UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-16783

VCA Antech, Inc.

(Exact name of registrant as specified in its charter)

Delaware		95-4097995
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

12401 West Olympic Boulevard
Los Angeles, California 90064-1022
(Address of principal executive offices)

(310) 571-6500
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ       No o.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

(Not yet applicable to the registrant)
Yes o       No o.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o       No þ.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: common stock, $0.001 par value, 85,960,877 shares as of May 4, 2010.

 

 

VCA Antech, Inc.
Form 10-Q
March 31, 2010

Table of Contents

		Page
		Number
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed, Consolidated Balance Sheets as of March 31, 2010 and December 31, 2009			1
Condensed, Consolidated Income Statements for the Three Months Ended March 31, 2010 and 2009			2
Condensed, Consolidated Statements of Equity for the Three Months Ended March 31, 2010 and 2009			3
Condensed, Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2010 and 2009			4
Notes to Condensed, Consolidated Financial Statements			5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			16
Item 3. Quantitative and Qualitative Disclosures About Market Risk			31
Item 4. Controls and Procedures			31
Part II. Other Information
Item 1. Legal Proceedings			31
Item 1A. Risk Factors			31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			31
Item 3. Defaults Upon Senior Securities			31
Item 5. Other Information			31
Item 6. Exhibits			32
Signature			33
Exhibit Index			34
EX-31.1
EX-31.2
EX-32.1

PART I. FINANCIAL INFORMATION

ITEM 1.		FINANCIAL STATEMENTS

VCA Antech, Inc. and Subsidiaries

Condensed, Consolidated Balance Sheets
(Unaudited)

		March 31,				December 31,
		2010				2009
Assets
Current assets:
Cash and cash equivalents		$	178,197			$	145,181
Trade accounts receivable, less allowance for uncollectible accounts of $13,036 and $13,015 at March 31, 2010 and December 31, 2009, respectively			54,276				49,186
Inventory			32,489				32,031
Prepaid expenses and other			24,516				27,242
Deferred income taxes			18,797				18,318
Prepaid income taxes			—				6,252
Total current assets			308,275				278,210
Property and equipment, less accumulated depreciation and amortization of $175,768 and $167,506 at March 31, 2010 and December 31, 2009, respectively			298,840				289,415
Goodwill			995,123				985,674
Other intangible assets, net			43,345				44,280
Notes receivable, net			5,662				5,153
Deferred financing costs, net			449				581
Other			25,991				24,091
Total assets		$	1,677,685			$	1,627,404
Liabilities and Equity
Current liabilities:
Current portion of long-term debt		$	8,721			$	17,195
Accounts payable			30,333				28,326
Accrued payroll and related liabilities			43,493				33,539
Income taxes payable			6,514				—
Other accrued liabilities			40,541				43,298
Total current liabilities			129,602				122,358
Long-term debt, less current portion			525,558				527,860
Deferred income taxes			85,640				75,197
Other liabilities			10,422				10,651
Total liabilities			751,222				736,066
Commitments and contingencies
Preferred stock, par value $0.001, 11,000 shares authorized, none outstanding			—				—
VCA Antech, Inc. stockholders’ equity:
Common stock, par value $0.001, 175,000 shares authorized, 85,918 and 85,584 shares outstanding as of March 31, 2010 and December 31, 2009, respectively			86				86
Additional paid-in capital			337,569				335,114
Accumulated earnings			571,945				540,010
Accumulated other comprehensive income (loss)			347				(163	)
Total VCA Antech, Inc. stockholders’ equity			909,947				875,047
Noncontrolling interest			16,516				16,291
Total equity			926,463				891,338
Total liabilities and equity		$	1,677,685			$	1,627,404

The accompanying notes are an integral part of these condensed, consolidated financial statements.

VCA Antech, Inc. and Subsidiaries

Condensed, Consolidated Income Statements
(Unaudited)

		Three Months Ended
		March 31,
		2010				2009
Revenue		$	330,734			$	315,850
Direct costs			247,939				233,681
Gross profit			82,795				82,169
Selling, general and administrative expense			26,140				22,917
Loss (gain) on sale and disposal of assets			25				(248	)
Operating income			56,630				59,500
Interest expense, net			3,167				6,118
Other expense (income)			25				(110	)
Income before provision for income taxes			53,438				53,492
Provision for income taxes			20,506				20,611
Net income			32,932				32,881
Net income attributable to noncontrolling interests			997				911
Net income attributable to VCA Antech, Inc.		$	31,935			$	31,970
Basic earnings per share		$	0.37			$	0.38
Diluted earnings per share		$	0.37			$	0.37
Weighted-average shares outstanding for basic earnings per share			85,824				84,680
Weighted-average shares outstanding for diluted earnings per share			86,870				85,386

The accompanying notes are an integral part of these condensed, consolidated financial statements.

VCA Antech, Inc. and Subsidiaries

Condensed, Consolidated Statements of Equity
(Unaudited)

