Vca 8-K VCA Antech, Inc. Reports Fourth Quarter 2007 Results and Affirms its Financial Guidance for 2008

Exhibit 99.1

VCA Antech, Inc. Reports Fourth Quarter 2007 Results and Affirms its Financial Guidance for 2008

• Fourth quarter revenue increased 17.3% to $284.2 million
• Fourth quarter gross profit increased 12.5% to $69.3 million
• Fourth quarter diluted earnings per common share increased 26.1% to $0.29
• Fourth quarter adjusted diluted earnings per common share increased 13.0% to $0.26

LOS ANGELES--(BUSINESS WIRE)--VCA Antech, Inc. (NASDAQ:WOOF), a leading animal healthcare company in the United States, today reported financial results for the quarter ended December 31, 2007, as follows: revenue increased 17.3% to a fourth quarter record of $284.2 million; gross profit increased 12.5% to $69.3 million; operating income increased 17.5% to $47.8 million; net income was $24.6 million; and diluted earnings per common share was $0.29. The fourth quarter of 2007 included a benefit of $3.5 million, or $2.2 million after tax, related to a decrease in our estimated workers’ compensation insurance liability for policy periods prior to 2007. Excluding this benefit from 2007, adjusted diluted earnings per common share increased 13.0% to $0.26.

We also reported our financial results for the year ended December 31, 2007, as follows: revenue increased 17.6% to a twelve-month record of $1.16 billion; gross profit increased 18.8% to $321.4 million; operating income increased 21.1% to $233.2 million; net income was $121.0 million; and diluted earnings per share was $1.41. The fourth quarter of 2007 included a benefit of $3.5 million, or $2.2 million after tax, related to a decrease in our estimated workers’ compensation insurance liability for policy periods prior to 2007. The first quarter of 2006 included a tax benefit of $6.8 million due to a favorable outcome of an income tax audit that resulted in a change to our estimated tax liabilities. Excluding these benefits from 2007 and 2006, adjusted diluted earnings per common share increased 19.8% to $1.39.

Bob Antin, Chairman and CEO, stated, “VCA Antech had a very strong year highlighted by organic growth in each of its business segments and the execution of a very successful acquisition program. In 2007, laboratory internal revenue growth, adjusted for differences in billing days, was 13.5% and animal hospital same-store revenue growth was 5.2%. In the fourth quarter of 2007, laboratory internal revenue growth, adjusted for differences in billing days, and animal hospital same-store revenue growth, adjusted for differences in business days, was 9.1% and 2.5%, respectively.

“Laboratory revenue in the fourth quarter increased 8.4% to $68.6 million driven primarily by internal revenue growth. Gross profit and operating margins in the fourth quarter of 2007 were 45.9% and 38.9%, respectively. Laboratory results for the fourth quarter of 2007 included a benefit of $597,000 related to a decrease in our workers’ compensation insurance liability for policy periods prior to 2007. Excluding this benefit, laboratory adjusted gross profit and operating margins were 45.1% and 38.0%, respectively.

“Animal hospital revenue in the fourth quarter increased 21.8% to $209.3 million driven by acquisitions, including Healthy Pet Corp. acquired on June 1, 2007, and same-store revenue growth. Gross profit and operating margins in the fourth quarter of 2007 were 16.0% and 13.3%, respectively. Animal hospital results for the fourth quarter of 2007 included a benefit of $2.8 million related to a decrease in our workers’ compensation insurance liability as previously discussed. Excluding this benefit, animal hospital adjusted gross profit and operating margins were 14.8% and 12.0%, respectively. Animal hospital same-store gross profit margin in the fourth quarter of 2007 was 16.7%. Excluding the impact for the decrease in our workers’ compensation insurance liability, same-store adjusted gross profit margin declined to 15.2% compared to 16.9% in the comparable prior year quarter.”

