517,650
|
|
||||
Goodwill acquired
|
129,246
|
|
|
—
|
|
|
120
|
|
|
129,366
|
|
||||
Foreign translation adjustment
|
9,013
|
|
|
31
|
|
|
—
|
|
|
9,044
|
|
||||
Other
(1)
|
329
|
|
|
—
|
|
|
—
|
|
|
329
|
|
||||
Balance as of March 31, 2016
|
|
|
|
|
|
|
|
||||||||
Goodwill
|
1,540,694
|
|
|
101,300
|
|
|
144,452
|
|
|
1,786,446
|
|
||||
Accumulated impairment losses
|
—
|
|
|
—
|
|
|
(130,057
|
)
|
|
(130,057
|
)
|
||||
Subtotal
|
$
|
1,540,694
|
|
|
$
|
101,300
|
|
|
$
|
14,395
|
|
|
$
|
1,656,389
|
|
(1)
|
"Other" consists primarily of measurement period adjustments.
|
|
As of March 31, 2016
|
|
As of December 31, 2015
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||||||||
Non-contractual customer relationships
|
$
|
132,741
|
|
|
$
|
(54,491
|
)
|
|
$
|
78,250
|
|
|
$
|
116,082
|
|
|
$
|
(48,821
|
)
|
|
$
|
67,261
|
|
Covenants not-to-compete
|
16,311
|
|
|
(5,364
|
)
|
|
10,947
|
|
|
12,435
|
|
|
(4,779
|
)
|
|
7,656
|
|
||||||
Favorable lease assets
|
9,461
|
|
|
(5,543
|
)
|
|
3,918
|
|
|
9,441
|
|
|
(5,440
|
)
|
|
4,001
|
|
||||||
Technology
|
1,377
|
|
|
(643
|
)
|
|
734
|
|
|
1,377
|
|
|
(589
|
)
|
|
788
|
|
||||||
Trademarks
|
11,242
|
|
|
(4,535
|
)
|
|
6,707
|
|
|
10,551
|
|
|
(4,086
|
)
|
|
6,465
|
|
||||||
Franchise rights
|
11,730
|
|
|
(1,857
|
)
|
|
9,873
|
|
|
11,730
|
|
|
(1,564
|
)
|
|
10,166
|
|
||||||
Total
|
$
|
182,862
|
|
|
$
|
(72,433
|
)
|
|
$
|
110,429
|
|
|
$
|
161,616
|
|
|
$
|
(65,279
|
)
|
|
$
|
96,337
|
|
3.
|
Goodwill and Other Long-Lived Assets, continued
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
Aggregate amortization expense
|
$
|
6,228
|
|
|
$
|
5,526
|
|
4.
|
Acquisitions
|
|
Three Months Ended
March 31, |
||||
|
2016
|
|
2015
|
||
Animal Hospitals:
|
|
|
|
||
Acquisitions
|
24
|
|
|
11
|
|
Acquisitions, merged
|
(1
|
)
|
|
(2
|
)
|
Sold, closed or merged
|
(2
|
)
|
|
(2
|
)
|
Net increase
|
21
|
|
|
7
|
|
|
|
|
|
||
Laboratories:
|
|
|
|
||
Acquisitions
|
—
|
|
|
1
|
|
Acquisitions, merged
|
—
|
|
|
(1
|
)
|
Net increase
|
—
|
|
|
—
|
|
4.
|
Acquisitions, continued
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
Consideration:
|
|
|
|
||||
Cash, net of cash acquired
|
$
|
157,325
|
|
|
$
|
31,850
|
|
Assumed debt
|
1,361
|
|
|
4,446
|
|
||
Holdbacks
|
3,508
|
|
|
1,722
|
|
||
Earn-outs
|
3,437
|
|
|
—
|
|
||
Fair value of total consideration transferred
|
$
|
165,631
|
|
|
$
|
38,018
|
|
|
|
|
|
||||
Allocation of the Purchase Price:
|
|
|
|
||||
Tangible assets
|
$
|
17,541
|
|
|
$
|
764
|
|
Identifiable intangible assets
(1)
|
18,844
|
|
|
2,838
|
|
||
Goodwill
(2)
|
129,246
|
|
|
34,563
|
|
||
Other liabilities assumed
|
—
|
|
|
(147
|
)
|
||
Fair value of assets acquired and liabilities assumed
|
$
|
165,631
|
|
|
$
|
38,018
|
|
(1)
|
Identifiable intangible assets include customer relationships, trademarks and covenants-not-to-compete. The weighted-average amortization period for the total identifiable intangible assets is approximately
five
years. The weighted-average amortization period for customer relationships, trademarks and covenants is approximately
five
years,
two
years and
five
years, respectively.
|
(2)
|
We expect that
$129.2 million
and
$30.4 million
of the goodwill recorded for these acquisitions, as of
March 31, 2016
and
2015
, respectively, will be fully deductible for income tax purposes.
|
5.