																		Accumulated
										Additional								Other
		Common Stock								Paid-In				Accumulated				Comprehensive				Noncontrolling
		Shares				Amount				Capital				Earnings				(Loss) Income				Interests				Total
Balances, December 31, 2008			84,633			$	85			$	308,674			$	408,582			$	(6,352	)		$	12,846			$	723,835
Net income			—				—				—				31,970				—				911				32,881
Foreign currency translation adjustment			—				—				—				—				(178	)			—				(178	)
Unrealized loss on foreign currency, net of tax			—				—				—				—				(58	)			—				(58	)
Unrealized loss on hedging instruments, net of tax			—				—				—				—				(374	)			—				(374	)
Losses on hedging instruments reclassified to income, net of tax			—				—				—				—				1,976				—				1,976
Formation of noncontrolling interest			—				—				—				—				—				3,440				3,440
Distribution to noncontrolling interest			—				—				—				—				—				(888	)			(888	)
Share-based compensation			—				—				1,976				—				—				—				1,976
Issuance of common stock under stock option plans			71				—				557				—				—				—				557
Stock repurchases			—				—				(180	)			—				—				—				(180	)
Tax shortfall from stock options and awards			—				—				(245	)			—				—				—				(245	)
Balances, March 31, 2009			84,704				85				310,782				440,552				(4,986	)			16,309				762,742
Balances, December 31, 2009			85,584			$	86			$	335,114			$	540,010			$	(163	)		$	16,291			$	891,338
Net income			—				—				—				31,935				—				997				32,932
Foreign currency translation adjustment			—				—				—				—				167				—				167
Unrealized gain on foreign currency, net of tax			—				—				—				—				111				—				111
Unrealized loss on hedging instruments, net of tax			—				—				—				—				(1	)			—				(1	)
Losses on hedging instruments reclassified to income, net of tax			—				—				—				—				233				—				233
Formation of noncontrolling interest			—				—				—				—				—				450				450
Distribution to noncontrolling interest			—				—				—				—				—				(989	)			(989	)
Purchase of noncontrolling interest			—				—				—				—				—				(233	)			(233	)
Share-based compensation			—				—				2,088				—				—				—				2,088
Issuance of common stock under stock option plans			334				—				2,858				—				—				—				2,858
Stock repurchases			—				—				(2,253	)			—				—				—				(2,253	)
Tax shortfall from stock options and awards			—				—				(238	)			—				—				—				(238	)
Balances, March 31, 2010			85,918			$	86			$	337,569			$	571,945			$	347			$	16,516			$	926,463

The accompanying notes are an integral part of these condensed, consolidated financial statements.

VCA Antech, Inc. and Subsidiaries

Condensed, Consolidated Statements of Cash Flows
(Unaudited)

		Three Months Ended
		March 31,
		2010				2009
Cash flows from operating activities:
Net income		$	32,932			$	32,881
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			10,707				9,152
Amortization of debt issue costs			132				120
Provision for uncollectible accounts			1,492				1,559
Loss (gain) on sale and disposal of assets			25				(248	)
Share-based compensation			2,088				1,976
Deferred income taxes			7,232				5,304
Excess tax benefit from exercise of stock options			(264	)			—
Other			(114	)			(148	)
Changes in operating assets and liabilities:
Accounts receivable			(6,511	)			(5,455	)
Inventory, prepaid expenses and other assets			644				(2,790	)
Accounts payable and other accrued liabilities			(288	)			(2,362	)
Accrued payroll and related liabilities			9,954				(3,204	)
Income taxes			12,527				14,413
Net cash provided by operating activities			70,556				51,198
Cash flows from investing activities:
Business acquisitions, net of cash acquired			(9,247	)			(14,467	)
Real estate acquired in connection with business acquisitions			(1,300	)			(963	)
Property and equipment additions			(16,049	)			(12,886	)
Proceeds from sale of assets			6				74
Other			(61	)			(373	)
Net cash used in investing activities			(26,651	)			(28,615	)
Cash flows from financing activities:
Repayment of debt			(10,822	)			(1,946	)
Distributions to noncontrolling interest partners			(989	)			(888	)
Proceeds from issuance of common stock under stock option plans			2,858				557
Excess tax benefit from exercise of stock options			264				—
Stock repurchases			(2,253	)			(180	)
Net cash used in financing activities			(10,942	)			(2,457	)
Effect of currency exchange rate changes on cash and cash equivalents			53				(1	)
Increase in cash and cash equivalents			33,016				20,125
Cash and cash equivalents at beginning of period			145,181				88,959
Cash and cash equivalents at end of period		$	178,197			$	109,084
Supplemental disclosures of cash flow information:
Interest paid		$	3,196			$	6,430
Income taxes paid		$	747			$	894
Supplemental schedule of noncash investing and financing activities:
Detail of acquisitions:
Fair value of assets acquired		$	8,868			$	23,333
Cash paid for acquisitions			(8,528	)			(13,095	)
Noncash note conversion to equity interest in subsidiary			—				(5,700	)
Contingent consideration			(7	)			—
Liabilities assumed		$	333			$	4,538

The accompanying notes are an integral part of these condensed, consolidated financial statements.

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements
March 31, 2010

1. Nature of Operations

     Our company, VCA Antech, Inc. (“VCA”) is a Delaware corporation formed in 1986 and is based in Los Angeles, California. We are an animal healthcare company with three strategic segments: animal hospitals (“Animal Hospital”), veterinary diagnostic laboratories (“Laboratory”) and veterinary medical technology (“Medical Technology”).

     Our animal hospitals offer a full range of general medical and surgical services for companion animals. Our animal hospitals treat diseases and injuries, provide pharmaceutical products and perform a variety of pet-wellness programs, including health examinations, diagnostic testing, vaccinations, spaying, neutering and dental care. At March 31, 2010, we operated 492 animal hospitals throughout 40 states.

     We operate a full-service veterinary diagnostic laboratory network serving all 50 states and certain areas in Canada. Our laboratory network provides sophisticated testing and consulting services used by veterinarians in the detection, diagnosis, evaluation, monitoring, treatment and prevention of diseases and other conditions affecting animals. At March 31, 2010, we operated 47 laboratories of various sizes located strategically throughout the United States and Canada.

     Our Medical Technology segment sells digital radiography and ultrasound imaging equipment, provides education and training on the use of that equipment, provides consulting and mobile imaging services, and sells software and ancillary services to the veterinary market.

2. Basis of Presentation

     Our accompanying unaudited, condensed, consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements as permitted under applicable rules and regulations. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. The results of operations for the three months ended March 31, 2010 are not necessarily indicative of the results to be expected for the full year ending December 31, 2010. For further information, refer to our consolidated financial statements and notes thereto included in our 2009 Annual Report on Form 10-K.

