Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

VCA Antech (NASDAQ:WOOF)

Q2 2012 Earnings Call

July 26, 2012 4:30 pm ET

Executives

Tomas W. Fuller - Chief Financial Officer, Principal Accounting Officer, Vice President and Secretary

Robert L. Antin - Co-Founder, Chairman of the Board, Chief Executive Officer and President

Analysts

Brian Tanquilut - Jefferies & Company, Inc., Research Division

Ryan Daniels - William Blair & Company L.L.C., Research Division

Erin E. Wilson - BofA Merrill Lynch, Research Division

Kevin K. Ellich - Piper Jaffray Companies, Research Division

L. Mitra Ramgopal - Sidoti & Company, LLC

Nicholas Jansen - Raymond James & Associates, Inc., Research Division

Operator

Before we commence the discussion, I would like to preface the comments made today with a statement regarding forward-looking information. The information contained in this presentation includes 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 our revenues and operating results in the 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 material from those projected in this presentation for the reasons, among others, discussed in our filings with the Securities and Exchange Commission. The information in this presentation concerning our forecast for future periods represents our outlook only as of today's date, July 26, 2012, and we undertake no obligation to update or revise any forward-looking statement, whether as a result of new developments or otherwise.

Listeners should also be aware that today’s discussion includes reference to non-GAAP financial measures, which management believes are useful to understanding of our business. A reconciliation of these non-GAAP measures to the most comparable GAAP measure will be included with our earnings release and posted on our website at investor.vcaantech.com. Our earnings and guidance releases are available on our website at investor.vcaantech.com. In addition, an audio file of this conference call will be available on our website for a period of 3 months.

I would now like to hand over call over to your speaker, Mr. Tom Fuller, you may begin.

Tomas W. Fuller

Thank you, Mimi, and thank you, all of you for joining us on our Second Quarter 2012 VCA Antech Earnings Call. Today, we reported earnings per share -- adjusted earnings per share of $0.41. On a GAAP basis, we reported $0.39, which compares to $0.45 in the prior year. In the quarter, we took a $3.3 million charge or $0.02 per to adjust the cumulative prior year's Hospital depreciation expense on certain capitalized leases. Upfront, this adjustment affects only our Hospital division, so when we talk about adjusted numbers in the Hospital section, we're talking about adjusted for that -- excluding that depreciation adjustment. So $0.41 per adjusted share.

After seeing improvement in our growth rates, starting in the third and fourth quarter of last year and seeing further momentum in the first quarter of this year, we were clearly disappointed to see our growth rates decline in the second quarter. As you recall, back in Q3 and Q4 of last year, our Lab growth rates were about -- over 2%, accelerating to 5.2% in the first quarter, and now at 2.6% in the second quarter of this year. On the Hospital side, around 1% in the third quarter and fourth quarter of last year. Going up to 2.2% in the first quarter and now back at 0.2%, roughly flat in the quarter.

With the lower growth rates, our margins were affected. On the 2.6% internal growth in the Lab, our margins were up 10 basis points, which is pretty good. On Hospital, on flat revenue growth in the Hospital division, our adjusted same-store Hospital growth profit margin were down 280 basis points, partially due to deleveraging but also I think we lost focus on controlling cost. Got a little ahead of ourselves on the expense side in light of the momentum we saw in the first quarter revenue growth rates. So reflecting that 280 basis point drop in margin, adjusted Hospital same-store gross profit declined almost $8 million, which was partially offset by gross profit at acquired hospitals. So the total Hospital adjusted gross profit for the quarter was down about $0.5 million.

At Vetstreet, their losses were about what we expected back in April when we had our discussion for the quarterly results. So as a result of the Vetstreet losses, the decrease in Hospital adjusted gross operating income, a $4.8 million increase in SG&A comprised mostly of a $2.3 million increase in share-based comp and $800,000 of integration and transaction costs, our adjusted operating income was down $5.6 million. And as a result, the adjusted EPS was down.