|
Other Accrued Liabilities
|
|
March 31, 2016
|
|
December 31, 2015
|
||||
Deferred revenue
|
$
|
15,853
|
|
|
$
|
14,647
|
|
Accrued health insurance
|
4,996
|
|
|
4,952
|
|
||
Deferred rent
|
4,998
|
|
|
4,791
|
|
||
Accrued other insurance
|
5,691
|
|
|
5,013
|
|
||
Miscellaneous accrued taxes
(1)
|
3,972
|
|
|
3,317
|
|
||
Accrued accounting and legal fees
|
3,772
|
|
|
2,697
|
|
||
Accrued workers' compensation
|
3,741
|
|
|
3,212
|
|
||
Holdbacks and earn-outs
|
13,072
|
|
|
9,959
|
|
||
Customer deposits
|
3,088
|
|
|
2,971
|
|
||
Accrued lease payments
|
1,763
|
|
|
1,536
|
|
||
Other
|
16,472
|
|
|
17,733
|
|
||
|
$
|
77,418
|
|
|
$
|
70,828
|
|
6.
|
Long-Term Obligations
|
6.
|
Long-Term Obligations, continued
|
|
|
|
|
March 31, 2016
|
|
December 31, 2015
|
||||
Senior term notes
|
|
Principal amount
|
|
$
|
577,500
|
|
|
$
|
585,000
|
|
|
|
Less unamortized debt issuance costs
|
|
(2,230
|
)
|
|
(2,408
|
)
|
||
|
|
Senior term notes less unamortized debt issuance costs, maturing in 2019, secured by assets, variable interest rate (1.94% and 1.92% at March 31, 2016 and December 31, 2015, respectively)
|
|
$
|
575,270
|
|
|
$
|
582,592
|
|
Revolving credit
|
|
Principal amount
|
|
$
|
322,000
|
|
|
$
|
232,000
|
|
|
|
Less unamortized debt issuance costs
|
|
(3,470
|
)
|
|
(3,725
|
)
|
||
|
|
Revolving line of credit less unamortized debt issuance costs, maturing in 2019, secured by assets, variable interest rate (1.96% and 1.92% at March 31, 2016 and December 31, 2015, respectively)
|
|
$
|
318,530
|
|
|
$
|
228,275
|
|
Secured seller note
|
|
Notes payable matures in 2016, secured by assets and stock of certain subsidiaries, with interest rate of 10.0%
|
|
230
|
|
|
230
|
|
||
|
|
Total debt obligations
|
|
894,030
|
|
|
811,097
|
|
||
|
|
Capital lease obligations and other debt
|
|
58,539
|
|
|
55,244
|
|
||
|
|
|
|
952,569
|
|
|
866,341
|
|
||
|
|
Less — current portion
|
|
(33,947
|
)
|
|
(33,623
|
)
|
||
|
|
|
|
$
|
918,622
|
|
|
$
|
832,718
|
|
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
||||||||||
Senior term notes
|
|
$
|
22,500
|
|
|
$
|
37,500
|
|
|
$
|
52,500
|
|
|
$
|
465,000
|
|
|
$
|
—
|
|
Revolving loans
|
|
—
|
|
|
—
|
|
|
—
|
|
|
322,000
|
|
|
—
|
|
|||||
|
|
$
|
22,500
|
|
|
$
|
37,500
|
|
|
$
|
52,500
|
|
|
$
|
787,000
|
|
|
$
|
—
|
|
6.
|
Long-Term Obligations, continued
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
Net income attributable to VCA Inc.
|
$
|
46,227
|
|
|
$
|
38,301
|
|
Weighted-average common shares outstanding:
|
|
|
|
||||
Basic
|
80,776
|
|
|
82,347
|
|
||
Effect of dilutive potential common shares:
|
|
|
|
||||
Stock options
|
284
|
|
|
340
|
|
||
Non-vested shares and units
|
463
|
|
|
686
|
|
||
Diluted
|
81,523
|
|
|
83,373
|
|
||
Basic earnings per common share
|
$
|
0.57
|
|
|
$
|
0.47
|
|
Diluted earnings per common share
|
$
|
0.57
|
|
|
$
|
0.46
|
|
8.
|
Lines of Business
|
8.
|
Lines of Business, continued
|
|
Animal
Hospital
|
|
Laboratory
|
|
All Other
|
|
Corporate
|
|
Eliminations
|
|
Total
|
||||||||||||
Three Months Ended
March 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
External revenue
|
$
|
458,623
|
|
|
$
|
89,240
|
|
|
$
|
14,454
|
|
|
$
|
—
|
|
|
$
|
1,122
|
|
|
$
|
563,439
|
|
Intercompany revenue
|
—
|
|
|
17,487
|
|
|
4,959
|
|
|
—
|
|
|
(22,446
|
)
|
|
—
|
|
||||||
Total revenue
|
458,623
|
|
|
106,727
|
|
|
19,413
|
|
|
—
|
|
|
(21,324
|
)
|
|
563,439
|
|
||||||
Direct costs
|
385,206
|
|
|
50,011
|
|
|
12,503
|
|
|
—
|
|
|
(21,061
|
)
|
|
426,659
|
|
||||||
Gross profit
|
73,417
|
|
|
56,716
|
|
|
6,910
|
|
|
—
|
|
|
(263
|
)