     Certain reclassifications have been made herein to 2009 amounts to conform to the current year presentation. During the quarter we reclassified certain business operations from our Medical Technology segment to our Laboratory segment; the reclassifications did not have a material impact on either of our segments.

     The preparation of our condensed, consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in our condensed, consolidated financial statements and notes thereto. Actual results could differ from those estimates.

3. Multiple-Deliverable Revenue Arrangements

     In October 2009, the FASB issued new accounting guidance related to multiple-deliverable revenue arrangements. The new guidance was designed to result in financial reporting that better reflects the underlying economics of multiple-deliverable transactions. We early adopted the new guidance on January 1, 2010, which resulted in the more timely recognition of revenue in our Medical Technology business segment. The early adoption resulted in the recognition of $1.1 million in incremental revenue during the quarter in comparison to the revenue that would have been recognized under previous accounting guidance.

VCA Antech, Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)

3. Multiple-Deliverable Revenue Arrangements, continued

     Our Medical Technology business segment sells Digital Radiography (“DR”) imaging equipment to end users and to distributors in international markets which includes receptor plates, related computer equipment, software and additional related equipment, with one year of warranty support on the receptor plates and items related to the plates, and technical support on all software provided with the equipment. Distributors sell the DR products and warranties to the end customers and are responsible for all support provided directly to the end customer. The support that we provide to distributors is limited to the machines that are under a current support program and includes a level of warranty coordination, support and facilitation, including technical support related to the receptor plates, and receptor plate replacement during warranty repair ensuring limited down time to the end customer.

     Under the new accounting guidance, sales arrangement consideration is allocated at the inception of the arrangement to all deliverables using the relative selling price method, whereby any discount in the arrangement is allocated proportionally to each deliverable on the basis of each deliverable’s selling price. The selling price for each deliverable is based on vendor-specific objective evidence (“VSOE”) if available, third-party evidence (“TPE”) if VSOE is not available, or estimated selling price (“ESP”) if neither VSOE nor TPE is available. For elements where VSOE is available, VSOE of fair value is based on the price for those products and services when sold separately by us or the price established by management with the relevant authority. TPE of selling price is the price of our, or any of our competitor’s, largely interchangeable products or services in stand-alone sales to similarly situated customers.

     We do not currently have VSOE for our DR imaging equipment as units are not sold on a stand-alone basis without the related support packages. As this is also true for our competitors, TPE of selling price is also unavailable. We therefore use the ESP to allocate the arrangement consideration related to our DR imaging equipment. Our ESP was based upon the actual selling price of our DR equipment bundled with our Sound Assurance warranty. We calculated the stand-alone selling price of the DR equipment using a cost plus margin approach. The stand-alone cost in most cases was determined using manufacturer data. The margin however was based upon the amount received on the actual sale of the bundled product, which does not differ materially from the margin exclusive of the post-contract customer support (“PCS”). By utilizing this cost plus actual margin method we were able to incorporate both our internal pricing strategies in addition to external market conditions.

     In domestic markets we have VSOE for our PCS as the support package is sold on a stand-alone basis. Our PCS agreements normally include a warranty on the receptor plate and technical support on the software elements. In foreign markets however, we do not have VSOE on the receptor plate warranties. Accordingly we use a similar cost plus margin approach to determine the ESP.

     Also in international markets revenue is recognized on the DR equipment upon delivery to the distributor and distributor acceptance. After the DR equipment is delivered there may be a delay as to when the warranty and software PCS period starts as the terms of the arrangement state that the PCS period starts the earlier of the date the DR equipment is delivered to the end user or three months after the DR equipment was delivered to the distributor, as such revenue recognition for the equipment does not start until the PCS period starts. Revenue for the warranty and software PCS is recognized on a straight-line basis over the PCS period.

     The changes made under the new accounting guidance did not cause any changes in the units of accounting related to our arrangements.

     The new guidance resulted in a different allocation of revenue to the deliverables in the current fiscal year, which changed the pattern and timing of revenue recognition for these elements but did not change the total revenue to be recognized for the arrangement. Revenue and gross profit increased by $1.1 million and $280,000, respectively, for the period ending March 31, 2010. The primary driver of the impact was the acceleration of revenue related to the delivery of the equipment in international markets, which under the previous accounting guidance was deferred over the PCS period as we were unable to establish VSOE for the undelivered elements.

     We are not able to reasonably estimate the effect of adopting these standards on future financial periods as the impact will vary based on the nature and volume of new or materially modified arrangements in any given period.

VCA Antech, Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)

4. Goodwill and Other Intangible Assets

   Goodwill

     Goodwill represents the excess of the aggregate of the consideration transferred, the fair value of any noncontrolling interest in the acquiree and for a business combination achieved in stages, the acquisition-date fair value of any previously held equity interest over the net of the fair value of identifiable assets acquired and liabilities assumed. The following table presents the changes in the carrying amount of our goodwill for the three months ended March 31, 2010 (in thousands):

		Animal								Medical
		Hospital				Laboratory				Technology				Total
Balance as of December 31, 2009		$	861,868			$	96,285			$	27,521			$	985,674
Goodwill acquired			7,069				7				—				7,076
Other (1)			(157	)			388				2,142				2,373
Balance as of March 31, 2010		$	868,780			$	96,680			$	29,663			$	995,123

   Other Intangible Assets

     In addition to goodwill, we have amortizable intangible assets at March 31, 2010 and December 31, 2009 as follows (in thousands):

