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Pethealth Inc. Announces Its Results for the Three and Six Months Ended June 30, 2014, Comprising Record Quarterly Revenue of $13,014,000

August 14, 2014

OAKVILLE, ONTARIO--(Marketwired - Aug. 14, 2014) - (TSX:PTZ) Pethealth Inc. ("Pethealth" or "the Company") today announced its financial results for the three and six months ended June 30, 2014.

---------------------------------------------------------------------------- For the quarter ended For the six months ended ---------------------------------------------------------------------------- ($'000 except for per June 30 June 30 Change June 30 June 30 Change share figures) 2014 2013 % 2014 2013 % ---------------------------------------------------------------------------- Revenue 13,014 10,475 24% 25,746 20,100 28% EBITDA(1) 1,005 1,145 (12%) 2,175 2,427 (10%) Profit before taxes 74 318 (77%) 277 797 (65%) Basic effective tax rate 43% 31% - 27% 30% - Profit after taxes 42 219 (81%) 203 559 (64%) Basic earnings per share(2) 0.00 0.00 - 0.00 0.01 - Fully diluted earnings per share(2) (0.01) 0.00 - (0.01) 0.01 - ---------------------------------------------------------------------------- (1) EBITDA, a non IFRS accounting measure, is profit before amortisation and depreciation, interest and income taxes. (2) Earnings per share presented for 2013 have been adjusted to reflect dividends on the preference shares on an accrual basis.

"I am very pleased with the performance of most of our operations in Q2 and for the last six months as a whole, despite the effect of various items, as outlined below, that affected our bottom line," said Mark Warren, President and Chief Executive Officer of Pethealth. "Record revenue was driven by our pet insurance operations which showed a 33% increase in core policy sales from Q2 last year, marking our highest quarterly year on year growth rate in core policy sales since 2004. Revenue growth from our BtoC pet specialty retail and pet pharmacy operations was also solid on both a year on year and sequential basis and our 24PetWatch database and information services made great contributions to both our top and bottom line. May was a bad month for our BtoB operations and thus reduced their contribution to both top and bottom line as a whole for the quarter but remedial action has been taken and we expect them to contribute more positively over the remainder of the year."

Consolidated quarterly revenue increased by 24% (YTD: 28%) to a record $13.0-million (YTD: $25.7-million) as the business-to-consumer segment recorded double digit revenue growth. Year-on-year relative movements in foreign exchange rates increased consolidated revenue by $966,000 (YTD: $2.1-million).

Consolidated EBITDA and Profit before taxes were impacted by the following:

-- $121,000 (YTD: $320,000) more than the same period in the prior year was spent on insurance policy acquisition costs resulting from a 33% (YTD: 23%) increase in policy sales, the benefits of which will not be realised until future quarters; -- A $175,000 (YTD: $225,000) expense by way of an investment in the integration of VetMedsDirect, the Company's recently acquired on-line pet pharmacy, pet food and pet supply retailer in the UK; -- A deferral of the Company's annual microchip price increase on its standard microchip, which was delayed until such time it could be tied to the launch of the Allflex bio-thermal microchip, now slated for mid- September of this year. The deferral impacted our ability to pass along cost increases and thus impacted both revenue, EBITDA and Profits before tax by $155,000 for the quarter (YTD: $312,000); -- Legal expenses incurred of $126,000 (YTD: $179,000) related to the Company's on-going review of its legal options as a result of actions undertaken by certain of its microchip competitors in the United Kingdom the Company alleges are anticompetitive; -- An investment of $54,000 (YTD: $104,000) made in the launch and promotion of, the Company's pet insurance aggregator website in Canada;

Excluding the impact of a foreign exchange benefit for the quarter on EBITDA of $218,000 (YTD: $545,000) and adjusting for those items described above, EBITDA would have increased by 24% (YTD: 14%) as compared to the prior year.

About Pethealth

For detailed financial statements for the quarter ended June 30, 2014, including Management's Discussion and Analysis, please refer to the Company's website or SEDAR at shortly after August 14, 2014.

Pethealth is North America's second largest provider of medical insurance for dogs and cats to pet owners, operating in the United States, Canada and the United Kingdom. In addition, the Company is the leading provider of management software to North American animal welfare organisations through its SaaS-based application and is the leading provider of pet related database management services to the North American companion animal industry. Pethealth offers a unique range of products and services for veterinarians, shelters and pet owners through a number of wholly owned subsidiaries using a range of brand names including PetCare, 24PetWatch, Pet Protect, Petpals Direct, ShelterCare, PetPoint, and

Pethealth is based in Oakville, Ontario. To find out more about Pethealth, visit the web site at

Forward-Looking Statements

This press release contains information that is forward-looking information within the meaning of applicable securities laws. In some cases, forward-looking information can be identified by the use of terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or the negative of these terms or other similar expressions concerning matters that are not historical facts.

Forward-looking information by its nature necessarily involves risks and uncertainties including, without limitation, the difficulty of predicting the current regulatory and supervisory environment, the timing and conditions to obtaining any regulatory approval, reliance on insurance underwriters for pet insurance policies, market acceptance and demand for existing and new products and services, including PetPoint and EVE Software and the 24PetWatch microchip program, the Company's ability to maintain and service new and existing customers, the protection of intellectual property associated with its products and services, the impact of competition generally and new competitive products, currency and foreign exchange fluctuations, risks associated with the Company's customer care solutions facility, and related risks and uncertainties. Additional risks and uncertainties affecting the Company can be found in the Company's Annual Information Form available on SEDAR at If any of these risks or uncertainties were to materialize or if the factors and assumptions underlying the forward-looking information were to prove incorrect, actual results could vary materially from those that are expressed or implied by the forward-looking information contained herein. The Company disclaims any intention or obligation, other than those required by security laws, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

FOR FURTHER INFORMATION PLEASE CONTACT: Investor Relations Contacts: Pethealth Inc.Mark Warren President and Chief Executive Officer (905) 842-2615 Pethealth Inc.Glen Tennison Chief Financial Officer (905) 842-2615 Source: Pethealth Inc.

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Source: Marketwire (Canada)

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