|
|
136,780
|
|
||||||
Selling, general and administrative expense
|
12,085
|
|
|
10,296
|
|
|
5,299
|
|
|
22,448
|
|
|
—
|
|
|
50,128
|
|
||||||
Operating income (loss) before sale or disposal of assets
|
61,332
|
|
|
46,420
|
|
|
1,611
|
|
|
(22,448
|
)
|
|
(263
|
)
|
|
86,652
|
|
||||||
Net loss (gain) on sale or disposal of assets
|
575
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
563
|
|
||||||
Operating income (loss)
|
$
|
60,757
|
|
|
$
|
46,420
|
|
|
$
|
1,611
|
|
|
$
|
(22,436
|
)
|
|
$
|
(263
|
)
|
|
$
|
86,089
|
|
Depreciation and amortization
|
$
|
17,573
|
|
|
$
|
2,781
|
|
|
$
|
883
|
|
|
$
|
638
|
|
|
$
|
(586
|
)
|
|
$
|
21,289
|
|
Property and equipment additions
|
$
|
18,544
|
|
|
$
|
4,652
|
|
|
$
|
607
|
|
|
$
|
2,851
|
|
|
$
|
(848
|
)
|
|
$
|
25,806
|
|
Three Months Ended
March 31, 2015 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
External revenue
|
$
|
393,026
|
|
|
$
|
78,809
|
|
|
$
|
26,533
|
|
|
$
|
—
|
|
|
$
|
1,085
|
|
|
$
|
499,453
|
|
Intercompany revenue
|
—
|
|
|
15,163
|
|
|
7,694
|
|
|
—
|
|
|
(22,857
|
)
|
|
—
|
|
||||||
Total revenue
|
393,026
|
|
|
93,972
|
|
|
34,227
|
|
|
—
|
|
|
(21,772
|
)
|
|
499,453
|
|
||||||
Direct costs
|
337,542
|
|
|
45,990
|
|
|
22,803
|
|
|
—
|
|
|
(20,744
|
)
|
|
385,591
|
|
||||||
Gross profit
|
55,484
|
|
|
47,982
|
|
|
11,424
|
|
|
—
|
|
|
(1,028
|
)
|
|
113,862
|
|
||||||
Selling, general and administrative expense
|
11,221
|
|
|
8,865
|
|
|
8,687
|
|
|
15,625
|
|
|
—
|
|
|
44,398
|
|
||||||
Operating income (loss) before sale or disposal of assets
|
44,263
|
|
|
39,117
|
|
|
2,737
|
|
|
(15,625
|
)
|
|
(1,028
|
)
|
|
69,464
|
|
||||||
Net loss on sale or disposal of assets
|
294
|
|
|
6
|
|
|
9
|
|
|
26
|
|
|
—
|
|
|
335
|
|
||||||
Operating income (loss)
|
$
|
43,969
|
|
|
$
|
39,111
|
|
|
$
|
2,728
|
|
|
$
|
(15,651
|
)
|
|
$
|
(1,028
|
)
|
|
$
|
69,129
|
|
Depreciation and amortization
|
$
|
16,072
|
|
|
$
|
2,504
|
|
|
$
|
1,152
|
|
|
$
|
592
|
|
|
$
|
(523
|
)
|
|
$
|
19,797
|
|
Property and equipment additions
|
$
|
12,082
|
|
|
$
|
3,216
|
|
|
$
|
800
|
|
|
$
|
1,064
|
|
|
$
|
(636
|
)
|
|
$
|
16,526
|
|
At March 31,2016
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total assets
|
$
|
2,377,077
|
|
|
$
|
322,776
|
|
|
$
|
69,589
|
|
|
$
|
586,394
|
|
|
$
|
(692,161
|
)
|
|
$
|
2,663,675
|
|
At December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total assets
|
$
|
2,186,959
|
|
|
$
|
306,296
|
|
|
$
|
73,491
|
|
|
$
|
471,112
|
|
|
$
|
(536,726
|
)
|
|
$
|
2,501,132
|
|
9.
|
Commitments and Contingencies
|
a.
|
Earn-Out Payments
|
b.
|
Legal Proceedings
|
9.
|
Commitments and Contingencies, continued
|
10.
|
Noncontrolling Interests
|
a.
|
Mandatorily Redeemable Noncontrolling Interests
|
|
Income
Statement
Impact
|
|
Mandatorily Redeemable
Noncontrolling
Interests
|
||||
Balance as of December 31, 2014
|
|
|
$
|
9,405
|
|
||
Noncontrolling interest expense
|
$
|
359
|
|
|
|
||
Redemption value change
|
(86
|
)
|
|
273
|
|
||
Purchase of noncontrolling interests
|
|
|
(803
|
)
|
|||
Distribution to noncontrolling interests
|
|
|
(346
|
)
|
|||
Currency translation adjustment
|
|
|
(195
|
)
|
|||
Balance as of March 31, 2015
|
|
|
$
|
8,334
|
|
||
|
|
|
|
||||
Balance as of December 31, 2015
|
|
|
$
|
8,588
|
|
||
Noncontrolling interest expense
|
$
|
365
|
|
|
|
||
Redemption value change
|
(116
|
)
|
|
249
|
|
||
Distribution to noncontrolling interests
|
|
|
(312
|
)
|
|||
Currency translation adjustment
|
|
|
167
|
|
|||
Balance as of March 31, 2016
|
|
|
$
|
8,692
|
|
10.
|
Noncontrolling Interests, continued
|
b.