		As of March 31, 2010												As of December 31, 2009
		Gross								Net				Gross								Net
		Carrying				Accumulated				Carrying				Carrying				Accumulated				Carrying
		Amount				Amortization				Amount				Amount				Amortization				Amount
Noncontractual customer relationships		$	39,483			$	(9,425	)		$	30,058			$	38,359			$	(8,077	)		$	30,282
Covenants not-to-compete			14,163				(7,659	)			6,504				14,748				(7,785	)			6,963
Favorable lease asset			5,406				(2,277	)			3,129				5,406				(2,150	)			3,256
Trademarks			3,379				(598	)			2,781				3,362				(494	)			2,868
Technology			2,209				(1,366	)			843				2,209				(1,332	)			877
Client lists			48				(18	)			30				60				(26	)			34
Total		$	64,688			$	(21,343	)		$	43,345			$	64,144			$	(19,864	)		$	44,280

     The following table summarizes our aggregate amortization expense related to other intangible assets (in thousands):

		Three Months Ended
		March 31,
		2010				2009
Aggregate amortization expense		$	2,154			$	1,807

VCA Antech, Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)

4. Goodwill and Other Intangible Assets, continued

     The estimated amortization expense related to intangible assets for the remainder of 2010 and each of the succeeding years thereafter as of March 31, 2010 is as follows (in thousands):

Remainder of 2010		$	6,735
2011			8,199
2012			7,204
2013			5,084
2014			2,841
Thereafter			13,282
Total		$	43,345

5. Other Accrued Liabilities

     Other accrued liabilities consisted of the following (in thousands):

		March 31,				December 31,
		2010				2009
Deferred revenue		$	11,321			$	12,497
Accrued health insurance			4,745				4,484
Deferred rent			3,022				2,989
Accrued workers’ compensation insurance			2,385				2,217
Customer deposits			2,157				3,783
Other			16,911				17,328
		$	40,541			$	43,298

6. Interest Rate Swap Agreements

     In accordance with current accounting guidance, all investments in derivatives are recorded at fair value. A derivative is typically defined as an instrument whose value is “derived” from an underlying instrument, index or rate, has a notional amount, requires little or no initial investment and can be net settled. Our derivatives are reported as current assets and liabilities or other non-current assets or liabilities as appropriate.

     We use interest rate swap agreements to mitigate our exposure to increasing interest rates as well as to maintain an appropriate mix of fixed-rate and variable-rate debt.

     If we determine that contracts are effective at meeting our risk reduction and correlation criteria we account for them using hedge accounting. Under hedge accounting, we recognize the effective portion of changes in the fair value of the contracts in other comprehensive income and the ineffective portion in earnings. If we determine that contracts do not, or no longer, meet our risk reduction and correlation criteria, we account for them under a fair-value method recognizing changes in the fair value in earnings in the period of change. If we determine that a contract no longer meets our risk reduction and correlation criteria, or if the derivative expires, we recognize in earnings any accumulated balance in other comprehensive income related to the contract in the period of determination. For interest rate swap agreements accounted for under hedge accounting, we assess the effectiveness based on changes in their intrinsic value with changes in the time value portion of the contract reflected in earnings. All cash payments made or received under the contracts are recognized in interest expense.

     Credit exposure associated with nonperformance by the counterparties to derivative instruments is generally limited to the uncollateralized fair value of the asset related to instruments recognized in the consolidated balance sheets. We attempt to mitigate the risk of nonperformance by selecting counterparties with high credit ratings and monitoring their creditworthiness and by diversifying derivative amounts with multiple counterparties.

VCA Antech, Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)

6. Interest Rate Swap Agreements, continued

     The contractual or notional amounts for derivatives are used to calculate the exchange of contractual payments under the agreements and are not representative of the potential for gain or loss on these instruments. Interest rates affect the fair value of derivatives. The fair values generally represent the estimated amounts that we would expect to receive or pay upon termination of the contracts at the reporting date. The fair values are based upon dealer quotes when available or an estimate using values obtained from independent pricing services, costs to settle or quoted market prices of comparable instruments.

     As of the quarter ended March 31, 2010, all of our interest rate swap agreements have expired.

     The following table summarizes cash received or cash paid and ineffectiveness reported in earnings as a result of our interest rate swap agreements (in thousands):

		Three Months Ended
		March 31,
		2010				2009
Cash paid (1)		$	382			$	3,245
Recognized gain from ineffectiveness (2)		$	—			$	(49	)

7. Fair Value Measurements

     Current fair value accounting guidance includes a hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions. The current guidance establishes a three-tiered fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:

	•		Level 1. Observable inputs such as quoted prices in active markets;
	•		Level 2. Inputs, other than quoted prices, that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and
	•		Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

VCA Antech, Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)

7. Fair Value Measurements, continued

     Fair Value of Financial Instruments

     The FASB accounting guidance requires disclosure of fair value information about financial instruments, whether or not recognized in the accompanying condensed, consolidated balance sheets. Fair value as defined by the guidance is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value estimates of financial instruments are not necessarily indicative of the amounts we might pay or receive in actual market transactions. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

     Cash and Cash Equivalents. These balances include cash and cash equivalents with maturities of less than three months. The carrying amount approximates fair value due to the short-term maturities of these instruments.

     Receivables, Less Allowance for Doubtful Accounts, Accounts Payable and Certain Other Accrued Liabilities. Due to their short-term nature, fair value approximates carrying value.

     Long-Term Debt. We believe the carrying values of our variable-rate debt at March 31, 2010 and December 31, 2009 are not reasonable estimates of fair value due to changes in the credit markets during 2009 and 2010. We have estimated the fair value of our variable-rate debt using discounted cash flow techniques utilizing current market rates, which incorporate our credit risk.

     The following table reflects the carrying value and fair value of our long-term debt (in thousands):

		As of March 31, 2010								As of December 31, 2009
		Carrying				Fair				Carrying				Fair
		Value				Value				Value				Value
Variable-rate long-term debt		$	506,773			$	504,919			$	516,889			$	513,053

     Interest Rate Swap Agreements. We use the market approach to measure fair value for our interest rate swap agreements. The market approach uses prices and other relevant information generated by market transactions involving comparable assets or liabilities.

