Introducing the new.

Transcription

1 Introducing the new.

2 Safe Harbor Disclosure The information contained in this presentation may include forward-looking statements that involve risks and uncertainties. Such statements appear in a number of places in this presentation and include statements regarding our intent, our belief or current expectations with respect to, among other things, our revenues and operating results in future periods, our expansion plans and our business strategy and ability to successfully execute on that strategy. We caution you not to place undue reliance on such forward-looking statements. Such statements are not guarantees of our future performance and involve risks and uncertainties. Our actual results may differ materially from those projected in this presentation, for the reasons, among others, discussed in our filings with the Securities and Exchange Commission. This presentation, and the information contained herein, represents our outlook only as of today's date, June 3, 2014 and we undertake no obligation to update or revise any forward-looking statement, whether as a result of new developments or otherwise. Attendees should be aware that today s discussion includes reference to several non-gaap financial measures that management believes are useful to an understanding of our business. A reconciliation of each of these non-gaap measures to the most comparable GAAP measure is posted on our website at

3 What s New at WOOF We changed our name Solid weather-challenged 1 st quarter operating results Two exciting agreements with Abaxis Our Sound-Eklin facility hit by San Diego wildfires We continue to evaluate our capital deployment strategy in light of evolving acquisition environment

4 94% of pet owners believe their pet has human personality traits The Human Animal Bond

5 The Human Animal Bond 86% of pet owners include their pet in holiday celebrations

6 The Human Animal Bond 52% of pet owners prepare special meals for their pet

7 67% of pet owners take their pet on vacations with them The Human Animal Bond

8 The Human Animal Bond 93% of pet owners would risk their own life for their pet

9 Four Businesses Market Leaders

10 Four Businesses- Great Market 208 million pets 83 million pet-owning households 26,000 animal hospitals $32 billion market Good demographic trends

11 Four Businesses- Great Industry Large, fragmented market with substantial opportunity for consolidation No reimbursement risk Favorable regulatory environment Predictable business: Recession resistant Highly repetitive revenue Geographically diversified Diversified business units

12 Four Businesses- Multiple Touch Points Millions of pet owners Millions of pets Thousands of professionals Thousands of hospitals

13 Transforming Pet Care - 25 Years of Leadership Increasing training and technology Providing sellers liquidity Creating an industry & providing careers Delivering higher quality medicine From a fragmented ( garage ) business to a nationwide platform Research centers Superb service and quality X-ray film to digital Same day telemedicine services Bonding the client and the veterinarian Maintaining the vet s influence through keeping in touch

14 VCA Animal Hospitals Animal Hospitals

15 VCA Animal Hospitals Leading network of free-standing hospitals: 608 animal hospitals Over 3,300 doctors Over 2.0 million clients Over 2.7 million pets Over 8.3 million annual pet visits Leading provider of specialty medicine Leading provider of post-grad veterinarian training

16 Leading Animal Hospital Network Leading Animal Hospital Network 608 Animal Hospitals in 41 States and 4 Canadian Provinces

17 Leader in Specialty Medicine Expanding the base of specialty/referral hospitals Operate over 54 specialty & specialty/hybrid hospitals Over 400 veterinary specialists 95% of visits referred from non-vca hospitals Host internship and residency programs Building flagship specialty hospitals

18 Leader in Specialty Medicine VCA West L.A. Animal Hospital Before After After- 2013

19 Leader in Specialty Medicine VCA West L.A. Animal Hospital Built in 1984; 15,000 sq. ft. $3 million annual revenue 19 doctors 5 GP 8 specialists 6 interns Advanced medical: X-ray and ultrasound, Endoscopy & ECG Then & Now Acquired in 1987 Built in 2013; 42,000 sq. ft. Over $20 million in revenue 50 doctors 9 GP 27 specialists 14 interns Advanced medical (additions): Digital X-ray MRI, CT, Lin-ac, Bone Marrow, Iodine-131, Bronchoscopy, Fluoroscopy, MIS, Trauma