In Antech Diagnostics, revenue increased 2.6% to $86.6 million. As I said, operating income -- operating margins increased 10 basis points to 40.2%, so still very healthy margins north of 40%. That 10 point increase in margin on 2.6% revenue growth was about what we would expect. We continue to do a great job of controlling cost and we could be in a position to see margin expand once revenue growth rates pick up. And as you recall back in the first quarter, on the 5.2% day adjusted gross, margins were up 110 basis points, so we still believe there's significant marginal potential in the Laboratory.

As for the components of the growth, number of requisitions increased 0.6% to $3,426,000, and average requisition increased 2.0% to $25.24 for that 2.6% all in growth. Total requisitions were the same number of $3,426,000. So compared to the first quarter, the drop in the growth during the second quarter came mostly in volumes. Where there a 2.5% positive volumes in the first quarter and 0.6% volume growth in the second quarter.

In terms of the lab count, no change. We still have 53 labs including 49 in United States and 4 up in Canada. So we did lose some momentum in our growth rates. Still positive though, on that 2.6% internal growth rate, margins increased 10 basis points, which I think is great. And pretty much what we would expect, and I think because I said we're poised to see margin improvement, once the growth rates improve.

In the Hospital division, 17.5% increase in revenue to $342 million, mostly due to acquisitions, as same-store revenue is basically flat, 0.2%. On that 0.2%, same-store growth, same-store adjusted Hospital gross profit margins decreased 280 basis points down to 15.5%. As I said, that results in that $8 million decrease in the same-store -- Hospital same-store gross profit. Much of that -- as I said, much of that decrease was offset by the gross profit at acquired hospitals, and our total gross profit margins in the Hospital division dropped 290 basis points. So a little -- only 10 basis points more than the same store of margin drop to 15.3%.

In terms of the components of the growth, average order increased 2.2% to 165.58 million. Number of orders decreased 2% to 1,751,000. Similar to what we saw in the Lab compared to previous quarters, the slowdown in the growth came mostly in the volume line to that negative 2%. Total orders for the quarter, 1,871,000. On acquisitions, we've acquired 5 hospitals with revenues of about $11 million, which takes our year-to-date total to 58 hospitals with revenues over $117 million. And we continue to look at great hospital acquisitions and grow our business. The pipeline is very, very good and we expect a strong back half of the year.

In our other segment, which include Sound-Eklin, Vetstreet, and now ThinkPets, which we acquired on February 1 and now integrating into Vetstreet, our revenue grew $11.2 million to $27.4 million due mostly to the acquisition of Vetstreet last year and of ThinkPets acquisition on February 1 of this year. With the expected Vetstreet losses, operating income decreased $671,000 to a loss of $533,000. And as we said in April, Vetstreet continues to be an extremely important long-term strategic asset for us, we continue to focus on integrating and assimilating the 2 company, as well as now, assimilating ThinkPets into Vetstreet.

We're pretty much on track with our revised plan, we discussed back in April. And part of that is we now have about 3/4 of our BC hospitals now on the Vetstreet system at the end of June, which is great. So I think, to the quarter, we certainly were disappointed with our growth rates. I think the Lab did a great job of holding margin, 10 basis point improvement and 2.6% internal growth. Hospital margins were clearly challenged, but I think as we see -- as we continue to see an improvement, if we continue to focus our intensity on controlling costs and as we see, same-store growth has improved, I think we can see the improvement in the Hospital margins.

Looking ahead with respect to the outlook for the remainder of the year. We continue to assess the trends in the second quarter, we're giving you the results of the quarter. We expect that our results for the year will be closer at the bottom end of the range of our previously issued guidance.

Robert L. Antin

Thank you very much, Tom. It certainly was a challenging quarter. As Tom said, the Lab had a slight improvement in margins and also held req counts in average growth. And what we took away from it in the quarter, particularly with the difficulties in the Animal Hospital, is we certainly reflected on last year's growth in the third and fourth quarter and followed up by an excellent first quarter in both of our segments, and also what we saw in the industry and the sentiment in the industry.