     The following table reflects the fair value of our interest rate swap agreements, which is measured on a recurring basis as defined by the FASB accounting guidance (in thousands):

Basis of Fair Value Measurement

Quoted Prices

Significant Other

Significant

In Active Markets

Observable

Unobservable

for Identical Items

Inputs

Inputs

Balance

(Level 1)

(Level 2)

(Level 3)

At December 31, 2009

Other accrued liabilities

$

380

$

—

$

380

$

—

     As of March 31, 2010, we do not have any applicable non-recurring measurements of non-financial assets and non-financial liabilities.

VCA Antech, Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)

8. Share-Based Compensation

Stock Option Activity

     A summary of our stock option activity for the three months ended March 31, 2010 is as follows (in thousands):

						Weighted-
						Average
		Stock				Exercise
		Options				Price
Outstanding at January 1, 2010			4,300			$	16.72
Exercised			(173	)			16.47
Outstanding at March 31, 2010			4,127			$	16.73
Exercisable at March 31, 2010			3,377			$	16.66
Expected to vest at March 31, 2010			716			$	17.04

     There were no stock options granted during the three months ended March 31, 2010. The aggregate intrinsic value of our stock options exercised during the three months ended March 31, 2010 was $1.6 million, and the actual tax benefit realized on options exercised during the period was $607,000.

     At March 31, 2010 there was $3.6 million of total unrecognized compensation cost related to our stock options. This cost is expected to be recognized over a weighted-average period of 1.9 years.

     The compensation cost that has been charged against income for stock options for the three months ended March 31, 2010 and 2009 was $471,000 and $507,000, respectively. The corresponding income tax benefit recognized was $183,000 and $198,000 for the three months ended March 31, 2010 and 2009, respectively.

  Nonvested Stock Activity

     During the three months ended March 31, 2010 there were no grants of nonvested common stock.

     Total compensation cost charged against income related to nonvested stock awards was $1.6 million and $1.5 million for the three months ended March 31, 2010 and 2009, respectively. The corresponding income tax benefit recognized in the income statement was $629,000 and $574,000 for the three months ended March 31, 2010 and 2009, respectively.

     At March 31, 2010, there was $8.3 million of unrecognized compensation cost related to these nonvested shares, which will be recognized over a weighted-average period of 2.1 years. A summary of our nonvested stock activity for the three months ended March 31, 2010 is as follows:

						Weighted-
						Average Fair
						Value
		Shares				Per Share
Outstanding at December 31, 2009			691,764			$	30.54
Granted			—				—
Vested			(250,154	)		$	31.71
Forfeited/Canceled			(8,630	)		$	30.35
Outstanding at March 31, 2010			432,980			$	29.87

VCA Antech, Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)

9. Calculation of Earnings per Share

     Basic earnings per share is calculated by dividing net income by the weighted-average number of shares outstanding during the period. Diluted earnings per share is calculated by dividing net income by the weighted-average number of common shares outstanding, after giving effect to all dilutive potential common shares outstanding during the period. Basic and diluted earnings per share were calculated as follows (in thousands, except per share amounts):

		Three Months Ended
		March 31,
		2010				2009
Net income attributable to VCA Antech, Inc.		$	31,935			$	31,970
Weighted-average common shares outstanding:
Basic			85,824				84,680
Effect of dilutive potential common shares:
Stock options			870				568
Nonvested shares			176				138
Diluted			86,870				85,386
Basic earnings per share		$	0.37			$	0.38
Diluted earnings per share		$	0.37			$	0.37

     For the three months ended March 31, 2010 and 2009, potential common shares of 79,918 and 2,417,761, respectively, were excluded from the computation of diluted earnings per share because their inclusion would have had an antidilutive effect.

10. Comprehensive Income

     Total comprehensive income consists of net income and the other comprehensive income during the three months ended March 31, 2010 and 2009. The following table provides a summary of comprehensive income (in thousands):

		Three Months Ended
		March 31,
		2010				2009
Net income		$	32,932			$	32,881
Other comprehensive income:
Foreign currency translation adjustments			167				(178	)
Unrealized gain (loss) on foreign currency			182				(95	)
Tax (expense) benefit			(71	)			37
Unrealized loss on hedging instruments			(2	)			(614	)
Tax benefit			1				240
Losses on hedging instruments reclassified to income			382				3,245
Tax benefit			(149	)			(1,269	)
Other comprehensive income			510				1,366
Total comprehensive income			33,442				34,247
Comprehensive income attributable to noncontrolling interests			(997	)			(911	)
Comprehensive income attributable to VCA Antech, Inc.		$	32,445			$	33,336

VCA Antech, Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)

11. Lines of Business

     Our reportable segments are Animal Hospital, Laboratory and Medical Technology. These segments are strategic business units that have different services, products and/or functions. The segments are managed separately because each is a distinct and different business venture with unique challenges, risks and rewards. Our Animal Hospital segment provides veterinary services for companion animals and sells related retail and pharmaceutical products. Our Laboratory segment provides diagnostic laboratory testing services for veterinarians, both associated with our animal hospitals and those independent of us. Our Medical Technology segment sells digital radiography and ultrasound imaging equipment, related computer hardware, software and ancillary services to the veterinary market. We also operate a corporate office that provides general and administrative support services for our other segments.

     The accounting policies of our segments are essentially the same as those described in the summary of significant accounting policies included in our 2009 Annual Report on Form 10-K. See Note 3, Multiple-Deliverable Revenue Arrangements, for an update on our revenue recognition policies as a result of implementing the FASB’s accounting guidance on multiple-deliverable revenue arrangements. We evaluate the performance of our segments based on gross profit and operating income. For purposes of reviewing the operating performance of our segments all intercompany sales and purchases are generally accounted for as if they were transactions with independent third parties at current market prices.