20 Specialty Medicine- Technology Linac CyberKnife CT MRI

21 Leader in Education Training Programs 55 Sponsored Residents 26 in 12 universities 29 in VCA specialty hospitals 30 Internship Programs Over 1,400 interns trained to date 154 interns in 30 programs this year Externship Programs Over 1,000 veterinary student externs hosted each year in our hospitals Plus vet technician interns

22 Leader in Education- WOOF University Accredited Programs Client Experience Performance Based Training Interactive elearning Virtual Classrooms Doctor Communication Training Business & Leadership Curricula Mobile Ready Content Client Service Training High-end Educational Videos

23 Leader in Education- WOOF University Accredited Programs Client Experience Virtual Classrooms Center of Culture Performance Based Training Interactive elearning Business & Leadership Curricula Doctor Communication Training Over 12,000 VCA professionals Over 700 non-vca professionals Completed over 89,000 courses since launched in September 2013 Mobile Ready Content Client Service Training High-end Educational Videos

24 Investing in Hospitals Revenue Acquired (1) $65.3 $130.2 $90.3 $177.3 $60.4 $ YTD 2014 Large target list Enables choice of most attractive targets Targets 6x-7x EBITDA Utilize internally generated free cash Easy integration process Proven track record for hitting acquisition targets (1) Includes Pet DRx (July 2010), BrightHeart (July 2011) and AVC (February 2012) acquisitions.

25 Growth Strategy Capitalize on Leading Market Position & Scale Grow revenue Leverage established infrastructure to improve margins Pursue selected, accretive acquisitions

26 Growth Initiatives- Client Centric Focus on Service and Medicine Wellness plans Client experience Doctor-client communication training Systems: WOOFware (EMR) Pet owner behavior and pet care analytics Hospital communications: texting & s

27 Antech Diagnostics #1 Provider of Veterinary Diagnostic Laboratory Services in the Nation

28 Antech Diagnostics 57 labs serving all 50 states & Canada Reference lab testing for over 30,000 veterinarians in 16,000 animal hospitals Over 10 million pets tested per year Over 12 million requisitions per year

29 Antech Diagnostics- Client-Centric Communications ANIMAL HOSPITAL Antech On-The-Move

30 Antech Diagnostics Antech Online Communication and Information Drives Better Medicine

31 Antech Diagnostics Healthtracks Communication and Information Drives Better Medicine Enhances the client experience Creates value

32 Antech Diagnostics Healthtracks Communication and Information Drives Better Medicine

33 Antech Diagnostics - Innovation New Services New Tests & Testing Platforms Antech Imagining Services Accuplex

34 State of the Art Laboratories

35 Extensive International Infrastructure in Place HI OR Irvine, CA WA CA NV UT CO MO IL KS AZ 57 Labs serving all 50 states & Canada - 3 Primary Hubs (1 in Canada) - 10 Secondary Hubs (1 in Canada) TX OK MN LA - 44 STAT Labs (2 in Canada) WI MS Ontario, Canada MI PA OH IN KY VA NC TN SC AL GA FL NY MA Long Island, NY Largest National Platform Over 16,000 customers Serving over 100 cities in U.S. & Canada Significant Operating Leverage Over 12 million requisitions in 2013 Transportation network in place 36,000 to 45,000 requisitions / day Highly automated chemistry testing

36 Growth Strategy Capitalize on Leading Market Position & Scale Grow market share Service, service, service Competitive pricing Offer complete solutions with the Abaxis co-marketing agreement Leverage infrastructure to improve margins Very high fixed-cost business

37 Sound-Eklin

38 Sound-Eklin Over 7,000 digital radiography units taking over 5 million X-rays per year Over 4,200 ultrasounds doing over 1.8 million studies per year Largest ultrasound training facility in the US

39 Sound-Eklin Staying Connected.. Sound-Eklin On-The-Move

40 Sound-Eklin Leader in Mobile Digital X-Ray

41 Sound-Eklin

42 VetSTREET #1 Provider of Education and Communication Services to Veterinarians and Consumers

43 VetSTREET Connecting pet owners with their veterinarian Strengthening the client-veterinarian relationship Practice communication (pet portals, s, reminders) Pet owner communication (pet education, practice referral) Practice analytics ecommerce Over 6,000 current subscribers Over 9 million pet-owner addresses with over 100 million pets Over 100 million s sent to over 13 million pet owners