And historically, we have been very, very good at maintaining controls and focus on the Animal Hospitals and the staffs and the hours and wages. And because we anticipated a little brighter turn of the year, and we were very fortunate in the first quarter to have a good quarter, we saw those things and we -- knowing that we've held wages so tightly inside the hospitals, and the hours, we anticipate a little bit stronger second quarter on the comps and we were a little surprised. Certainly, disappointed. And as a result, we sort of slowed revenue growth, which I think was indicative inside the industry. But nonetheless, we saw our expenses go up and consequently, our margins go down.

We look forward to the remainder of the year, returning back to what we anticipated with a certainly tighter focus on expenses and refocusing our effort on it. But we also are very cognizant that it does take growth inside the industry because we've been so focused on the expense side. And we see -- we look forward and we're seeing a little of it now and hope in the third and fourth quarter, we'll resume back to where we through it would be, with certainly a greater focus in the third and fourth quarter on expenses than we've had in the second.

As Tom mentioned on Vetstreet, we're going to the integration. The integration has been very, very challenging. Much of the integration has been focused on IT, which has captured an awful lot of our resources. But at the same time, we've moved forward and had a very successful launch inside of our own hospitals and we've spent much of the quarter dedicating lots of resources to the nearly 500 hospitals of VCA that we've put on Vetstreet and very successfully.

So I will turn it over for questions because I am sure there are many. And we'll take questions now.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Brian Tanquilut of Jeffries.

Brian Tanquilut - Jefferies & Company, Inc., Research Division

Tom or Bob, just a question for you on volumes, I guess, that's obviously the number one driver for the quarter. And anecdotally, we are hearing during the quarter that pet adoption rates were up and I see a lot of your smaller competitors were reporting decent volume numbers for the quarter. And so I'm just wondering, do you think you're losing market share in the Hospital division to those guys, to your smaller competitors? Given that -- it seems like the industry backdrop looks much better than what you've reported?

Robert L. Antin

Well, it's hard to look because you would think over -- nearly 600 hospitals in a regional aspect, we have hospitals that have certainly done incredibly well. So when you look at those comparisons, and we certainly do and have a pretty good network into the community, when we look at them and we look at the regional differences, there are certainly some places where we could be losing on a local basis. But on a regional basis, we have many, many, many hospitals that are up and increasing volumes. But we do have areas where we are still sustaining lower, lower volume rates. And I tend to believe that's more market-driven. I don't believe it's a specific -- it's a systemic issue. I tend to believe that it's a market issue and we see some of it even on the req side, on Antech and some other indicators that we have as well.

Brian Tanquilut - Jefferies & Company, Inc., Research Division

Bob, just a follow-up to that. I know that you've been able to push price increases over the last several years. Do you think that at this point, are you premium priced, relative to the community veterinarians at this point?

Robert L. Antin

I am certain that we are not the low-cost provider in the community. Although, we have recently released, and had some success with programs to serve the cat community through a program that we have called Cattitude. And that adjust some of the pricing to the entry levels. So we're going after cats, new cat owners and new puppy owners with our Little Bundles program. So in areas where there is price shopping, because we are not lowest-priced hospitals in the area and nor were the hospitals that we purchased previously, we're going back after that reentry place. So I don't think we're the highest priced hospitals and I'm certainly, certain that we're not lowest-priced hospitals. But we are going after, and we are having competitive programs on things like spay and neuters and cat programs and product purchases. But I think it's a volume-based thing. And I've seen it as well across the country.

Brian Tanquilut - Jefferies & Company, Inc., Research Division

Okay. Last question, Bob or Tom. You talked about how you got ahead of yourselves in terms of cost, was that a function of number -- of headcount number or was that a rate increase on the compensation that you were giving to your employees?