2008 Financial Guidance

We affirm our 2008 financial guidance previously provided on February 4, 2008. Our 2008 financial guidance is as follows:

• Revenue from $1.30 billion to $1.33 billion;
• Laboratory internal revenue growth to a range from 8% to 10%;
• Animal hospital same-store revenue growth to a range from 3% to 5%;
• Animal hospital acquired revenue from $50.0 million to $60.0 million;
• Net income from $135.0 million to $139.0 million; and
• Diluted earnings per common share from $1.55 to $1.60.

Non-GAAP Financial Measures

We believe investors’ understanding of our total performance is enhanced by disclosing adjusted gross profit, adjusted gross margin, adjusted operating income, adjusted operating margin, adjusted net income and adjusted diluted earnings per common share. We define these adjusted measures as the reported amounts, adjusted to exclude certain significant items. Adjusted diluted earnings per common share is adjusted net income divided by diluted common shares outstanding.

Management uses adjusted measures because they exclude the effect of significant items that we believe are not representative of our core operations for the periods presented. As a result, these non-GAAP financial measures help to provide meaningful comparisons of our overall performance from one reporting period to another and meaningful assessments of our future performance and related trends. For the year and quarter ended December 31, 2007, we adjusted our reported amounts for a benefit in the amount of $3.5 million, or $2.2 million after tax, related to a decrease in our estimated workers’ compensation insurance liability recorded during the fourth quarter of 2007. For the year ended December 31, 2006, we adjusted our reported amounts for a $6.8 million tax benefit recorded during the first quarter of 2006.

There is a material limitation associated with the use of these non-GAAP financial measures: our adjusted measures exclude the impact of these significant items and as a result, our computation of adjusted diluted earnings per common share does not depict diluted earnings per common share in accordance with GAAP.

To compensate for the limitations in the non-GAAP financial measures discussed above, our disclosures provide a complete understanding of all adjustments found in non-GAAP financial measures, and we reconcile the non-GAAP financial measures to the GAAP financial measures in the attached financial schedules titled “Supplemental Operating Data.”

Conference Call

We will discuss our company’s fourth quarter and annual 2007 financial results and our 2008 financial guidance during a conference call today, February 21, 2008, at 4:30 p.m. Eastern Time. You can access a live broadcast of the call by visiting our website at http://investor.vcaantech.com. You can also access the call via telephone by dialing (877) 675-4753. Interested parties should call at least 10 minutes prior to the start of the call to register.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including our financial guidance for fiscal year 2008. Actual results may and likely will differ materially from the guidance provided in this release. Among the important factors that could cause actual results to differ are: a material adverse change in our financial condition or operations; the impact of adverse trends in the general economy on the rate of our laboratory internal revenue growth and animal hospital same-store revenue growth; the level of direct costs and our ability to maintain revenue at a level necessary to maintain expected operating margins; the level of selling, general and administrative costs; the effects of our recent acquisitions (including Healthy Pet Corp.) and our ability to effectively manage our growth and achieve operating synergies; a decline in demand for some of our products and services; any disruption in our information technology systems or transportation networks; the effects of competition; any impairment in the carrying value of our goodwill and other intangible assets; changes in prevailing interest rates; our ability to service our debt; and general economic conditions. These and other risk factors are discussed in our Report on Form 10-K for the year ended December 31, 2006, and our Report on Form 10-Q for the quarter ended September 30, 2007, and the reader is directed to these statements for a further discussion of important factors that could cause actual results to differ materially from those in the forward-looking statements.

We own, operate and manage the largest networks of freestanding veterinary hospitals and veterinary-exclusive clinical laboratories in the country, and we supply diagnostic imaging equipment to the veterinary industry.