|
Redeemable Noncontrolling Interests
|
|
Income
Statement
Impact
|
|
Redeemable
Noncontrolling
Interests
|
||||
Balance as of December 31, 2014
|
|
|
$
|
11,077
|
|
||
Noncontrolling interest expense
|
$
|
322
|
|
|
|
||
Redemption value change
|
95
|
|
|
417
|
|
||
Distribution to noncontrolling interests
|
|
|
(386
|
)
|
|||
Balance as of March 31, 2015
|
|
|
$
|
11,108
|
|
||
|
|
|
|
||||
Balance as of December 31, 2015
|
|
|
$
|
11,511
|
|
||
Noncontrolling interest expense
|
$
|
387
|
|
|
|
||
Redemption value change
|
254
|
|
|
641
|
|
||
Distribution to noncontrolling interests
|
|
|
(365
|
)
|
|||
Balance as of March 31, 2016
|
|
|
$
|
11,787
|
|
11.
|
Recent Accounting Pronouncements
|
11.
|
Recent Accounting Pronouncements, continued
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Our Animal Hospital segment operates the largest network of freestanding, full-service animal hospitals in the nation. Our animal hospitals offer a full range of general medical and surgical services for companion animals. We treat diseases and injuries, offer pharmaceutical and retail products and perform a variety of pet wellness programs, including health examinations, diagnostic testing, routine vaccinations, spaying, neutering and dental care. At
March 31, 2016
, our animal hospital network consisted of
703
animal hospitals in
41
states and in four Canadian provinces.
|
•
|
Our Laboratory segment operates the largest network of veterinary diagnostic laboratories in the nation. Our laboratories provide sophisticated testing and consulting services used by veterinarians in the detection, diagnosis, evaluation, monitoring, treatment and prevention of diseases and other conditions affecting animals. At
March 31, 2016
, our laboratory network consisted of
60
laboratories serving all 50 states and certain areas in Canada.
|
|
Three Months Ended
March 31, |
||||
|
2016
|
|
2015
|
||
Animal Hospitals:
|
|
|
|
||
Beginning of period
|
682
|
|
|
643
|
|
Acquisitions
|
24
|
|
|
11
|
|
Acquisitions, merged
|
(1
|
)
|
|
(2
|
)
|
Sold, closed or merged
|
(2
|
)
|
|
(2
|
)
|
End of period
|
703
|
|
|
650
|
|
|
|
|
|
||
Laboratories:
|
|
|
|
||
Beginning of period
|
60
|
|
|
59
|
|
Acquisitions
|
—
|
|
|
1
|
|
Acquisitions, merged
|
—
|
|
|
(1
|
)
|
End of period
|
60
|
|
|
59
|
|
|
Three Months Ended
March 31, |
||||
|
2016
|
|
2015
|
||
Revenue:
|
|
|
|
||
Animal Hospital
|
81.4
|
%
|
|
78.7
|
%
|
Laboratory
|
18.9
|
|
|
18.8
|
|
All Other
|
3.5
|
|
|
6.9
|
|
Intercompany
|
(3.8
|
)
|
|
(4.4
|
)
|
Total revenue
|
100.0
|
|
|
100.0
|
|
Direct costs
|
75.7
|
|
|
77.2
|
|
Gross profit
|
24.3
|
|
|
22.8
|
|
Selling, general and administrative expense
|
8.9
|
|
|
8.9
|
|
Net loss on sale or disposal of assets
|
0.1
|
|
|
0.1
|
|
Operating income
|
15.3
|
|
|
13.8
|
|
Interest expense, net
|
1.2
|
|
|
0.9
|
|
Income before provision for income taxes
|
14.1
|
|
|
12.9
|
|
Provision for income taxes
|
5.6
|
|
|
5.0
|
|
Net income
|
8.5
|
|
|
7.9
|
|
Net income attributable to noncontrolling interests
|
0.3
|
|
|
0.2
|
|
Net income attributable to VCA Inc.
|
8.2
|
%
|
|
7.7
|
%
|
|
Three Months Ended
March 31, |
|||||||||||||||
|
2016
|
|
2015
|
|
|
|||||||||||
|
$
|
|
% of
Total
|
|
$
|
|
% of
Total
|
|
%
Change
|
|||||||
Animal Hospital
|
$
|
458,623
|
|
|
81.4
|
%
|
|
$
|
393,026
|
|
|
78.7
|
%
|
|
16.7
|
%
|
Laboratory
|
106,727
|
|
|
18.9
|
%
|
|
93,972
|
|
|
18.8
|
%
|
|
13.6
|
%
|
||
All Other
|
19,413
|
|
|
3.5
|
%
|
|
34,227
|
|
|
6.9
|
%
|
|
(43.3
|
)%
|
||
Intercompany
|
(21,324
|
)
|
|
(3.8
|
)%
|
|
(21,772
|
)
|
|
(4.4
|
)%
|
|
2.1
|
%
|
||
Total revenue
|
$
|
563,439
|
|
|
100.0
|
%
|
|
$
|
499,453
|
|
|
100.0
|
%
|
|
12.8
|
%
|
|
Three Months Ended
March 31, |
|||||||||||||||
|
2016
|
|
2015
|
|
|
|||||||||||
|
$
|
|
% of
Revenue
|
|
$
|
|
% of
Revenue
|
|
%
Change
|
|||||||
Animal Hospital
|
$
|
385,206
|
|
|
84.0
|
%
|
|
$
|
337,542
|
|
|
85.9
|
%
|
|
14.1
|
%
|
Laboratory
|
50,011
|
|
|
46.9
|
%
|
|
45,990
|
|
|
48.9
|
%
|
|
8.7
|
%
|
||
All Other
|
12,503
|
|
|
64.4
|
%
|
|
22,803
|
|
|
66.6
|
%
|
|
(45.2
|
)%
|
||
Intercompany
|
(21,061
|
)
|
|
(3.7
|
)%
|
|
(20,744
|
)
|
|
(4.2
|
)%
|
|
(1.5
|
)%
|
||
Total direct costs
|
$
|
426,659
|
|
|
75.7
|
%
|
|
$
|
385,591
|
|
|