VCA Antech, Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)

11. Lines of Business, continued

     The following is a summary of certain financial data for each of our segments (in thousands):

		Animal								Medical								Intercompany
		Hospital				Laboratory(1)				Technology(1)				Corporate				Eliminations				Total(1)
Three Months Ended March 31, 2010
External revenue		$	246,668			$	69,400			$	14,666			$	—			$	—			$	330,734
Intercompany revenue			—				8,780				1,131				—				(9,911	)			—
Total revenue			246,668				78,180				15,797				—				(9,911	)			330,734
Direct costs			204,991				41,652				10,966				—				(9,670	)			247,939
Gross profit			41,677				36,528				4,831				—				(241	)			82,795
Selling, general and administrative expense			5,587				6,154				3,515				10,884				—				26,140
Net (gain) loss on sale and disposal of assets			(16	)			1				40				—				—				25
Operating income (loss)		$	36,106			$	30,373			$	1,276			$	(10,884	)		$	(241	)		$	56,630
Depreciation and amortization		$	7,352			$	2,413			$	601			$	581			$	(240	)		$	10,707
Capital expenditures		$	13,128			$	832			$	82			$	2,327			$	(320	)		$	16,049
Three Months Ended March 31, 2009
External revenue		$	238,358			$	69,713			$	7,779			$	—			$	—			$	315,850
Intercompany revenue			—				8,149				1,006				—				(9,155	)			—
Total revenue			238,358				77,862				8,785				—				(9,155	)			315,850
Direct costs			195,194				41,831				5,557				—				(8,901	)			233,681
Gross profit			43,164				36,031				3,228				—				(254	)			82,169
Selling, general and administrative expense			5,384				5,567				2,812				9,154				—				22,917
Net (gain) loss on sale and disposal of assets			(259	)			2				1				8				—				(248	)
Operating income (loss)		$	38,039			$	30,462			$	415			$	(9,162	)		$	(254	)		$	59,500
Depreciation and amortization		$	6,299			$	2,195			$	357			$	488			$	(187	)		$	9,152
Capital expenditures		$	9,123			$	2,129			$	1,121			$	885			$	(372	)		$	12,886
At March 31, 2010
Total assets		$	1,173,654			$	210,394			$	71,238			$	233,855			$	(11,456	)		$	1,677,685
At December 31, 2009
Total assets		$	1,158,891			$	207,043			$	71,019			$	201,024			$	(10,573	)		$	1,627,404

VCA Antech, Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)

12. Commitments and Contingencies

     We have certain commitments, including operating leases and purchase agreements. These items are discussed in detail in our consolidated financial statements and notes thereto included in our 2009 Annual Report on Form 10-K. We also have contingencies as follows:

    a. Earn-Out Payments

     We have contractual arrangements in connection with certain acquisitions that were accounted for under previous business combinations accounting guidance, whereby additional cash may be paid to former owners of acquired companies upon attainment of specified financial criteria as set forth in the respective agreements. The amount to be paid cannot be determined until the earn-out periods expire and the attainment of criteria is established. If the specified financial criteria are attained, at March 31, 2010, we will be obligated to pay an additional $1.7 million. We adopted new accounting guidance regarding business combinations for acquisitions with acquisition dates of January 1, 2009 or later. Under the new guidance contingent consideration, such as earn-out liabilities, is now recognized as part of the consideration transferred on the acquisition date and a corresponding liability is recorded based on the fair value of the liability. The changes in fair value are recognized in earnings where applicable at each reporting period.

   b. Other Contingencies

     We have certain contingent liabilities resulting from litigation and claims incident to the ordinary course of our business. We believe that the probable resolution of such contingencies will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

     In the fourth quarter of 2009, we received correspondence from the state of New York which included a proposed assessment of taxes payable related to our reported taxable income for the tax years from 2004 through 2006. We have evaluated the proposal and have determined that it is more likely than not that our position will be upheld.

13. Subsequent Events

     On April 8, 2010, pursuant to our warrant agreement we purchased 34% of the outstanding stock of Strategic Pharmaceutical Solutions, Inc. (“Vet Source”) for $1.0 million. We anticipate that this investment will be accounted for in accordance with the equity method of accounting which involves recording 34% of the net income or loss of Vet Source at each reporting period. In addition, we entered into a consulting agreement whereby VCA will receive a fee of $1.0 million for advisory services to be provided to Vet Source management over the remainder of the 2010 fiscal year.

ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

		Page
Introduction			17
Executive Overview			18
Critical Accounting Policies			19
Consolidated Results of Operations			21
Segment Results			22
Liquidity and Capital Resources			27

Introduction

     The following discussion should be read in conjunction with our condensed, consolidated financial statements provided under Part I, Item I of this Quarterly report on Form 10-Q. We have included herein statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We generally identify forward-looking statements in this report using words like “believe,” “intend,” “expect,” “estimate,” “may,” “plan,” “should plan,” “project,” “contemplate,” “anticipate,” “predict,” “potential,” “continue,” or similar expressions. You may find some of these statements below and elsewhere in this report. These forward-looking statements are not historical facts and are inherently uncertain and outside of our control. Any or all of our forward-looking statements in this report may turn out to be wrong. They can be affected by inaccurate assumptions we might make, or by known or unknown risks and uncertainties. Many factors mentioned in our discussion in this report will be important in determining future results. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially. Factors that may cause our plans, expectations, future financial condition and results to change are described throughout this report and in our Annual Report on Form 10-K, particularly in “Risk Factors,” Part I, Item 1A of that report.

     The forward-looking information set forth in this Quarterly Report on Form 10-Q is as of May 7, 2010, and we undertake no duty to update this information. Shareholders and prospective investors can find information filed with the SEC after May 7, 2010 at our website at http://investor.vcaantech.com or at the SEC’s website at www.sec.gov.

