Vca 8-K VCA Inc. Reports Second Quarter 2015 Results and Increases Financial Guidance for 2015

Exhibit 99.1

VCA Inc. Reports Second Quarter 2015 Results and Increases Financial Guidance for 2015

• Revenue increased 12.1% to a second quarter record of $548.8 million
• Gross profit increased 17.0% to $140.8 million
• Operating income increased 21.6% to $97.2 million
• Diluted earnings per common share increased 27.5% to $0.65
• Non-GAAP diluted earnings per common share increased 27.3% to $0.70

LOS ANGELES--(BUSINESS WIRE)--July 29, 2015--VCA Inc. (NASDAQ: WOOF), a leading animal healthcare company in the United States and Canada, today reported financial results for the second quarter ended June 30, 2015, as follows: revenue increased 12.1% to a second quarter record of $548.8 million; gross profit increased 17.0% to $140.8 million; operating income increased 21.6% to $97.2 million; net income increased 19.1% to $54.3 million and diluted earnings per common share increased 27.5% to $0.65. Non-GAAP diluted earnings per common share, which excludes acquisition-related amortization, increased 27.3% to $0.70.

We also reported our financial results for the six months ended June 30, 2015, as follows: revenue increased 11.6% to $1.0 billion, gross profit increased 14.8% to $254.7 million, operating income increased 17.8% to $166.3 million, net income increased 16.3% to $92.6 million, and diluted earnings per common share increased 24.7% to $1.11. Our financial results for the six months ended June 30, 2015, on a Non-GAAP basis, are as follows: gross profit increased 14.6% to $266.0 million, operating income increased 17.3% to $178.0 million, net income increased 15.8% to $99.5 million, and Non-GAAP diluted earnings per common share increased 25.0% to $1.20.

Bob Antin, Chairman and CEO, stated, "We had a great quarter. Our Animal Hospital business segment same-store revenue growth rate continues to accelerate, driven once again by an increase in both the number of orders and the average revenue per order. Our Laboratory business segment experienced 7.3% internal revenue growth resulting in a 220 basis point increase in gross profit margin. Accordingly, we remain very optimistic with respect to our results for the full year ended December 2015.

"Animal Hospital revenue in the current quarter increased 12.6%, to $435.4 million, driven by acquisitions made during the past 12 months and same-store revenue growth of 6.0%. Our same-store gross profit margin increased to 17.3%, from 16.6% and our total gross margin increased to 16.9%, from 16.4% in the prior-year quarter. During the quarter, we acquired 12 independent animal hospitals which had historical combined annual revenue of $30.5 million.

"Laboratory internal revenue in the second quarter increased 7.3%, to $103.0 million. Our Laboratory gross profit margin increased to 53.4%, from 51.2% and our operating margin increased to 44.4%, from 42.5% in the prior-year quarter.

"During the quarter we repurchased 840,000 shares of our common stock for $43.9 million. Since the Board authorized our repurchase programs in April 2013, through the second quarter 2015, we have acquired 9.1 million shares for $365.7 million, including commissions. At the end of the second quarter, we have $159.5 million left in our authorization."

2015 Guidance

We are revising our guidance as follows:

• Revenue from $2.12 billion to $2.13 billion;

• Net income from $172 million to $181 million;

• Diluted earnings per common share from $2.08 to $2.18; and

• Non-GAAP diluted earnings per common share of $2.25 to $2.35.

Non-GAAP Financial Measures

We believe investors’ understanding of our total performance is enhanced by disclosing Non-GAAP financial measures including Non-GAAP net income, Non-GAAP gross profit, Non-GAAP operating income and Non-GAAP diluted earnings per common share. We define these adjusted measures as the reported amounts, adjusted to exclude certain significant items and amortization of intangibles acquired in acquisitions.

Management believes these adjusted measures are useful to management and investors in evaluating the Company's operational performance and their use provides an additional tool for evaluating the Company's operating results and trends. 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 related trends.

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 second quarter 2015 financial results during a conference call today, July 29^th, at 9:00 a.m. Eastern Time. A live broadcast of the call may be accessed by visiting our website at investor.vca.com. The call may also be accessed by dialing (877) 293-5492. Interested parties should call at least ten minutes prior to the start of the call to register. Replay of the webcast will be available for ninety days by visiting the company's website.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Among the forward-looking statements in this press release are statements addressing our 2015 guidance and plans, expectations, future financial position and results of operation. These forward-looking statements are not historical facts and are inherently uncertain and out of our control. Any or all of our forward-looking statements in this press release may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Actual future results may vary materially. Among other factors that could cause our actual results to differ from this forward-looking information are: the continued effects of the economic uncertainty prevailing in regions in which we operate; our ability to execute on our growth strategy and to manage acquired operations; changes in demand for our products and services; fluctuations in our revenue adversely affecting our gross profit, operating income and margins; and the effects of the other factors discussed in our Annual Report on Form 10-K, Reports on Form 10-Q and our other filings with the SEC.

About VCA Inc.

We own, operate and manage the largest networks of freestanding veterinary hospitals and veterinary-exclusive clinical laboratories in the country, additionally we are the largest provider of online communication, professional education and marketing solutions to the veterinary community. We also supply diagnostic imaging equipment to the veterinary industry.