77.2
|
%
|
|
10.7
|
%
|
|
Three Months Ended
March 31, |
|||||||||||||||
|
2016
|
|
2015
|
|
|
|||||||||||
|
$
|
|
Gross
Margin
|
|
$
|
|
Gross
Margin
|
|
%
Change
|
|||||||
Animal Hospital
|
$
|
73,417
|
|
|
16.0
|
%
|
|
$
|
55,484
|
|
|
14.1
|
%
|
|
32.3
|
%
|
Laboratory
|
56,716
|
|
|
53.1
|
%
|
|
47,982
|
|
|
51.1
|
%
|
|
18.2
|
%
|
||
All Other
|
6,910
|
|
|
35.6
|
%
|
|
11,424
|
|
|
33.4
|
%
|
|
(39.5
|
)%
|
||
Intercompany
|
(263
|
)
|
|
|
|
(1,028
|
)
|
|
|
|
|
|||||
Consolidated gross profit
|
$
|
136,780
|
|
|
24.3
|
%
|
|
$
|
113,862
|
|
|
22.8
|
%
|
|
20.1
|
%
|
Intangible asset amortization associated with acquisitions
|
6,228
|
|
|
|
|
5,465
|
|
|
|
|
|
|||||
Non-GAAP consolidated gross profit and Non-GAAP gross margin
(1)
|
$
|
143,008
|
|
|
25.4
|
%
|
|
$
|
119,327
|
|
|
23.9
|
%
|
|
19.8
|
%
|
(1)
|
Non-GAAP consolidated gross profit and Non-GAAP gross margin are not measurements of financial performance prepared in accordance with GAAP. See
Non-GAAP Financial Measures
below for information about these Non-GAAP financial measures, including our reasons for including the measures, material limitations with respect to the usefulness of the measures, and a reconciliation of each Non-GAAP financial measure to the most directly comparable GAAP financial measure.
|
|
Three Months Ended
March 31, |
|||||||||
|
2016
|
|
2015
|
|
% Change
|
|||||
Same-store facilities:
|
|
|
|
|
|
|||||
Orders
(1)
|
2,266
|
|
|
2,206
|
|
|
2.7
|
%
|
||
Average revenue per order
(2)
|
$
|
184.58
|
|
|
$
|
176.18
|
|
|
4.8
|
%
|
Same-store revenue
(1)
|
$
|
418,222
|
|
|
$
|
388,664
|
|
|
7.6
|
%
|
Business-day adjustment
(3)
|
4,684
|
|
|
—
|
|
|
|
|||
Acquisitions
|
39,995
|
|
|
1,666
|
|
|
|
|||
Closures
|
133
|
|
|
2,696
|
|
|
|
|||
Net acquired revenue
(4)
|
$
|
40,128
|
|
|
$
|
4,362
|
|
|
|
|
Foreign currency impact
|
(4,411
|
)
|
|
—
|
|
|
|
|||
Total
|
$
|
458,623
|
|
|
$
|
393,026
|
|
|
16.7
|
%
|
(1)
|
Same-store revenue and orders were calculated using Animal Hospital operating results, adjusted to exclude the operating results for newly acquired animal hospitals that we did not own, as of the beginning of the comparable period in the prior year. Same-store revenue also includes revenue generated by customers referred from our relocated or combined animal hospitals, including those merged upon acquisition.
|
(2)
|
Computed by dividing same-store revenue by same-store orders. The average revenue per order may not calculate exactly due to rounding.
|
(3)
|
The 2016 Business-day adjustment reflects the impact of the one additional day in 2016 as compared to 2015.
|
(4)
|
Net acquired revenue represents the revenue from animal hospitals acquired, net of revenue from animal hospitals sold or closed, on or after the beginning of the comparable period in the prior year. Fluctuations in net acquired revenue occur due to the volume, size, and timing of acquisitions and dispositions.
|
|
Three Months Ended
March 31, |
|||||||||
|
2016
|
|
2015
|
|
% Change
|
|||||
Gross profit
|
$
|
73,417
|
|
|
$
|
55,484
|
|
|
32.3
|
%
|
Intangible asset amortization associated with acquisitions
|
5,240
|
|
|
4,570
|
|
|
|
|||
Non-GAAP gross profit
(1)
|
$
|
78,657
|
|
|
$
|
60,054
|
|
|
31.0
|
%
|
Gross margin
|
16.0
|
%
|
|
14.1
|
%
|
|
|
|||
Non-GAAP gross margin
(1)
|
17.2
|
%
|
|
15.3
|
%
|
|
|
|||
|
|
|
|
|
|
|||||
Same-store gross profit
|
$
|
69,528
|
|
|
$
|
55,745
|
|
|
24.7
|
%
|
Intangible asset amortization associated with acquisitions
|
3,731
|
|
|
4,503
|
|
|
|
|||
Non-GAAP same-store gross profit
(1)
|
$
|
73,259
|
|
|
$
|
60,248
|
|
|
21.6
|
%
|
Same-store gross margin
|
16.6
|
%
|
|
14.3
|
%
|
|
|
|||
Non-GAAP same-store gross margin
(1)
|
17.5
|
%
|
|
15.5
|
%
|
|
|
(1)
|
Non-GAAP gross profit and Non-GAAP gross margin and the same measures expressed on a same store basis, are not measurements of financial performance prepared in accordance with GAAP. See
Non-GAAP Financial Measures
below for information about these Non-GAAP financial measures, including our reasons for including the measures, material limitations with respect to the usefulness of the measures, and a reconciliation of each Non-GAAP financial measure to the most directly comparable GAAP financial measure.