     We are a leading national animal healthcare company. We provide veterinary services and diagnostic testing to support veterinary care and we sell diagnostic imaging equipment, other medical technology products and related services to veterinarians. Our reportable segments are as follows:

•

Our Animal Hospital segment operates the largest network of freestanding, full-service animal hospitals in the nation. Our animal hospitals offer a full range of general medical and surgical services for companion animals. We treat diseases and injuries, offer pharmaceutical and retail products and perform a variety of pet wellness programs, including health examinations, diagnostic testing, routine vaccinations, spaying, neutering and dental care. At March 31, 2010, our animal hospital network consisted of 492 animal hospitals in 40 states.

•

Our Laboratory segment operates the largest network of veterinary diagnostic laboratories in the nation. Our laboratories provide sophisticated testing and consulting services used by veterinarians in the detection, diagnosis, evaluation, monitoring, treatment and prevention of diseases and other conditions affecting animals. At March 31, 2010, our Laboratory network consisted of 47 laboratories serving all 50 states and certain areas in Canada.

•

Our Medical Technology segment sells digital radiography and ultrasound imaging equipment, related computer hardware, software and ancillary services.

     The practice of veterinary medicine is subject to seasonal fluctuation. In particular, demand for veterinary services is significantly higher during the warmer months because pets spend a greater amount of time outdoors where they are more likely to be injured and are more susceptible to disease and parasites. In addition, use of veterinary services may be affected by levels of flea infestation, heartworm and ticks, and the number of daylight hours.

     Our revenue has been adversely impacted by the current economic recession. We are unable to forecast the timing or degree of any economic recovery. Further, trends in the general economy may not be reflected in our business at the same time or in the same degree as in the general economy. The timing and degree of any economic recovery, and its impact on our business, are among the important factors that could cause our actual results to differ from our forward-looking information.

Executive Overview

     During the three months ended March 31, 2010 we experienced relative improvement in our revenue growth rate in comparison to previous quarters. We continued to recover from the effects of the economic recession; however, we were confronted by record adverse weather conditions throughout certain parts of the country which impacted both our Animal Hospital and Laboratory revenues. Although our Animal Hospital same-store revenue declined, we achieved an increase in consolidated revenue through selective animal hospital acquisitions. We also experienced substantial growth in our Medical Technology segment partially related to the expansion of our business as a result of the acquisition of Eklin. Overall economic conditions and adverse weather resulted in declines in our operating income. Our overall earnings were flat in comparison to the prior year.

   Acquisitions and Facilities

     Our growth strategy includes the acquisition of independent animal hospitals. We currently anticipate that we will acquire $50.0 million to $60.0 million of annualized Animal Hospital revenue by the end of 2010. In addition, we also evaluate the acquisition of animal hospital chains, laboratories, or related businesses if favorable opportunities are presented. The following table summarizes the changes in the number of facilities operated by our Animal Hospital and Laboratory segments during the three months ended March 31, 2010:

Animal Hospitals:
Beginning of period			489
Acquisitions			4
Sold, closed or merged			(1	)
End of period			492
Laboratories:
Beginning of period			47
Acquisitions			—
Acquisitions relocated into our existing laboratories			(1	)
Created			1
End of period			47

     The following table summarizes the aggregate consideration for the four animal hospitals acquired during the three months ended March 31, 2010, and the allocation of the purchase price (in thousands):

Consideration:
Cash (1)		$	8,528
Contingent consideration			7
Fair value of total consideration transferred		$	8,535
Allocation of the Purchase Price:
Tangible assets		$	584
Identifiable intangible assets			1,208
Goodwill (2)			7,076
Other liabilities assumed			(333	)
Total		$	8,535

     In addition to the purchase price listed above, we made cash payments for real estate acquired in connection with our purchase of animal hospitals totaling $1.3 million for the three months ended March 31, 2010.

   Acquisition of Eklin Medical Systems, Inc.

     On July 1, 2009, we acquired Eklin, a leading seller of digital radiography and ultrasound systems in the veterinary market. We acquired Eklin for a purchase price of $12.5 million, net of cash acquired of $1.0 million. The following table summarizes the consideration and allocation of the purchase price (in thousands):

Consideration:
Cash		$	12,504
Fair value of total consideration transferred		$	12,504
Allocation of the Purchase Price:
Tangible assets		$	6,830
Identifiable intangible assets			7,351
Goodwill (1)			10,875
Other liabilities assumed			(12,552	)
Total		$	12,504

     Eklin has been combined with Sound Technologies, Inc. (“STI”) and is reported within our Medical Technology segment.

     The pro forma impacts on revenue and earnings have not been disclosed for the current or comparable prior periods as the amounts were immaterial to the financial statements as a whole.

Critical Accounting Policies

     Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), which require management to make estimates and assumptions that affect reported amounts. The estimates and assumptions are based on historical experience and on other factors that management believes to be reasonable. Actual results may differ from those estimates. Critical accounting policies represent the areas where more significant judgments and estimates are used in the preparation of our consolidated financial statements. A discussion of such critical accounting policies, which include revenue recognition, valuation of goodwill and other intangible assets, income taxes, and self-insured liabilities can be found in our 2009 Annual Report on Form 10-K. During the quarter ended March 31, 2010, we implemented new accounting guidance related to multiple-deliverable revenue arrangements. Other than the changes to our revenue recognition policies there have been no other material changes to the policies noted above as of this quarterly report on Form 10-Q for the period ended March 31, 2010.

   Medical Technology Revenue

     We sell our digital radiography imaging equipment with multiple elements, including hardware, software, licenses and/or services. Under new accounting guidance, tangible products containing software components and nonsoftware components that function together to deliver the tangible product’s essential functionality are now accounted for under the FASB’s guidance pertaining to multiple-deliverable revenue arrangements. These types of arrangements were previously accounted for under software accounting guidance. Accordingly we now account for our digital radiography imaging equipment under this revised guidance.

