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Press Press Releases 2006
OAKVILLE , ON, August 11, 2006. Pethealth Inc. (TSXV:PTZ) ("Pethealth" or "the Company") today announced its financial results for the quarter and six months ended June 30, 2006. Highlights Quarter ended June 30, 2006
Six months ended June 30, 2006
In addition to its financial results, the Company also announced today that Steve Zeidman has agreed, subject to regulatory approval, to assume the newly created position of Chief Information Officer effective August 15, 2006. Mr. Zeidman has been the Company’s Director of Information Technology since January 2005 and has been instrumental in both the development and roll-out of the Company’s PetPoint, EVE and information strategy. Results of Operations Pethealth Inc. reports its financial results in a single reportable segment. However, in order to provide readers of the financial results greater insight into the growing diversity of the Company’s operations, it has elected to provide financial results by program line, that is, by its “insurance operations” and its “non-insurance operations”. The Company’s i nsurance operations currently consist of the distribution and administration of the PetCare, ShelterCare, QuickCare and CherryBlue pet insurance programs while non-insurance operations are made up of its 24PetWatch manufacturer-neutral pet registry, recovery and database management and information services, including the distribution of microchip technology, and the development and distribution of PetPoint, its animal shelter management software program . The following table details the operational results from each program line:
“We are obviously delighted with our Q2 results, which provide evidence that the initial stages of the restructuring of our ShelterCare insurance program have been successful,” said Mark Warren, President and Chief Executive Officer of Pethealth. “We are also very pleased with the success of our early testing of database and information services which leverage our 24PetWatch database, the aggregate medical information we collect and our electronic platforms. This testing has begun to generate significant revenue for the company which we expect to grow as the size of the database, which currently includes nearly 700,000 pets, continues to grow.”
Insurance Operations: The Company is the number two provider of pet insurance to the companion animal market in North America as measured by both policies in force and gross written premium. Pet insurance revenues are earned primarily through commissions and fees generated from the placement of pet insurance policies at a blended commission rate of approximately 36%. Commissions and fees earned in Q2 2006 from the insurance operation increased by 19% to $3,707,467 from Q2 2005. For the six months ended June 30, 2006, the Company achieved commission and fee revenue of $7,383,359 an increase of 23% over the prior year. The Company’s U.S. core pet insurance programs produced a calendar year loss ratio of 45% which is within the Company’s established target band of 43% to 45%. During the quarter, the Company began to place business in certain U.S. states with Praetorian Insurance Group (formerly the Insurance Corporation of Hannover). Under the terms of the agreement, the Company will begin to participate in a portion of the underwriting results for policies placed with Praetorian. The Company recorded an average annual administration cost per policy of $33 for the rolling twelve month period ended June 30, 2006, down from $37* in the preceding twelve month rolling period. This 11% reduction is the result of the Company’s continued efforts to leverage its infrastructure and to create operational efficiencies. The Company believes that this cost per policy, whether measured on an absolute basis or as a percentage of premiums, is the best in the industry. Acquisition cost per policy was an average of US$66 compared to US$64 for the same twelve month periods. Acquisition cost per policy was relatively flat through the period as the relative weightings of the various marketing channels from which policies were acquired remained stable.
The pet insurance operations contributed net income of $414,351 to the consolidated net income during the quarter compared to a contributed net loss of $90,145* for the same period in the prior year. For the six month period ended June 30, 2006, the insurance business contributed net income of $550,694 to the consolidated loss vs. a net loss of $250,865* in the prior year. In addition, the pet insurance operations achieved EBITDA of $490,695 for the period and $703,096 for the six months year-to-date compared to an EBITDA loss of $8,300* and $99,056* for the same periods in the prior year.
Non-Insurance Operations: Non-insurance revenues are earned from the sale of microchip technology and database and information services leveraging the Company’s PetPoint, EVE and 24PetWatch infrastructures. To date, the Company’s non-insurance business has been focused on building out its technology platforms, which, in and of themselves, were not initially designed to generate significant margins. These platforms will be used to deliver database and information services from which the Company expects to generate significant revenues at much greater margins. During the quarter, the Company achieved revenues of $733,288 from its non-insurance businesses, an increase of 102% from the $363,805 earned in the prior year. For the six months ended June 30, 2006, the Company generated revenues of $1,563,183 an increase of 129% from the $682,404 earned in the prior year. The Company’s non-insurance business contributed a net loss of $324,318 to the consolidated net income of $90,033 for the quarter ended June 30, 2006 as compared to a net loss contribution of $347,575 to the consolidated net loss for the same period in the prior year. For the six months ended June 30, 2006 the non-insurance business contributed a net loss of $611,516 to the consolidated net loss of $60,822 as compared to a net loss contribution of $652,944 for the same period in the prior year.
Consolidated Results The Company had consolidated net income of $90,033 ($0.0003 per share) for the quarter and a consolidated net loss of $60,822 ($0.0024 per share) for the first six months of the year compared to net losses of $437,720 ($0.0015 per share) and $903,809 (0.0053 per share) for the same period in the prior year. The Company’s consolidated EBITDA was $208,877 for the quarter and $175,682 for the six months to date compared to EBITDA losses of $325,607 and $708,447 respectively for the same periods in the prior year. At June 30, 2006, the Company had total assets of $6,180,244 including cash resources of $1,711,437.
The Company will be hosting an investor conference call on Monday, August 14, 2006 at 11:30 AM (EST) which can be accessed at 1-877-888-3490. For those unable to participate, an instant replay of the call will be available for 7 days at 1-888-509-0081, passcode 629248.
** The Company believes the presentation of EBITDA is a useful means of providing investors with additional information in reviewing and analyzing the Company’s operating results. EBITDA is considered to be a non-GAAP earnings measure and does not have any standardized meaning prescribed by GAAP. It is, therefore, unlikely to be comparable to similar measures presented by other issuers. *** As the Company writes new or renewing pet insurance policies, its insurance carriers earn written premiums and pay the Company commissions. The Company’s revenues consist of commissions and fees, microchip technology sales, database and information services, and interest and other income.
About Pethealth Pethealth is a leading provider of pet insurance and pet related data 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, ShelterCare, QuickCare, CherryBlue, 24PetWatch, PetPoint, PetMedInfo and PetMedAlert. Pethealth is based in Oakville, Ontario. To find out more about Pethealth, visit the web site at www.pethealthinc.com. The TSX Venture Exchange Inc. has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. 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. Not for dissemination in the United States of America or to United States news wire services. For further information contact: Pethealth Inc. (905) 842-2615
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