|
|
Three Months Ended
March 31, |
|||||||||
|
2016
|
|
2015
|
|
% Change
|
|||||
Revenue
|
$
|
106,727
|
|
|
$
|
93,972
|
|
|
13.6
|
%
|
Gross profit
|
$
|
56,716
|
|
|
$
|
47,982
|
|
|
18.2
|
%
|
Gross margin
|
53.1
|
%
|
|
51.1
|
%
|
|
|
|
Three Months Ended
March 31, |
|||||||||
|
2016
|
|
2015
|
|
% Change
|
|||||
Internal growth:
|
|
|
|
|
|
|||||
Number of requisitions
(1)
|
3,328
|
|
|
3,141
|
|
|
6.0
|
%
|
||
Average revenue per requisition
(2)
|
$
|
30.79
|
|
|
$
|
29.92
|
|
|
2.9
|
%
|
Total internal revenue
(1)
|
$
|
102,479
|
|
|
$
|
93,972
|
|
|
9.1
|
%
|
Billing-day adjustment
(3)
|
1,348
|
|
|
—
|
|
|
|
|||
Acquired revenue
(4)
|
2,900
|
|
|
—
|
|
|
|
|||
Total
|
$
|
106,727
|
|
|
$
|
93,972
|
|
|
13.6
|
%
|
(1)
|
Internal revenue and requisitions were calculated using Laboratory operating results, which are adjusted (i) to exclude the operating results of acquired laboratories that we did not own as of the beginning of the comparable period in the prior year, and (ii) for the impact resulting from any differences in the number of billing days in the comparable period, if applicable.
|
(2)
|
Computed by dividing internal revenue by the number of requisitions.
|
(3)
|
The 2016 Business-day adjustment reflects the impact of one additional day in 2016 as compared to 2015.
|
(4)
|
Acquired revenue represents the current-year period revenue recognized from our acquired laboratories that we did not own as of the beginning of the comparable period in the prior year.
|
|
Three Months Ended
March 31, |
|||||||||||||||
|
2016
|
|
2015
|
|
|
|||||||||||
|
$
|
|
% of
Revenue
|
|
$
|
|
% of
Revenue
|
|
%
Change
|
|||||||
Animal Hospital
|
$
|
12,085
|
|
|
2.6
|
%
|
|
$
|
11,221
|
|
|
2.9
|
%
|
|
7.7
|
%
|
Laboratory
|
10,296
|
|
|
9.6
|
%
|
|
8,865
|
|
|
9.4
|
%
|
|
16.1
|
%
|
||
All Other
|
5,299
|
|
|
27.3
|
%
|
|
8,687
|
|
|
25.4
|
%
|
|
(39.0
|
)%
|
||
Corporate
|
22,448
|
|
|
4.0
|
%
|
|
15,625
|
|
|
3.1
|
%
|
|
43.7
|
%
|
||
Total SG&A
|
$
|
50,128
|
|
|
8.9
|
%
|
|
$
|
44,398
|
|
|
8.9
|
%
|
|
12.9
|
%
|
|
Three Months Ended
March 31, |
|||||||||||||||
|
2016
|
|
2015
|
|
|
|||||||||||
|
$
|
|
% of
Revenue
|
|
$
|
|
% of
Revenue
|
|
%
Change
|
|||||||
Animal Hospital
|
$
|
60,757
|
|
|
13.2
|
%
|
|
$
|
43,969
|
|
|
11.2
|
%
|
|
38.2
|
%
|
Laboratory
|
46,420
|
|
|
43.5
|
%
|
|
39,111
|
|
|
41.6
|
%
|
|
18.7
|
%
|
||
All Other
|
1,611
|
|
|
8.3
|
%
|
|
2,728
|
|
|
8.0
|
%
|
|
(40.9
|
)%
|
||
Corporate
|
(22,436
|
)
|
|
|
|
(15,651
|
)
|
|
|
|
(43.4
|
)%
|
||||
Eliminations
|
(263
|
)
|
|
|
|
(1,028
|
)
|
|
|
|
74.4
|
%
|
||||
Total GAAP consolidated operating income
|
$
|
86,089
|
|
|
15.3
|
%
|
|
$
|
69,129
|
|
|
13.8
|
%
|
|
24.5
|
%
|
Adjustments to other long-term liabilities
|
1,954
|
|
|
|
|
—
|
|
|
|
|
|
|||||
Transaction costs related to the CAPNA acquisition
|
966
|
|
|
|
|
—
|
|
|
|
|
|
|||||
Intangible asset amortization associated with acquisitions
|
6,228
|
|
|
|
|
5,526
|
|
|
|
|
|
|||||
Non-GAAP consolidated operating income and Non-GAAP consolidated operating margin
(1)
|
$
|
95,237
|
|
|
16.9
|
%
|
|
$
|
74,655
|
|
|
14.9
|
%
|
|
27.6
|
%
|
(1)
|
Non-GAAP consolidated operating income and Non-GAAP consolidated operating margin are not measurements of financial performance prepared in accordance with GAAP. See
Non-GAAP Financial Measures
below for information about these Non-GAAP financial measures, including our reasons for including the measures, material limitations with respect to the usefulness of the measures, and a reconciliation of each Non-GAAP financial measure to the most directly comparable GAAP financial measure.