     Sales arrangement consideration is allocated at the inception of the arrangement to all deliverables using the relative selling price method, whereby any discount in the arrangement is allocated proportionally to each deliverable on the basis of each deliverable’s selling price. The selling price for each deliverable is based on vendor-specific objective evidence (“VSOE”) if available, third-party evidence (“TPE”) if VSOE is not available, or estimated selling price (“ESP”) if neither VSOE nor TPE is available. For elements where VSOE is available, VSOE of fair value is based on the price for those products and services when sold separately by us or the price established by management with the relevant authority. TPE of selling price is the price of our, or any of our competitor’s, largely interchangeable products or services in stand-alone sales to similarly situated customers. Our ESP was based upon the actual selling price of our DR equipment bundled with our Sound Assurance warranty. We calculated the stand-alone selling price of the DR equipment using a cost plus margin approach. The stand-alone cost in most cases was determined using manufacturer data. The margin however was based upon the amount received on the actual sale of the bundled product, which does not differ materially from the margin exclusive of the post-contract customer support (“PCS”). By utilizing this cost plus actual margin method we were able to incorporate both our internal pricing strategies in addition to external market conditions.

     We do not currently have VSOE for our digital radiography imaging equipment as units are not sold on a stand-alone basis without support packages. As this is also true for our competitors, TPE of selling price is also unavailable. We therefore use the ESP to determine the selling price of our digital radiography imaging equipment using the methodology mentioned above. See Note 3, Multiple-Deliverable Revenue Arrangements, in our condensed, consolidated financial statements of this quarterly report on Form 10-Q for a more detailed discussion.

     We recognize revenue when the services are provided or at the time of delivery or installation and customer acceptance. Generally, at the time of delivery and installation of equipment the only undelivered item is the PCS. This obligation is contractually defined in both terms of scope and period. For the PCS, we recognize the revenue for these services on a straight-line basis over the period of support and we expense the costs of these services as they are incurred.

Consolidated Results of Operations

     The following table sets forth components of our condensed, consolidated income statements expressed as a percentage of revenue:

		Three Months Ended
		March 31,
		2010				2009
Revenue:
Animal Hospital			74.6	%			75.5	%
Laboratory			23.6				24.6
Medical Technology			4.8				2.8
Intercompany			(3.0	)			(2.9	)
Total revenue			100.0				100.0
Direct costs			75.0				74.0
Gross profit			25.0				26.0
Selling, general and administrative expense			7.9				7.2
Operating income			17.1				18.8
Interest expense, net			0.9				1.9
Income before provision for income taxes			16.2				16.9
Provision for income taxes			6.2				6.5
Net income			10.0				10.4
Net income attributable to noncontrolling interests			0.3				0.3
Net income attributable to VCA Antech, Inc.			9.7	%			10.1	%

Revenue

     The following table summarizes our revenue (in thousands, except percentages):

		Three Months Ended March 31,
		2010								2009
						% of								% of				%
		$				Total				$				Total				Change
Animal Hospital		$	246,668				74.6	%		$	238,358				75.5	%			3.5	%
Laboratory (1)			78,180				23.6	%			77,862				24.6	%			0.4	%
Medical Technology (1)			15,797				4.8	%			8,785				2.8	%			79.8	%
Intercompany			(9,911	)			(3.0	)%			(9,155	)			(2.9	)%			8.3	%
Total revenue		$	330,734				100.0	%		$	315,850				100.0	%			4.7	%

     Consolidated revenue increased $14.9 million for the three months ended March 31, 2010 as compared to the same period in the prior year. The increase was primarily attributable to revenue from acquired animal hospitals and increased revenue from our Medical Technology business segment to some extent related to our ability to integrate the Eklin product line, partially offset by a decline in Animal Hospital same-store revenue of 1.6%.

Gross Profit

     The following table summarizes our gross profit in both dollars and as a percentage of applicable revenue, or gross margin (in thousands, except percentages):

		Three Months Ended March 31,
		2010								2009
						Gross								Gross				%
		$				Margin				$				Margin				Change
Animal Hospital		$	41,677				16.9	%		$	43,164				18.1	%			(3.4	)%
Laboratory			36,528				46.7	%			36,031				46.3	%			1.4	%
Medical Technology			4,831				30.6	%			3,228				36.7	%			49.7	%
Intercompany			(241	)							(254	)
Total gross profit		$	82,795				25.0	%		$	82,169				26.0	%			0.8	%

     Consolidated gross profit increased $626,000 for the three months ended March 31, 2010 as compared to the same period in the prior year. The increase was primarily due to increased sales in our Medical Technology segment of digital radiography and ultrasound equipment partially offset by a decline in the gross profit margins due to a shift in product mix in that segment. The increase was also partially offset by a decline in both acquired and same-store Animal Hospital gross margins.

Segment Results

   Animal Hospital Segment

     The following table summarizes revenue, gross profit and gross margin for our Animal Hospital segment (in thousands, except percentages):

		Three Months Ended March 31,
		2010				2009				% Change
Revenue		$	246,668			$	238,358				3.5	%
Gross profit		$	41,677			$	43,164				(3.4	)%
Gross margin			16.9	%			18.1	%

     Animal Hospital revenue increased $8.3 million for the three months ended March 31, 2010 as compared to the same period in the prior year. The components of the increase are summarized in the following table (in thousands, except percentages and average revenue per order):

		Three Months Ended March 31,
		2010				2009				% Change
Same-store facilities:
Orders (1)			1,471				1,544				(4.7	)%
Average revenue per order (2)		$	156.85			$	151.88				3.3	%
Same-store revenue (1)		$	230,696			$	234,490				(1.6	)%
Net acquired revenue (3)			15,972				3,868
Total		$	246,668			$	238,358				3.5	%