Robert L. Antin

I would suspect it's a little of both. I mean we've held wages and the employees in the hospital have been great and morale across it has been very, very good. And we certainly saw, as with most of the industry, see that positive trend at the end of last year and certainly at the beginning of this year. We felt a change in the second quarter. But interestingly, that changed. Consumers, going back to your price question, on a very large specialty, and a large general practice hospitals, we had our greatest advance in those areas. And interestingly, they are the highest priced services in the industry. Not our hospitals, but those sectors. So I think in that respect, I think our prices are, as I've mentioned before, are not the highest in the sector, but we did see tremendous growth in the specialty and the large hybrid hospitals.

Operator

Our next question comes from Ryan Daniels of William Blair.

Ryan Daniels - William Blair & Company L.L.C., Research Division

A couple of macro ones on the volume front. I'm curious if you're able to look at any of your data and see how much of the weakness you experienced in the second quarter was related to maybe broader consumer trends and how much was related to the pull forward of some of your business into Q1, given the warm weather. Can you give us a better feel on that if possible?

Robert L. Antin

Well, I suspect Q1 had pull through. We had great weather in the quarter. But we also noticed, as you know even based on some of the stuff that you put out, that you've seen weakness in other companies in the same months April, May and June. So I think there was general market weakness and hospital volumes. And we certainly stay in tune to make sure that systemic issues are not the cause for the driving -- the driving factors in the quarter, but the actually, market. And I would suspect from the sentiment that we have seen I think the, particularly, May and June had a downdraft in the overall market, which affected us.

Ryan Daniels - William Blair & Company L.L.C., Research Division

Okay. That's helpful color. And then when you talk about the taking the eye off the ball or whatever term you used on the cost structure during the first quarter, I appreciate that with a stronger growth outlook, you might have increased wages and taken up staffing in some areas. Is it possible for you to morph that back down, if the growth outlook does stay kind of a flat outlook? Or are some of those things, especially the wages, going to be hard to change in 3 years? So I'm just trying to get a feel for how much leverage you have to pull to actually help your margins going forward?

Robert L. Antin

I'd like to correct the choice of words. I don't know that it's the eye off the ball. I think we have great staffs, we have loyal staffs that have been there for years. And I think incremental wages are 1% and 2%. So we were a little surprised inside the hospitals, I guess as a headshake. So hours creep up. I would think that it's as much hours as it is wages. And looking at the numbers, they're tiny. As Tom has repeatedly said, we need some revenue growth in the business. So I think the numbers are tiny. And I don't think it's -- I think our focus on the wages are going to be a little bit sharpened by what we experienced in the second quarter.

Tomas W. Fuller

I also just want to quickly mention that there was -- we are self-insured for healthcare. In addition to getting educated on ObamaCare last week, which was sort of mind-boggling. With this self-insurance, we do have some variable on our healthcare cost, which spiked in the second quarter due to the unusual amount of high dollar claims, which hopefully, we won't see that going forward. Not a big part of the number, but one of the many just a little cost things that I think could change going forward.

Operator

Our next question goes to Erin Wilson of Bank of America.

Erin E. Wilson - BofA Merrill Lynch, Research Division

Can you comment on maybe some competition that you're seeing on the Lab side, and when you see that start to level out at any point?

Robert L. Antin

Well, we do know that -- as you well know, from the large competitor out there, we go head-to-head with them all the time. And I certainly follow their public comments, as I'm sure they do ours. The new entrant in it, we've seen them in a few marketplaces, but it's not that a material factor to us.

Erin E. Wilson - BofA Merrill Lynch, Research Division

Okay. And then, you mentioned you're on track with Vetstreet, I mean, how is your customer retention for Vetstreet at this point?

Tomas W. Fuller

Retention is actually about where we thought, and it's customer base is growing.

Erin E. Wilson - BofA Merrill Lynch, Research Division

Can you quantify that?

