BREA, Calif., August 29, 2003 (PRIMEZONE) -- Veterinary Pet Services, Inc., the parent company of Veterinary Pet Insurance Company and its subsidiary, DVM Insurance Agency, announced a 26 percent increase in revenue for the quarter ended June 30, 2003. Revenue grew to $11.2 million compared to $8.9 million for the same period in 2002.
The company reported a net loss of $209,000 in the second quarter of 2003 compared to net income of $437,000 for the same period in 2002. Income for the six months ending June 30, 2003 was $402,000 compared to $873,000 for the first six months of 2002. The decrease in net income, as well as the loss produced in the current quarter, is strictly a result of higher general and administrative costs. The key factors contributing to the higher costs include additional expenditures relating to enhanced marketing and advertising campaigns; higher depreciation and increased consulting costs associated with the implementation of the company's software system conversion; and increased expenditures pertaining to the fulfillment processes. The advertising and marketing programs will continue to enhance future business growth and increase revenue. Investments into the fulfillment processes and software development are expected to increase the company's operating efficiencies to support future revenue growth.
The company wrote approximately 14.6 percent more pet insurance policies in the second quarter of 2003 than in the comparable period of 2002. Gross premiums produced in the second quarter of 2003 increased 29.4 percent to $20.7 million compared to gross premiums produced of $16 million for the same period in 2002.
Gross premiums produced include sales of pet insurance policies in California by VPI and sales of pet insurance outside of California through DVM that are underwritten by National Casualty Company prior to the application of the quota share reinsurance agreement VPI has with Scottsdale Insurance Company, an affiliate of National Casualty.
Total gross revenue, which comprises gross premiums produced, service fees and investment income, for the second quarter of 2003 was $22.2 million compared to $16.9 million in the second quarter of 2002, a 31.4 percent increase.
"We are pleased by the overall growth of the company and the increase in policy sales," said Paul Souza, chief financial officer for Veterinary Pet Services, Inc. "VPI is committed to helping pet owners afford the sophisticated veterinary care available today and reducing economic euthanasia. The results show more and more pet owners feel the same way."
"Although our second quarter expense ratios were higher than the first quarter's, we expect to contain those costs and see stability in these ratios in the second half of 2003," Souza commented.
About Veterinary Pet Services, Inc.
Veterinary Pet Services, Inc. is the parent company of Veterinary Pet Insurance Company (VPI) and its subsidiary, DVM Insurance Agency. Together, VPI and DVM market health insurance policies for pets in all 50 states and the District of Columbia. There are approximately 350,000 policies in force covering dogs, cats, birds and exotic pets for medical problems and conditions relating to accidents, illnesses and injuries. Optional vaccination and routine care coverage is also available. Policies are underwritten by Veterinary Pet Insurance Company in California and in all other states by National Casualty Company, an A+15 rated company, in Madison, Wisconsin and a subsidiary of Nationwide Mutual Insurance Company. For more information about VPI policies, call 800-USA-PETS (800-872-7387) or visit www.petinsurance.com.
Veterinary Pet Services, Inc. is an SEC-reporting company whose stock is not publicly traded.
Safe Harbor Statement
This news release contains forward-looking statements that may involve risks and uncertainties. Such forward-looking statements involve assumptions, known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Examples of the uncertainties and contingencies that might affect our business include, among other important factors, those affecting the insurance industry generally such as economic conditions, the risk of higher inflation and the effect it may have on claims costs and loss ratios, interest rates, legislative and regulatory developments and our ability to raise capital when needed. Additional factors relate to the pet insurance industry specifically, such as market pricing, competitive trends in the pet insurance industry, our insurance premiums and related fee income, our claims experience, our reinsurance arrangements and the performance of our investment portfolio. In such instances, actual results could differ materially as a result of a variety of factors, including the risks associated with the effect of changing economic conditions and other risk factors detailed in our Securities and Exchange Commission filings. For a definition of terms used in this release and for more detailed information concerning our financial results, please consult the Form 10-K filed with the Securities and Exchange Commission for the year ending December 31, 2002 and the Form 10-Q filed for the quarter ending June 30, 2003. Quarterly results are not necessarily indicative of the results we might experience for the year ending December 31, 2003.