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Press Press Releases 2003 Pethealth Inc. Announces Growth of 140% in Revenue and a 149% Increase in Active Policies for the First Quarter Ended March 31, 2003 Compared to the Same Period in 2002. OAKVILLE, ON, May 14, 2003 Pethealth Inc. ("Pethealth" or "the Company") (TSX Venture Exchange Tier 1: PTZ) today announced record financial results for the quarter ended March 31, 2003. Highlights
Pethealth, the parent company of PetCare Insurance Brokers Ltd., PetCare Insurance Agency, Ltd. and Pethealth Services Inc., achieved record revenue for the seventeenth consecutive quarter of $1,452,988 as compared to $605,947 for the same period in 2002, representing a 140% increase. Gross premiums written in Q1 2003 were $3,660,352, up 132% from the same period in 2002. The Company's operating loss for Q1, 2003 was $471,582, a 60% reduction from the $1,185,822 loss reported in Q1, 2002. The significant reduction in the net loss was, in large part, the result of a change in the Company's accounting policy with respect to certain advertising costs. Advertising costs incurred in connection with policy acquisitions, formerly expensed as incurred, are now being capitalized and are amortized over the three-year minimum expected life of the policy. The Company's current retention rate is approximately 82% and 72% in Canada and the United States respectively. The costs that have been deferred consist of direct-response advertising expenditures where the related policy sale can be attributed to the marketing cost incurred. All other marketing and acquisition costs that cannot be specifically attributed to a specific direct-response advertisement continue to be expensed in the period incurred. Prior to 2003, many programs were in their infancy and the full recoveries of direct response-marketing costs through future revenue streams were uncertain and as such expensed in the period in which these costs were incurred. At the present time, future revenue streams are more predictable. The change in accounting policy resulted in the Company reducing marketing expenses by $807,770, and increasing deferred acquisition costs by the same amount. The Company has recorded amortization of deferred acquisition costs of $67,314 in the period. The Company continued to make significant reductions in the acquisition cost of U.S. policies, which declined to an average of US$95 in Q1 2003 vs. US$203 for the same period in the prior year. The Company's break-even point for its acquisition cost per U.S. policy is estimated to be US$70. The Canadian acquisition cost per policy increased to $112 from $93 in Q1 2002 as a result of increased television and direct to consumer print advertising. Q1 new policy sales totalled 46,854, consisting of 10,361 new core policies and 36,493 new ShelterCare policies vs. 9,575 new policy sales in Q1 2002, 5,154 and 4,421 respectively, a 389% increase. New policy sales consist of new core policy sales, new ShelterCare policy sales, ShelterCare policies converted into new core policies and ShelterCare policies continued past the first 60 days of coverage. Renewals of existing policies are not included as new policy sales. Total active policies at March 31, 3003 totalled 72,737, consisting of 47,946 core policies and 24,791 ShelterCare policies vs. 29,244 total policies at March 31, 2002, 25,577 and 3,667 respectively, representing a 149% increase. Petfinder.com pays for and distributes the first 60 days of ShelterCare coverage to individuals adopting dogs and cats through its 5,200 member animal shelters and rescue groups. U.S. new core policy sales accounted for 72% of total new core policy sales in Q1 2003 generating revenues in U.S. dollars while 78% of employment and administration costs were in paid in Canadian dollars. As at March 31, 2003 the Company had 44,396 active U.S. policies, representing 61% of its total active polices. Thus far in 2003, the Company has announced new pet insurance distribution strategic alliance partnership agreements with Progeny Marketing Innovations, Memberworks Incorporated and a three-way agreement with Colleague Services Corporation and Lockton Associates. During the quarter, the Company, through its wholly owned subsidiary Pethealth Services Inc., entered the Canadian microchip distribution and pet recovery industry with an initial focus on the Province of Ontario. The Company intends to enter additional selected provinces during the second quarter of 2003. The Company began the cross promotion of its pet insurance programs to the pet owners registered on its Canadian pet recovery database in April 2003. Subsequent to the quarter-end, the Company, through its wholly owned subsidiary Pethealth Services (USA) Inc., launched its pet recovery network in the United States. With an initial focus on the animal shelter community, the Company is currently offering pet microchip registration and recovery services in the 48 continental states. The Company's distribution of its 24PetWatch microchip technology will be rolled-out on a state-by-state basis beginning in Wisconsin during the second quarter of 2003. At March 31, 2003, the Company had total assets of $6,943,435 including cash resources of $3,590,250. "We are very pleased with the progress made in the first quarter of 2003," said Mark Warren, President & C.E.O. of Pethealth Inc. "Not only did we execute a number of new strategic partnerships, which are expected to generate a significant number of policy sales over the course of the year and in the future, but we have also been pleased with the early response to our 24PetWatch microchip program. This strategic initiative, when combined with our new and existing distribution partnerships, provides continuing evidence of the viability of our model, which is reflected in our continued strong revenue growth and our move towards profitability." Financial Highlights:
The Company, together with Avalon Risk Management Inc. in the United States, writes Gross Premiums and remits the carriers' portion to its pet insurance carriers. The Company's revenue consists of Commissions, Management Fees, Administrative and Interest Income.
About Pethealth Founded in February 1998, Pethealth is Canada's number one provider of pet insurance and is number two in North America, currently offering its PetCare pet insurance programs in 10 provinces, 45 states and Washington, D.C. Pethealth offers its pet insurance programs under a variety of names, including QuickCare, the PetCare Pet Insurance Programs, Union Plus Pet Insurance, and betterpethealth. In the United States, the PetCare Pet Insurance Programs are underwritten by Lincoln General Insurance Company, York, PA, through Avalon Risk Management Inc. In Canada, the Company's pet insurance is offered to owners of dogs and cats through its wholly owned subsidiary, PetCare Insurance Brokers Ltd. ING Insurance Company of Canada, a member of the ING Group, and Kingsway General Insurance Company underwrite PetCare products in Canada. The PetCare programs also carry the exclusive endorsements of a number of industry leaders, including veterinary medical associations representing approximately four out of five practicing veterinarians in Canada. In addition, Pethealth, through its wholly owned subsidiaries Pethealth Services Inc. and Pethealth Services (USA) Inc., sells and distributes Allflex pet microchip supplies to the companion animal market in North America and operates the related pet recovery registry under the trade name 24PetWatch. Pethealth is based in Oakville, Ontario. Institutional investors include Dynamic Mutual Funds, through its Dynamic Venture Opportunities Fund. Statements contained in this news release, if not historical, are forward-looking statements, which involve risks and uncertainties that could cause actual results to differ materially from the results described in forward-looking statements. The TSX Venture Exchange Inc. has not reviewed and does not, accept responsibility for the adequacy or accuracy of this release. Not for dissemination in the United States of America or to United States news wire services. For further information please contact: |
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