Tomas W. Fuller

No. Like we did in the past, we really try not to give too much detail. But the customer base is growing. We did lose quite a bit of clients in the first couple of quarters, which we stemmed the losses now. And now we're growing, I think, we're close to 5,000 clients now.

Erin E. Wilson - BofA Merrill Lynch, Research Division

Okay. And just going back to the cost trend really quickly. I mean, how do you think about, I guess, the quarterly progression in the second half?

Robert L. Antin

We expect to see the third and fourth quarter -- we expect -- we hope to see a third and fourth quarter with better revenue and certainly, better margins than we did in the second quarter. We thought the second quarter was a bit of an aberration. So we're positive on the outlook.

Operator

Our next question comes from Kevin Ellich of Piper Jaffray.

Kevin K. Ellich - Piper Jaffray Companies, Research Division

I was just wondering if you guys could provide us with what percent of the Animal Hospitals have negative same-store in volume growth?

Tomas W. Fuller

I believe it's around 60% to 65% -- no, excuse me, closer to, I'm sorry, it's closer to 55% to 60%.

Kevin K. Ellich - Piper Jaffray Companies, Research Division

55% to 60%, okay. And then just going back to one of the stats you gave or the metrics you gave, Tom, on Vetstreet, what was the loss in the quarter?

Tomas W. Fuller

We're not talking about the Vetstreet losses per se, it's obviously, buried with the other 2, the other 2 divisions, so the operating loss was $533,000.

Kevin K. Ellich - Piper Jaffray Companies, Research Division

Total? Between the -- all 3 of them?

Tomas W. Fuller

Yes. Which was mostly, obviously, due to the expected losses at Vetstreet.

Kevin K. Ellich - Piper Jaffray Companies, Research Division

Got you. But is Vetstreet on track to hit break even or even profitability by the end of the year, would you say?

Tomas W. Fuller

I'm not sure it's by the end of the year, but going in the first quarter, we should be there. But by the end of the year, we'll certainly be EBITDA -- we are EBITDA positive now actually and growing, but I wouldn't expect the fourth quarter to be breakeven.

Kevin K. Ellich - Piper Jaffray Companies, Research Division

Got you. And then maybe, Bob, I'm just wondering how Canada's performing with your expansion in Canada? And also, what's your outlook on continued M&A, both in the U.S. and the Canadian market?

Robert L. Antin

Canada is doing very well. We've gone through integration up there. It was more seamless than most. And the management team is in place, we're very comfortable with it. On an M&A basis up in Canada, we continue to make acquisitions and it seems very -- the future of it seems pretty good from an M&A standpoint. From an M&A standpoint in the United States, as Tom mentioned, we've had an active year and I suspect the end of the year will be more active than we have seen so far. So we're encouraged. We're encouraged about the acquisition. It's certainly a bright point in the quarter's activities.

Kevin K. Ellich - Piper Jaffray Companies, Research Division

And then I guess just thinking big picture and strategically, if the environment remains, let's call it, choppy and relatively weak, what else could you do?

Robert L. Antin

I'd say -- you know something, that's a great question. I think trying to fight the general economy is a challenging one. We do have initiatives, we're investing money in the website, in the Internet. We're creating programs as I mentioned before. On the hospital side, things like Cattitude, Mini Bundles (sic) [Little Bundles] going back to providing pricing that's very competitive even with adoption agencies on spay and neuters are around the country. And I think, we've initiated a program for service going back and training hospitals and doctors on service and client relations. So we're going back to block and tackling, besides the normal pay attention to the expenses, putting out private brands, doing home delivery. In addition to that, we're rededicating and refocusing and investing money on a service-oriented. In addition, we have also begun to pile at our own software, we call WoofWare. We now have, in 5 hospitals, in the Phase 1 test that's going very well. And it will give us a better opportunity inside the hospitals to more closely manage, more timely manage and to more effectively communicate with the clients as well. So we have this, a platform, which is our software, WoofWare, which is being powered at which we expect to be rolled out towards the end of the year. So those are some of the initiatives.