44 ANIMAL HOSPITAL VetSTREET Pet Portals

45 VetSTREET - Client Reminders Over 100 million s sent to over 13 million pet owners Over 34 million direct mail You ve got mail! ANIMAL HOSPITAL

46 VetSTREET - Communications Healthtracks Provided by Antech & Delivered via VetSTREET Pet Portal ANIMAL HOSPITAL

47 Financial Summary

48 Organic Revenue Growth Recovering 13.5% 5.2% 0.9% 0.8% 0.9% 0.2% 2.0% 5.1% 2.2% 2.6% 0.2% 3.5% 1.1% 4.3% 3.0% 1.6% 1.8% 6.3% 5.2% 5.3% 1.3% 1.1% 0.9% 1.9% 0.5% -0.7% -3.2% -2.5% st 2nd 3rd 4th 1st 2nd 3rd 4th 1st Labs Hospitals

49 Organic Revenue Growth Recovering 13.5% 5.2% 0.9% 0.8% 0.9% 0.2% 2.0% 5.1% 2.2% 2.6% 0.2% 3.5% 1.1% 4.3% 3.0% 1.6% 1.8% 6.3% 5.2% 5.3% 1.3% 1.1% 0.9% 1.9% 0.5% -0.7% -3.2% -2.5% st 2nd 3rd 4th 1st 2nd 3rd 4th 1st Labs Hospitals

50 ($ in millions) ($ in millions) Hospital Performance Three Months Ended March 31 Revenue Adjusted Operating Income & Margin (Excluding Amortization) $340.6 $351.6 $42.7 $ % 12.4% * Business day adjusted same-store revenue growth of 0.5%

51 ($ in millions) ($ in millions) Laboratory Performance Three Months Ended March 31 Revenue Operating Income & Margin (Excluding Amortization) $87.3 $88.5 $34.7 $ % 39.9% * Day- adjusted internal revenue growth of 1.9%

52 ($ in millions) ($ in millions) Company Performance Three Months Ended March 31 Revenue Adj. Operating Income & Margin Excl. Amort. $438.6 $449.5 $64.2 $ % 14.8%

53 Adjusted Diluted EPS, Excluding Amortization First Quarter $0.40 $

54 Cash and Long Term Debt March 31, 2014 ($ in millions) Cash $ Debt: Senior Credit Facility (LIBOR +1.75) Other 61.3 Total Debt $ 606.4

55 Looking Forward Leading market position & strong franchise in: Animal hospitals Diagnostic laboratories Digital radiography & ultrasound imaging equipment Communications and education Substantial operating leverage opportunities Significant free cash flow Strong, flexible, balance sheet

56

57 Appendix - Reconciliation of Non-GAAP Measures Reconciliation of operating incom e and operating m argin to adjusted operating incom e excluding am ortization and adjusted operating m argin excluding am ortization (in m illions): Revenue $ 1,314.5 $ 1,381.5 $ 1,485.4 $ 1,699.6 $ 1,803.4 Operating income $ $ $ $ 92.9 $ Operating margin 18.4% 15.0% 13.2% 5.5% 13.8% Certain significant items: Depreciation expense adj Impairment charges Consultant agreement costs Write-dow n of assets Vacant lease expense accrual Vacant property w rite dow n West LA capital lease correction (1.4) Inventory adjustment (2.8) Adjusted operating income $ $ $ $ $ Adjusted operating margin 18.6% 16.1% 14.6% 12.9% 13.8% Amortization Adj. operating income excl. amort. $ $ $ $ $ Adj. operating margin excl. amort. 19.2% 16.7% 15.5% 14.3% 14.9%