VCA Inc.
Condensed, Consolidated Income Statements
(Unaudited)
(In thousands, except per share amounts)
	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Revenue:
Animal hospital	$	435,376		$	386,776		$	828,402		$	738,364
Laboratory	106,222			95,955			200,194			184,489
All other	28,669			23,712			62,896			51,833
Intercompany	(21,482		)	(16,971		)	(43,254		)	(35,707		)
	548,785			489,472			1,048,238			938,979
Direct costs	407,938			369,057			793,529			717,113
Gross profit:
Animal hospital	73,385			63,336			128,869			112,136
Laboratory	56,703			49,092			104,685			92,123
All other	11,389			7,648			22,813			17,617
Intercompany	(630		)	339			(1,658		)	(10		)
	140,847			120,415			254,709			221,866
Selling, general and administrative expense:
Animal hospital	10,453			9,864			21,674			18,992
Laboratory	9,487			8,281			18,352			16,299
All other	7,741			7,411			16,428			15,759
Corporate	16,804			14,375			32,429			30,321
	44,485			39,931			88,883			81,371
Net (gain) loss on sale or disposal of assets	(819		)	578			(484		)	(643		)
Operating income	97,181			79,906			166,310			141,138
Interest expense, net	5,104			4,030			9,941			8,197
Other (income) expense	(37		)	43			29			(10		)
Income before provision for income taxes	92,114			75,833			156,340			132,951
Provision for income taxes	36,191			28,925			60,864			51,128
Net income	55,923			46,908			95,476			81,823
Net income attributable to noncontrolling interests	1,624			1,324			2,876			2,196
Net income attributable to VCA Inc.	$	54,299		$	45,584		$	92,600		$	79,627
Diluted earnings per share	$	0.65		$	0.51		$	1.11		$	0.89
Weighted-average shares outstanding for diluted earnings per share	83,084			89,191			83,227			89,312

VCA Inc.
Condensed, Consolidated Balance Sheets
(Unaudited)
(In thousands)
	June 30, 2015			December 31, 2014
Assets
Current assets:
Cash and cash equivalents	$	74,326		$	81,383
Trade accounts receivable, net	81,593			60,482
Inventory	53,789			56,050
Prepaid expenses and other	27,874			36,924
Deferred income taxes	30,324			30,331
Prepaid income taxes	6,472			18,277
Total current assets	274,378			283,447
Property and equipment, net	477,929			468,041
Other assets:
Goodwill	1,452,370			1,415,861
Other intangible assets, net	98,908			88,175
Notes receivable	2,471			2,807
Deferred financing costs, net	7,004			7,874
Other	84,050			65,815
Total assets	$	2,397,110		$	2,332,020
Liabilities and Equity
Current liabilities:
Current portion of long-term debt	$	33,881		$	19,356
Accounts payable	42,071			46,284
Accrued payroll and related liabilities	72,697			64,359
Other accrued liabilities	73,093			67,219
Total current liabilities	221,742			197,218
Long-term debt, less current portion	819,380			775,412
Deferred income taxes	103,424			103,502
Other liabilities	31,862			33,190
Total liabilities	1,176,408			1,109,322
Redeemable noncontrolling interests	11,183			11,077
VCA Inc. stockholders’ equity:
Common stock	81			83
Additional paid-in capital	72,590			155,802
Retained earnings	1,156,758			1,064,158
Accumulated other comprehensive loss	(30,331		)	(19,397		)
Total VCA Inc. stockholders’ equity	1,199,098			1,200,646
Noncontrolling interests	10,421			10,975
Total equity	1,209,519			1,211,621
Total liabilities and equity	$	2,397,110		$	2,332,020

VCA Inc.
Condensed, Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
	Six Months Ended June 30,
	2015			2014
Cash flows from operating activities:
Net income	$	95,476		$	81,823
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	40,163			39,797
Amortization of debt issue costs	870			604
Provision for uncollectible accounts	3,379			2,612
Net gain on sale or disposal of assets	(484		)	(643		)
Share-based compensation	8,269			8,571
Excess tax benefit from stock based compensation	(4,729		)	(2,092		)
Other	(658		)	(53		)
Changes in operating assets and liabilities:
Trade accounts receivable	(24,217		)	(8,945		)
Inventory, prepaid expense and other assets	(8,942		)	(6,610		)
Accounts payable and other accrued liabilities	(4,196		)	1,171
Accrued payroll and related liabilities	8,300			3,816
Income taxes	16,525			8,062
Net cash provided by operating activities	129,756			128,113
Cash flows from investing activities:
Business acquisitions, net of cash acquired	(66,529		)	(30,764		)
Property and equipment additions	(34,521		)	(27,979		)
Proceeds from sale of assets	6,164			4,456
Other	205			55
Net cash used in investing activities	(94,681		)	(54,232		)
Cash flows from financing activities:
Repayment of debt	(7,924		)	(26,218		)
Proceeds from revolving credit facility	61,000			—
Distributions to non-controlling interest partners	(2,447		)	(2,259		)
Purchase of non-controlling interests	(1,493		)	(326		)
Proceeds from issuance of common stock under stock option plans	679			467
Excess tax benefit from stock based compensation	4,729			2,092
Repurchase of common stock	(96,674		)	(49,091		)
Other	(80		)	(838		)
Net cash used in financing activities	(42,210		)	(76,173		)
Effect of currency exchange rate changes on cash and cash equivalents	78			(202		)
Decrease in cash and cash equivalents	(7,057		)	(2,494		)
Cash and cash equivalents at beginning of period	81,383			125,029
Cash and cash equivalents at end of period	$	74,326		$	122,535