Kevin K. Ellich - Piper Jaffray Companies, Research Division

And then just lastly, I want to make sure that I got this right. For the question on the Lab business, did you say that you're not seeing material competition?

Robert L. Antin

I think it's specifically being asked, no. We certainly see very active competition from IDEXX. And they're very, very aggressive, but the competition level seems a little bit more milder right now. Abaxis as you know, who has been a point of care company has opened up several labs and is trying to bundle. But logistics and volume are such an important part. We've seen them in a few markets. But the question was, do you see them in a strongly competitive way? And thus far, we haven't. We see them in a few markets, but it's nothing like we experienced from IDEXX so far.

Operator

Our next question comes from Mitra Ramgopal of Sidoti.

L. Mitra Ramgopal - Sidoti & Company, LLC

Bob, first I'm sorry if you touched on this before, but I believe you mentioned in the second half, especially if you look to maintain margins through various expense management-related initiatives, I was wondering if you could expand on that a little?

Robert L. Antin

Well, we came out of the first quarter and the fourth quarter enthusiastic as much of the economy and much of the industry came out. We were surprised by the second quarter and we believe, it's a bit of an aberration. We look positive going into the third and fourth quarter because we don't hear and feel the same things we did 1 year ago, 1.5 year ago. The sentiment is a little better. And so our feeling is, is the second quarter was more aberrant. We don't, as you know from past, we can't guarantee the third quarter and the fourth quarter there is focus. We need, in the business like ours, we need some small revenue growth. We anticipate it. We have every indication that we'll get it. We see strength at the upper end of the market. And the highest dollar volume area the market, the specialty hospitals, VCA and non-VCA hospitals are growing very nicely. So we think the market is coming back and we expect the second quarter to be an aberration. Margins will be a little bit challenged. I suspect in the third and fourth quarter, if we don't get continued growth on the revenue side, which we believe we will.

L. Mitra Ramgopal - Sidoti & Company, LLC

But what this message is, is you have pretty much taken the cost out of the business that you can. It's a question of just, again, you're at the mercy of the revenue coming back as result of the economy, et cetera?

Robert L. Antin

Well, I think we're certainly a part at the mercy of revenue, part. But I also think, as you reflect to the second quarter, from our own, lightening up a little bit on the controls, on hours and wages certainly had an impact. So I think that part of it, we're not at the mercy. We're challenged, as management to make sure that we refocus on it in the third and fourth quarter, which we are. I mean that's already begun.

L. Mitra Ramgopal - Sidoti & Company, LLC

And again, given the challenges you have, et cetera, in no way should this slow down your acquisition activity or any -- a lot of such like that treat-type initiatives?

Robert L. Antin

No. I don't think it will. Even our cash flow invest rate is positive. Tom mentioned before, from the integration, it is mostly an IT integration. And we've hit some unexpected hurdles. We're focusing the resources on them. But from a cash flow standpoint, it's strong. Our hospitals from an acquisition standpoint, there's some great opportunities out there, which us and our competitors. In part, because the timing, certainly enhanced by the potential of tax increases on every level for Medicare to income, to state, to capital gains. So I think on the acquisition side, it's probably the best we've seen it since the last scare of tax increases, but it certainly is accelerated.

Operator

[Operator Instructions] Our next question comes from Nicholas Jansen of Raymond James.

Nicholas Jansen - Raymond James & Associates, Inc., Research Division

Quick question. Thinking about the back half of the year, obviously, your comps stepped up quite dramatically, particularly in the Animal Hospital segment. So I guess, if revenue kind of decelerated sequentially in 2Q, and we don't see any kind of pickup, how confident are you in that low end of the guided range?

Robert L. Antin

Well, I think, every guidance is predicated on revenue. And I think on the -- when Tom mentioned before, guiding towards the low end of the range, and I would reiterate that it's predicated on a -- and I'm not going to give a number, but a very small focus on any revenue gain at all. So it's going to be challenged, but revenue gain is necessary, even the slightest of it to maintain. And I feel encouraged by it. I don't think the hurdle is greatest as it would seem.