58 Appendix - Reconciliation of Non-GAAP Measures Reconciliation of net income and diluted earnings per share to adjusted net income excluding amortization and adjusted diluted earnings per share excluding amortization (in millions, except per share amounts): Net income $ $ $ 95.4 $ 45.6 $ Certain significant items: Depreciation expense adj Impairment charges Business combination adj. (gain) (5.7) - Compensation charges Debt retirement costs NY State tax settlement Write-down of assets Vacant lease expense accrual Vacant property write down Inventory adjustment (2.8) Tax benefit of significant items (1.3) (6.4) (1.1) (45.7) (0.4) Certain significant items (net of taxes): Amortization (net of taxes): Adjusted net income excluding amortization $ $ $ $ $ Diluted earnings per common share $ 1.53 $ 1.27 $ 1.09 $ 0.51 $ 1.53 Certain significant items Amortization Adjusted diluted EPS excluding amortization* $ 1.61 $ 1.49 $ 1.45 $ 1.52 $ 1.68 Shares used for computing adjusted diluted earnings per common share *Amounts may not foot due to rounding

59 Appendix - Reconciliation of Non-GAAP Measures Reconciliation of net income and diluted earnings per share to adjusted net income excluding amortization and adjusted diluted earnings per share excluding amortization (in millions, except per share amounts): First Quarter Net income $ 30.5 $ 34.0 Certain significant items: Vacant lease expense accrual Vacant property write down Tax benefit of significant items (1.5) - Certain significant items (net of taxes): Adjusted net income 1 $ 32.8 $ 34.0 Amortization Tax effect on amortization (1.9) (2.0) Adjusted net income excl. amortization 1 $ 35.9 $ 37.2 Diluted earnings per common share $ 0.34 $ 0.38 Certain significant items as detailed above Adjusted diluted earnings per common share 1 $ 0.37 $ 0.38 Amortization, net of tax Adjusted diluted EPS excl. amortization 1 $ 0.40 $ 0.42 Shares used for computing adjusted diluted earnings per common share Amounts may not foot due to rounding

60 Appendix - Reconciliation of Non-GAAP Measures Reconciliation of Animal Hospital operating income and operating margin to Animal Hospital adjusted operating income excl. amortization and adjusted operating margin excl. amortization (in millions): Year Ended December 31, Animal hospital revenue $ $ 1,052.5 $ 1,150.1 $ 1,331.3 $ 1,417.9 Animal hospital operating income $ $ $ $ $ Animal hospital operating margin 16.3% 14.1% 13.5% 11.7% 12.1% Certain significant items: Depreciation Expense Adjustment Property write-down adj West LA capital lease correction (1.4) Vacant lease expense accrual Vacant property write down Inventory adjustment (2.8) Animal hospital adjusted operating income $ $ $ $ $ Animal hospital adjusted operating margin 16.3% 14.1% 13.5% 12.1% 12.1% Hospital amortization Animal hospital adj. operating income excl. amort. $ $ $ $ $ Animal hospital adj. operating margin excl. amort. 16.9% 14.8% 14.3% 13.2% 13.2%

61 Appendix - Reconciliation of Non-GAAP Measures Reconciliation of operating income and operating margin to adjusted operating income excluding amortization and adjusted operating margin excluding amortization (in millions): First Quarter Revenue $ $ Operating income $ 55.4 $ 61.2 Operating margin 12.6% 13.6% Certain significant items: Vacant lease expense accrual Vacant property write down Total certain significant items Adjusted operating income $ 59.2 $ 61.2 Adjusted operating margin 13.5% 13.6% Amortization Adjusted operating income excl. amortization $ 64.2 $ 66.4 Adj. operating margin excl. amortization 14.6% 14.8%

62 Appendix - Reconciliation of Non-GAAP Measures Reconciliation of Animal Hospital operating income and operating margin to Animal Hospital adjusted operating income excl. amortization and adjusted operating margin excl. amortization (in millions): First Quarter Animal hospital revenue $ $ Animal hospital operating income $ 35.1 $ 39.5 Animal hospital operating margin 10.3% 11.2% Certain significant items: Vacant lease expense accrual Vacant property write down Total certain significant items Animal hospital adjusted operating income 1 $ 38.9 $ 39.5 Animal hospital adjusted operating margin 11.4% 11.2% Hospital amortization Adjusted operating income excl. amortization Adj. operating margin excl. amortization 12.5% 12.4% 1 Amounts may not foot due to rounding