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
Interest expense:
|
|
|
|
||||
Senior term notes and revolver
|
$
|
4,165
|
|
|
$
|
3,069
|
|
Capital leases and other
|
1,238
|
|
|
1,376
|
|
||
Amortization of debt costs
|
433
|
|
|
435
|
|
||
Non-GAAP interest expense
(1)
|
5,836
|
|
|
4,880
|
|
||
Adjustments to other long-term liabilities
|
1,398
|
|
|
—
|
|
||
Consolidated interest expense
|
7,234
|
|
|
4,880
|
|
||
Interest income
|
(139
|
)
|
|
(43
|
)
|
||
Total consolidated interest expense, net of interest income
|
$
|
7,095
|
|
|
$
|
4,837
|
|
(1)
|
Non-GAAP interest expense is not a measurement of financial performance prepared in accordance with GAAP. See
Non-GAAP Financial Measures
below for information about this financial measure including our reasons for including the measure and material limitations with respect to the usefulness of this measure.
|
•
|
Adjustments to other long-term liabilities
- We recorded a non-cash charge to adjust certain long-term liabilities in our GAAP net income for $3.4 million, of which $2.0 million of related to compensation and $1.4 million related to interest accretion.
|
•
|
Discrete tax items
- We recorded a non-cash tax adjustment to our income tax liabilities for $1.0 million
|
•
|
Intangible asset amortization associated with acquisitions
- Our GAAP net income includes amortization expense related to intangible assets in our acquired businesses. The amortization expense related to our acquired intangible assets can vary significantly dependent upon the amount and size of our acquisitions in each period; accordingly, we exclude amortization from our GAAP net income, for all periods presented, to provide investors with more comparable operating results.
|
•
|
Transaction costs related to the CAPNA acquisition
-
In the first quarter of 2016, we recorded non-cash transaction costs of $966,000 related to our acquisition of CAPNA.
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
GAAP net income
|
$
|
46,227
|
|
|
$
|
38,301
|
|
Adjustments to other long-term liabilities
|
3,352
|
|
|
—
|
|
||
Discrete tax items
|
1,045
|
|
|
—
|
|
||
Transaction costs related to CAPNA acquisition
|
966
|
|
|
—
|
|
||
Intangible asset amortization associated with acquisitions
|
6,228
|
|
|
5,526
|
|
||
Tax benefit on above adjustments
|
(4,128
|
)
|
|
(2,163
|
)
|
||
Non-GAAP net income
|
$
|
53,690
|
|
|
$
|
41,664
|
|
Non-GAAP diluted earnings per share
|
$
|
0.66
|
|
|
$
|
0.50
|
|
Shares used for computing adjusted diluted earnings per share
|
81,523
|
|
|
83,373
|
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
Cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
93,909
|
|
|
$
|
80,625
|
|
Investing activities
|
(193,525
|
)
|
|
(50,662
|
)
|
||
Financing activities
|
74,909
|
|
|
(51,703
|
)
|
||
Effect of currency exchange rate changes on cash and cash equivalents
|
299
|
|
|
(365
|
)
|
||
Decrease in cash and cash equivalents
|
(24,408
|
)
|
|
(22,105
|
)
|
||
Cash and cash equivalents at beginning of period
|
98,888
|
|
|
81,383
|
|
||
Cash and cash equivalents at end of period
|
$
|
74,480
|
|
|
$
|
59,278
|
|
|
Three Months Ended
March 31, |
|
|
|
||||||||
|
2016
|
|
2015
|
|
Change
|
|
||||||
Investing Cash Flows:
|
|
|
|
|
|
|
||||||
Business acquisitions, net of cash acquired
|
$
|
(160,385
|
)
|
|
$
|
(33,652
|
)
|
|
$
|
(126,733
|
)
|
(1)
|
Property and equipment additions
|
(25,806
|
)
|
|
(16,526
|
)
|
|
(9,280
|
)
|
(2)
|
|||
Proceeds from sale or disposal of assets
|
12
|
|
|
92
|
|
|
(80
|
)
|
|
|||
Other
|
(7,346
|
)
|
|
(576
|
)
|
|
(6,770
|
)
|
(3)
|
|||
Net cash used in investing activities
|
$
|
(193,525
|
)
|
|
$
|
(50,662
|
)
|
|
$
|
(142,863
|
)
|
|
(1)
|
The number of acquisitions will vary from period to period based upon the available pool of suitable candidates. A discussion of our acquisitions is provided above in our
Executive Overview
.
|
(2)
|
The cash used to acquire property and equipment will vary from period to period based on upgrade requirements and expansion of our animal hospitals and laboratory facilities.