Nicholas Jansen - Raymond James & Associates, Inc., Research Division

Okay. That's helpful. And then maybe just kind of intra-quarter trends, where you're seeing something differently in June relative to April. And I know it's early, I'm sure you don't have much on July, but is there anything to give investors confidence that maybe things have bottomed here?

Robert L. Antin

Well, I think our visibility in July is better than June. The months in between, in May, were not very strong. And I think, July shows a heck of a lot better than May. So in terms of looking at it and trying to forecast, July was stronger than was May, certainly.

Nicholas Jansen - Raymond James & Associates, Inc., Research Division

And then lastly, just kind of thinking about Vetstreet, what are the opportunities there once the IT integration is finalized? How much growth could we see in '13? And I guess maybe the longer-term picture, what should be the -- if we're looking at kind of returns metrics, what's your kind of hurdle rate for kind of '13, '14 and '15 as we think out further?

Robert L. Antin

I think the growth rate that we see is predicated on hospitals we own and hospitals that we don't own, need to communicate with the client because of all the different competitive factors in the environment. And our greatest challenge in all of the programs, the Mini Bundles, Cattitude and websites, and the same holds for individual hospitals, is to make sure clients are educated and they bond with the hospitals. And Vetstreet now, as Tom mentioned, is in 5,000 hospitals. It has the ability to communicate on behalf of hospitals to some 20 million pet owners. That's a very, very strong platform. We're struggling with the IT conversion because we're sucking out of a company. And I think the opportunity for the growth is there and it's strong. So we look very, very favorably on to the professional side relationship, which does throw off the income and we continue to invest on the consumer side with a particular focus right now on building content on vetstreet.com.

Operator

Our next question comes from Brian Tanquilut from Jefferies.

Brian Tanquilut - Jefferies & Company, Inc., Research Division

Bob, just a follow-up on that last question on Vetstreet. It seems like you guys are focused on the infrastructure in terms of trying to bring that business back to stability, but at what point do you start putting money towards expanding the sales force again? Because it seems like it's a pretty competitive environment there in that market with VetMatrix and some of these other Indigo Blues [ph], and other competitors. I mean, do we need to expand the sales force there to make it work and actually grow going forward? I guess is the question that I have for you.

Robert L. Antin

Well, you're right. We are investing in the IT side of it. And we haven't stopped investing in the sales side of it. In fact, we have some very important strategic relationships with at least 2 of the largest pharma companies out there who are -- with their sales forces, working with our sales force to push both on the consumer side and on the pro-vet side. So your point is well taken. It is competitive, but we've had to stop a little bit and at least focus a little bit more on the IT side to make sure that we can serve the clients, satisfy the clients and help them develop the marketing programs they need, which we are doing. We've brought in additional people in leadership on the customer service side and also the program side. So we're doing it now. And you're right, it is a little competitive from some of those companies, and once we straighten out the IT part of it, it'll provide us a little bit more strength to do it. And we've done a very, very good job in converting the ThinkPets clients, and that part is going well.

Operator

I'm showing no further questions in the queue at this time.

Robert L. Antin

I'd like to thank everybody and that I'd like to reiterate, we saw some good growth coming both in the economy, in the environment and also, in the company at the end of the fourth quarter, and certainly in the first quarter. We have some very good programs and controls that are going into place that are in place now, we also see the opportunity for continuing to grow in the marketplace, particularly on the Hospital side, with the Lab side functioning very well. And we see still, good opportunities. So I'd like to thank you very much and appreciate it. Bye.

Operator

Thank you. Ladies and gentlemen, this does concludes the conference for today. You may all disconnect, and have a wonderful day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: VCA Antech Management Discusses Q2 2012 Results - Earnings Call Transcript
This Transcript
All Transcripts