VCA Antech, Inc.
Consolidated Income Statements
(In thousands, except per share amounts)
	Three Months Ended						Year Ended
	December 31,						December 31,
	2007			2006			2007			2006
Revenue:
Laboratory	$	68,622		$	63,281		$	295,695		$	258,345
Animal hospital		209,298			171,880			844,344			711,997
Medical technology		13,925			13,957			46,823			39,305
Intercompany		(7,687	)		(6,767	)		(30,717	)		(26,334	)
		284,158			242,351			1,156,145			983,313
Direct costs		214,837			180,735			834,724			712,749
Gross profit:
Laboratory		31,466			28,362			143,072			119,449
Animal hospital		33,588			28,650			163,053			138,358
Medical technology		4,522			5,141			15,879			14,213
Intercompany		(255	)		(537	)		(583	)		(1,456	)
		69,321			61,616			321,421			270,564
Selling, general and administrative expense:
Laboratory		4,776			4,667			19,648			17,460
Animal hospital		5,270			5,125			21,562			20,232
Medical technology		3,139			3,028			11,528			10,762
Corporate		7,881			7,885			34,139			29,566
		21,066			20,705			86,877			78,020
Write-down and loss on sale of assets		448			217			1,323			17
Operating income		47,807			40,694			233,221			192,527
Interest expense, net		8,129			5,917			29,503			24,240
Other expense		89			32			315			8
Minority interest		694			580			3,755			3,100
Income before provision for income taxes		38,895			34,165			199,648			165,179
Provision for income taxes		14,272			14,825			78,636			59,650
Net income	$	24,623		$	19,340		$	121,012		$	105,529
Diluted earnings per share	$	0.29		$	0.23		$	1.41		$	1.24
Shares used for computing diluted earnings per share		86,080			85,165			85,716			84,882

VCA Antech, Inc.
Consolidated Balance Sheets
(In thousands)
	December 31,
	2007			2006
Assets
Current assets:
Cash and cash equivalents	$	110,866		$	45,104
Trade accounts receivable, net		42,650			44,491
Inventory		25,517			21,420
Prepaid expenses and other		15,307			13,492
Deferred income taxes		14,402			14,935
Prepaid income taxes		8,160			13,523
Total current assets		216,902			152,965
Property and equipment, net		214,020			166,033
Other assets:
Goodwill		821,967			625,748
Other intangible assets, net		22,373			18,337
Deferred financing costs, net		1,537			979
Other		9,912			7,895
Total assets	$	1,286,711		$	971,957
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term obligations	$	7,886		$	6,648
Accounts payable		28,092			23,328
Accrued payroll and related liabilities		38,341			33,864
Other accrued liabilities		42,074			30,961
Total current liabilities		116,393			94,801
Long-term obligations, less current portion		552,294			384,067
Deferred income taxes		28,197			39,804
Other liabilities		11,236			13,294
Minority interest		10,207			9,686
Stockholders' equity:
Common stock		84			84
Additional paid-in capital		296,037			275,013
Retained earnings		275,598			154,586
Accumulated other comprehensive income (loss)		(3,335	)		622
Total stockholders' equity		568,384			430,305
Total liabilities and stockholders' equity	$	1,286,711		$	971,957

VCA Antech, Inc.
Consolidated Statements of Cash Flows
For the Year Ended December 31, 2007 and 2006
(In thousands)
	Year Ended
	December 31,
	2007			2006
Cash flows from operating activities:
Net income	$	121,012		$	105,529
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		27,049			22,242
Amortization of debt costs		368			361
Provision for uncollectible accounts		5,053			5,923
Write-down and loss on sale of assets		1,323			17
Share-based compensation		4,584			3,071
Minority interest in income of subsidiaries		3,755			3,100
Distributions to minority interest partners		(3,388	)		(3,514	)
Deferred income taxes		10,940			7,688
Excess tax benefit from exercise of stock options		(7,866	)		(6,645	)
Other		(113	)		(949	)
Changes in operating assets and liabilities:
Accounts receivable		(2,687	)		(12,308	)
Inventory, prepaid expenses and other assets		(4,712	)		(8,594	)
Accounts payable and other accrued liabilities		7			2,989
Accrued payroll and related liabilities		1,154			3,733
Prepaid income taxes		13,897			4,247
Net cash provided by operating activities		170,376			126,890
Cash flows from investing activities:
Business acquisitions, net of cash acquired		(215,523	)		(50,484	)
Real estate acquired in connection with business acquisitions		(7,962	)		(2,872	)
Property and equipment additions		(48,714	)		(35,316	)
Proceeds from sale of assets		1,674			598
Other		(780	)		342
Net cash used in investing activities		(271,305	)		(87,732	)
Cash flows from financing activities:
Repayment of long-term obligations		(8,238	)		(65,414	)
Proceeds from the issuance of long-term obligations		160,000			-
Payment of financing costs		(926	)		-
Proceeds from issuance of common stock under stock option plans		7,989			6,227
Excess tax benefit from exercise of stock options		7,866			6,645
Net cash provided by (used in) financing activities		166,691			(52,542	)
Increase (decrease) in cash and cash equivalents		65,762			(13,384	)
Cash and cash equivalents at beginning of period		45,104			58,488
Cash and cash equivalents at end of period	$	110,866		$	45,104