VCA Inc.
Supplemental Operating Data
(Unaudited - In thousands, except per share amounts)
Table #1
Reconciliation of net income attributable to	Three Months Ended June 30,						Six Months Ended June 30,
VCA Inc., to Non-GAAP net income attributable
to VCA Inc. (1)	2015			2014			2015			2014
Net income attributable to VCA Inc.	$	54,299		$	45,584		$	92,600		$	79,627
Acquisitions related amortization (1)	5,858			5,227			11,384			10,374
Tax benefit from acquisitions related amortization (1)	(2,293		)	(2,046		)	(4,456		)	(4,060		)
Non-GAAP net income attributable to VCA Inc.	$	57,864		$	48,765		$	99,528		$	85,941
Table #2	Three Months Ended June 30,						Six Months Ended June 30,
Reconciliation of diluted earnings per share to
Non-GAAP diluted earnings per share (1)	2015			2014			2015			2014
Diluted earnings per share	$	0.65		$	0.51		$	1.11		$	0.89
Impact of acquisitions related amortization, net of tax (1)	0.04			0.04			0.08			0.07
Non-GAAP diluted earnings per share (2)	$	0.70		$	0.55		$	1.20		$	0.96
Shares used for computing diluted earnings per share	83,084			89,191			83,227			89,312
Table #3	Three Months Ended June 30,						Six Months Ended June 30,
Reconciliation of consolidated gross profit to
Non-GAAP consolidated gross profit (1)	2015			2014			2015			2014
Consolidated gross profit	$	140,847		$	120,415		$	254,709		$	221,866
Impact of acquisitions related amortization (1)	5,798			5,160			11,263			10,240
Non-GAAP consolidated gross profit	$	146,645		$	125,575		$	265,972		$	232,106
Non-GAAP consolidated gross profit margin	26.7%			25.7%			25.4%			24.7%
Table #4	Three Months Ended June 30,						Six Months Ended June 30,
Reconciliation of consolidated operating income to
Non-GAAP consolidated operating income (1)	2015			2014			2015			2014
Consolidated operating income	$	97,181		$	79,906		$	166,310		$	141,138
Impact of acquisitions related amortization (1)	5,858			5,227			11,384			10,374
Non-GAAP consolidated operating income	$	103,039		$	85,133		$	177,694		$	151,512
Non-GAAP consolidated operating margin	18.8%			17.4%			17.0%			16.1%

_________________________________________________

⁽¹⁾ Management believes that investors' understanding of our performance is enhanced by disclosing adjusted measures as the reported amounts, adjusted to exclude certain significant items and acquisition-related amortization. Non-GAAP net income, Non-GAAP diluted earnings per common share, Non-GAAP consolidated gross profit and Non-GAAP consolidated operating income measures are not, and should not be viewed as substitutes for U.S. generally accepted accounting principles (GAAP) net income, its components and diluted earnings per share.

⁽²⁾ Amounts may not add due to rounding.

VCA Inc.
Supplemental Operating Data (cont)
(Unaudited - In thousands, except per share amounts)
							As of
Table #5							June 30, 2015			December 31, 2014
Selected consolidated balance sheet data
Debt:
Senior term notes							$	600,000		$	600,000
Revolving credit							196,000			135,000
Other debt and capital leases							57,261			59,768
Total debt							$	853,261		$	794,768
	Three Months Ended June 30,						Six Months Ended June 30,
Table #6
Selected expense data	2015			2014			2015			2014
Rent expense	$	18,841		$	16,879		$	37,621		$	33,808
Depreciation and amortization included
in direct costs:
Animal hospital	$	16,381		$	14,955		$	32,343		$	29,529
Laboratory	2,676			2,543			5,151			5,059
All other	963			1,671			1,903			3,402
Intercompany	(530		)	(473		)	(1,053		)	(938		)
	$	19,490		$	18,696		$	38,344		$	37,052
Depreciation and amortization included in selling,
general and administrative expense	876			1,334			1,819			2,745
Total depreciation and amortization	$	20,366		$	20,030		$	40,163		$	39,797
Share-based compensation included in direct costs:
Laboratory	$	163		$	133		$	324		$	283
Share-based compensation included in
selling, general and administrative expense:
Animal hospital	673			424			1,337			941
Laboratory	376			352			742			733
All other	198			191			400			373
Corporate	2,727			2,927			5,466			6,241
	3,974			3,894			7,945			8,288
Total share-based compensation	$	4,137		$	4,027		$	8,269		$	8,571

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