|
(3)
|
We issued a $3.5 million note receivable in connection with the acquisition of CAPNA, which closed on May 2, 2016. A discussion of this acquisition is provided in
Note 12
,
Subsequent Events
to the Unaudited Condensed, Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
|
|
Three Months Ended
March 31, |
|
|
|
||||||||
|
2016
|
|
2015
|
|
Change
|
|
||||||
Financing Cash Flows:
|
|
|
|
|
|
|
||||||
Repayment of long-term obligations
|
$
|
(9,678
|
)
|
|
$
|
(5,165
|
)
|
|
$
|
(4,513
|
)
|
(1)
|
Proceeds from revolving credit facility
|
90,000
|
|
|
—
|
|
|
90,000
|
|
(2)
|
|||
Distributions to noncontrolling interest partners
|
(1,238
|
)
|
|
(1,325
|
)
|
|
87
|
|
|
|||
Purchase of noncontrolling interests
|
(3,730
|
)
|
|
(1,483
|
)
|
|
(2,247
|
)
|
(3)
|
|||
Proceeds from issuance of common stock under stock incentive plans
|
286
|
|
|
404
|
|
|
(118
|
)
|
|
|||
Excess tax benefits from stock based compensation
|
445
|
|
|
791
|
|
|
(346
|
)
|
|
|||
Stock repurchases
|
(843
|
)
|
|
(44,845
|
)
|
|
44,002
|
|
(4)
|
|||
Other
|
(333
|
)
|
|
(80
|
)
|
|
(253
|
)
|
|
|||
Net cash provided by (used in) financing activities
|
$
|
74,909
|
|
|
$
|
(51,703
|
)
|
|
$
|
126,612
|
|
|
(1)
|
The repayment of long-term obligations consists primarily of $8.3 million in scheduled senior-term note principal and capital lease payments.
|
(2)
|
The $90.0 million borrowed from our revolving credit facility was primarily used to fund our individual hospital acquisitions.
|
(3)
|
The cash paid to purchase noncontrolling interests will vary based upon differing opportunities and circumstances during each of the respective periods.
|
(4)
|
For the three months ended March 31, 2016, the cash paid for stock repurchases related to income taxes paid on behalf of employees who elected to settle their tax obligation on vested stock with a portion of their vested stock. For the three months ended March 31, 2015, the cash paid for stock repurchases included both the repurchase of our common shares in accordance with our share repurchase program of $43.3 million, and income taxes paid on behalf of employees who elected to settle their tax obligation on vested stock with a portion of their vested stock.
|
|
Payment due by period
|
||||||||||||||||||
|
Total
|
|
Less than 1 Year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5 years
|
||||||||||
Contractual Obligations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt
|
$
|
899,730
|
|
|
$
|
30,230
|
|
|
$
|
97,500
|
|
|
$
|
772,000
|
|
|
$
|
—
|
|
Variable cash interest expense Term A
(1)
|
55,538
|
|
|
17,205
|
|
|
32,232
|
|
|
6,101
|
|
|
—
|
|
|||||
|
$
|
955,268
|
|
|
$
|
47,435
|
|
|
$
|
129,732
|
|
|
$
|
778,101
|
|
|
$
|
—
|
|
(1)
|
The interest payments on our variable-rate senior term notes are based on rates effective as of
March 31, 2016
.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
PART II.
|
OTHER INFORMATION
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
|
|
|
|
|
|
Total Number of
|
|
Approximate Dollar
|
||||||
|
|
|
|
|
|
Shares Purchased as
|
|
Value of Shares That
|
||||||
|
|
Total Number
|
|
Average
|
|
Part of Publicly
|
|
May Yet Be Purchased
|
||||||
|
|
of Shares
|
|
Price Paid
|
|
Announced Plan
|
|
Under the Plan
|
||||||
Period
|
|
Purchased
|
|
Per Share
|
|
or Program
|
|
or Program
|
||||||
(1)
|
|
(2)
|
|
(3)
|
|
(4)
|
|
(4)
|
||||||
|
|
|
|
|
|
|
|
|
||||||
January 1, 2016 to January 31,2016
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
101,058,831
|
|
February 1, 2016 to February 29, 2016
|
|
17,256
|
|
|
$
|
51.55
|
|
|
—
|
|
|
$
|
101,058,831
|
|
March 1, 2016 to March 31, 2016
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
101,058,831
|
|
|
|
17,256
|
|
|
$
|
51.55
|
|
|
—
|
|
|
$
|
101,058,831
|
|
(1)
|
Information is based on settlement dates of repurchase transactions.
|
(2)
|
Consists of shares of our common stock, par value $0.001 per share. Of these shares, no shares were repurchased in the open market or in block trades pursuant to a previously-announced share repurchase program (see (4) below). The repurchases in the table above represent shares of common stock surrendered to us by employees to satisfy minimum statutory tax withholding obligations in connection with the vesting of restricted stock and payout of restricted stock units. These shares were excluded from column (4) as they do not affect the number of shares that may be repurchased under the Share Repurchase Program.
|
(3)
|
The average price paid for shares repurchased under the Share Repurchase Program excludes commissions paid.
|
(4)
|
In April 2013, our Board of Directors authorized a repurchase program to purchase up to $125 million in shares of our common stock. As of August 2014, we have completed this program and our Board of Directors authorized a new repurchase program to buyback up to $400 million in shares of our common stock in open market purchases or negotiated transactions.
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
Date:
|
May 6, 2016
|
By:
/s/ Tomas W. Fuller
|
|
|
|
Tomas W. Fuller
|
|
|
|
Chief Financial Officer, Principal Accounting Officer, and Vice President and Secretary
|
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