VCA Antech, Inc.
Supplemental Operating Data
(In thousands, except per share amounts)
Table #1	Three Months Ended						Year Ended
Reconciliation of net income to adjusted net income	December 31,						December 31,
	2007			2006			2007			2006
Net income	$	24,623		$	19,340		$	121,012		$	105,529
Certain significant items:
Workers' compensation benefit		(3,548	)		-			(3,548	)		-
Tax benefit		1,381			-			1,381			(6,806	)
Adjusted net income	$	22,456		$	19,340		$	118,845		$	98,723
Table #2
Reconciliation of diluted earnings per share to adjusted diluted earnings per share
Diluted earnings per share	$	0.29		$	0.23		$	1.41		$	1.24
Certain significant items as detailed in Table #1		(0.03	)		-			(0.02	)		(0.08	)
Adjusted diluted earnings per share	$	0.26		$	0.23		$	1.39		$	1.16
Shares used for computing adjusted diluted earnings per share		86,080			85,165			85,716			84,882
Table #3
Reconciliation of gross profit to adjusted gross profit and gross margin to adjusted gross margin
Consolidated revenue	$	284,158		$	242,351		$	1,156,145		$	983,313
Consolidated gross profit	$	69,321		$	61,616		$	321,421		$	270,564
Consolidated gross margin		24.4	%		25.4	%		27.8	%		27.5	%
Certain significant item:
Workers' compensation benefit		(3,210	)		-			(3,210	)		-
Adjusted consolidated gross profit	$	66,111		$	61,616		$	318,211		$	270,564
Adjusted consolidated gross margin		23.3	%		25.4	%		27.5	%		27.5	%

VCA Antech, Inc.
Supplemental Operating Data - Continued
(In thousands, except per share amounts)
	Three Months Ended						Year Ended
	December 31,						December 31,
Table #3 - Continued	2007			2006			2007			2006
Laboratory revenue	$	68,622		$	63,281		$	295,695		$	258,345
Laboratory gross profit	$	31,466		$	28,362		$	143,072		$	119,449
Laboratory gross margin		45.9	%		44.8	%		48.4	%		46.2	%
Certain significant item:
Workers' compensation benefit		(493	)		-			(493	)		-
Laboratory adjusted gross profit	$	30,973		$	28,362		$	142,579		$	119,449
Laboratory adjusted gross margin		45.1	%		44.8	%		48.2	%		46.2	%
Animal hospital revenue	$	209,298		$	171,880		$	844,344		$	711,997
Animal hospital gross profit	$	33,588		$	28,650		$	163,053		$	138,358
Animal hospital gross margin		16.0	%		16.7	%		19.3	%		19.4	%
Certain significant item:
Workers' compensation benefit		(2,655	)		-			(2,655	)		-
Animal hospital adjusted gross profit	$	30,933		$	28,650		$	160,398		$	138,358
Animal hospital adjusted gross margin		14.8	%		16.7	%		19.0	%		19.4	%
Animal hospital same-store revenue	$	173,183		$	169,041		$	718,224		$	683,012
Animal hospital same-store gross profit	$	28,856		$	28,484		$	142,288		$	134,096
Animal hospital same-store gross margin		16.7	%		16.9	%		19.8	%		19.6	%
Certain significant item:
Workers' compensation benefit		(2,548	)		-			(2,548	)		-
Animal hospital same-store adjusted gross profit	$	26,308		$	28,484		$	139,740		$	134,096
Animal hospital same-store adjusted gross margin		15.2	%		16.9	%		19.5	%		19.6	%

