VCA Antech Earnings Call Nuggets: Revenue Growth Trajectory and Vetstreet

VCA Antech, Inc. (NASDAQ:WOOF) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

Revenue Growth Trajectory

Erin Wilson – Bank of America Merrill Lynch: I guess I just want to know kind of what’s outstanding on Vetstreet integration kind of what’s next you alluded to some possibly near term launches what are your thoughts on how we should think about kind of the revenue growth trajectory for that business going forward?

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Bob L. Antin – Co-Founder, CEO, President and Chairman: I think I’ll answer the last one first Erin. The revenue is in the range of about $50 million. So, it is cash flow positive. We’re looking at around $5 million cash positive. We’re about to introduce our first joint introduction between Antech Diagnostics and Vetstreet. We have some other offerings that we’re providing out on the consumer side. Vetstreet.com itself which originally was going to be our vehicle for the consumer side has an wonderful site for data and content. It is a phenomenal site. So we have now made it easier for Hospitals to access and the clients on the portals to access. So, we’ve been releasing that over the last three weeks. So, going through the transition from the current datacenter it is allowing us to be able to move some of those out into the marketplace. We’re also now allowing clients – previous clients to access online the ability to order the magazine, Healthy Pet’s which we before couldn’t do to about 75% of our clients. So, we’re slowly integrating some of our capabilities now that we’ve moved the data center.

Erin Wilson – Bank of America Merrill Lynch: How should we think about current utilization trends and going into I guess we’re now in the first quarter and last year there was a favorable weather impact how should we think about the quarterly progression?

Bob L. Antin – Co-Founder, CEO, President and Chairman: It’s a great question. We turn over the course of the year in terms of the guidance that Tom provided we’re still cautious. We are optimistic and we’re assuming that the revenue assumptions on the Hospital side are going to grow 2% to 3.5%. We’re very encouraged by what we saw in January, but then we got hit with the snow in February. So, it really the visibility to it was changed a little bit just because we didn’t know what impact the economy was having or the snow was having, but so far when we’re turning the corner we’ve looked very encouraging.

Erin Wilson – Bank of America Merrill Lynch: Just one last one. On the Lab side of your business, I guess your growth was sequentially better adjusted for the weather, but it continues to lag your competitors and with regard to competition, your answer doesn’t really seem to change all that much and the trends are continuing to lag, I guess the competition. What’s the disconnect there and skeptics I think that there is ultimately a conflict of interest there?

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Bob L. Antin – Co-Founder, CEO, President and Chairman: I’m not sure the conflict of interest. I could address both them. You do know IDEXX is very tough competitor they are very strong and I think we’re holding market share. I think the new entrant into the market is going after placements of machines through selling a very, very small clients and we track them very, very carefully and they typically are the small clients that we previously ran through our test express in Memphis. So, we’re aware of it. We are competing with one other competitor which I think releases their numbers and they are finding out that it’s a very challenging market on the small one. So, I don’t know what resolve they have, but we’re still seeing growth. If we looked at the requisitions and we adjusted it for Sandy, we still had positive requisition growth.

Vetstreet

Robert Willoughby – Bank of America Merrill Lynch: Bob you got to look at the magnitude of the write-downs for Vetstreet, what was that technology business and how quickly they came close to closing? It just really makes me wonder what would where would the stock be had the capital been deployed on share repurchases and dividends, and is the Board any closer to finding religion on that front, or are you just asking people to believe that deal strategy is going to pull you out of this stock swap?

Bob L. Antin – Co-Founder, CEO, President and Chairman: Well I think first part, we were committed to Vetstreet and we did find, and I think you could see it in the results, we did find it challenging. We under estimated the difficulty was on the electronic side which I mentioned before, so there is no disagreement. That is, you put an awful lot of resource into it and that is a challenge, but the positive side of it is we still feel Vetstreet will be positive and a positive contributor. In terms of the underlying question of share purchase, I think one of the questions, Aaron was alluding to that maybe I didn’t answer is, our hospital acquisitions this year have targeted towards $50 million to $60 million which is down some from last year, and we’re taking a slower approach in the beginning of the year to see whether or not it rebounds. If the business rebounds we’ll be more aggressive, if the business doesn’t rebound and doesn’t perform as we expect then we would as you say find more (religion) and would strongly consider a share buyback but I’m not committing to that. I think part of it is what we see in the beginning of the year. We’ve taken feedback from folks like you and some of the other shareholders and have tampered the aggression in acquisitions to see whether or not it comes back in the beginning of the year. If the market comes back as we hope and as we are seeing we will be again more aggressive in growing the business, if it doesn’t we will strongly consider and it’s been discussed we will strongly consider a strategy that l9oks more towards maybe deploying some of the capital and leverage towards a share buyback.

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Tomas W. Fuller – CFO and VP: Yeah, I think definitely by changes in orders so we’re certainly pulling for that.

Bob L. Antin – Co-Founder, CEO, President and Chairman: Thank you, Bob.