VCA Antech, Inc.
Supplemental Operating Data - Continued
(In thousands, except per share amounts)
Table #4
Reconciliation of operating income to adjusted operating income and operating margin to adjusted operating margin
	Three Months Ended						Year Ended
	December 31,						December 31,
	2007			2006			2007			2006
Consolidated revenue	$	284,158		$	242,351		$	1,156,145		$	983,313
Consolidated operating income	$	47,807		$	40,694		$	233,221		$	192,527
Consolidated operating margin		16.8	%		16.8	%		20.2	%		19.6	%
Certain significant item:
Workers' compensation benefit		(3,548	)		-			(3,548	)		-
Consolidated adjusted operating income	$	44,259		$	40,694		$	229,673		$	192,527
Consolidated adjusted operating margin		15.6	%		16.8	%		19.9	%		19.6	%
Laboratory revenue	$	68,622		$	63,281		$	295,695		$	258,345
Laboratory operating income	$	26,682		$	23,701		$	123,344		$	101,981
Laboratory operating margin		38.9	%		37.5	%		41.7	%		39.5	%
Certain significant item:
Workers' compensation benefit		(597	)		-			(597	)		-
Laboratory adjusted operating income	$	26,085		$	23,701		$	122,747		$	101,981
Laboratory adjusted operating margin		38.0	%		37.5	%		41.5	%		39.5	%
Animal hospital revenue	$	209,298		$	171,880		$	844,344		$	711,997
Animal hospital operating income	$	27,927		$	23,323		$	140,344		$	118,138
Animal hospital operating margin		13.3	%		13.6	%		16.6	%		16.6	%
Certain significant item:
Workers' compensation benefit		(2,776	)		-			(2,776	)		-
Animal hospital adjusted operating income	$	25,151		$	23,323		$	137,568		$	118,138
Animal hospital adjusted operating margin		12.0	%		13.6	%		16.3	%		16.6	%

VCA Antech, Inc.
Supplemental Operating Data - Continued
(In thousands, except per share amounts)
Table #5							December 31,
Selected consolidated balance sheet data							2007			2006
Debt:
Revolving credit facility							$	-		$	-
Senior term notes								527,675			372,668
Other debt and capital leases								32,505			18,047
Total debt							$	560,180		$	390,715
	Three Months Ended						Year Ended
Table #6	December 31,						December 31,
Selected expense data	2007			2006			2007			2006
Rent expense	$	9,755		$	8,359		$	36,864		$	32,058
Depreciation and amortization included in direct costs:
Laboratory	$	1,713		$	1,256		$	6,356		$	4,584
Animal hospital		4,825			3,875			17,353			14,455
Medical technology		304			283			1,201			1,174
Intercompany		(105	)		(93	)		(386	)		(202	)
		6,737			5,321			24,524			20,011
Depreciation and amortization included in selling, general and administrative expense		548			574			2,525			2,231
Total depreciation and amortization	$	7,285		$	5,895		$	27,049		$	22,242
Share-based compensation included in direct costs:
Laboratory	$	159		$	164		$	661		$	656
Share-based compensation included in selling, general and administrative expense:
Laboratory		179			127			731			509
Animal hospital		297			269			1,193			1,076
Medical technology		30			-			111			-
Corporate		490			185			1,888			830
		996			581			3,923			2,415
Total share-based compensation	$	1,155		$	745		$	4,584		$	3,071

CONTACT:
VCA Antech, Inc.
Tomas Fuller, Chief Financial Officer
(310) 571-6505