Public is Getting Fed Up With VCA Prices

A stock analyst says VCA's price increases are driving people elsewhere, and both its growth and income are not sustainable. After a recent $780 bill for one of my rescues, including $425 for a pelvic ultrasound, I know of what he speaks.

This recession is the time for some established clinic to decide to drop prices and grab an increased market share and hold onto it when the economy picks up. They could cut into  the customer base of VCA and the other high priced corporate practices. But I don't see this happening. The good clinics of the past are being rapidly bought out by VCA and other corporations. Too bad VCA can't turn a few of their many clinics into budget clinics and see what happens.

Here is the article (partial. Getting the whole article requires a $130 subscription fee):

VCA Antech Losing Its Bite


About this article:
Yesterday evening, VCA Antech reported its March quarter. Revenue of $316 million missed consensus by nearly 5%, while very tight expense control produced an earnings per share beat of 1 cent. The company's veterinary hospital revenue was up over 5% year over year to $238 million, but that was driven by continued price increases and acquisitions. I estimate that organic order growth in the hospital business was down mid-to-high single digits, given "same-store" sales down 2.7%. I believe that VCA's continued price increases are unsustainable in this economic environment, as customers on the margin will choose to take their business elsewhere. I believe this is showing up partially in the organic growth figures. The company's lab business performed slightly better -- up 1.7% organically, to $77.5 million. The company's operating margins continued to suffer this quarter, falling 60 basis points to 18.8%. This continues the descent...


Anonymous said...

This guy is way off. If he paid attention he would no it is not pricing going up, but rather due to mix shift. In other words, the company is losing business (like dog food, grooming, pharma) to more places like Petsmart and Petmed express. This has the function of reducing low-priced volume (like a bag of food) and thus means that remaining volume is for medical care, which costs more than dog food. Thus, volume goest down (less food) and rev/order goes up as what is left is higher priced is not that they are just raising prices by that attention

Ed Muzika said...

Actually that is not true. I have been going to VCA West LA for two years with two cats with cancer. Recently there was a dramatic increase in their prices. An initial pelvic ultrasound went from $360 to $425 about 8 weeks ago and followup ultrasounds went from $160 to $180--in the middle of a huge recession!!

The initial consult fee went up a little as did follow up visits.

The cost of some prescription meds prepared there also went up considerably (30% on one of them).

The cost for a 20 lb bag of Science Diet went up from about $50 to $56 in that same time frame and neither Petsmart or Petco sell prescription pet food unless a vet is on premise. Even then, Petsmart where they do have vets, prices their prescription pet food only about $5 less for a 20 lb bag ($56), so that theory goes down the drain.

As for non prescription pet food, such as Science Diet, Royal Canin, etc., only idiots have bought that from vets for the past 15 years instead of from discount pet stores. This certainly is not a recent "mix" loss for VCA.

A non-prescription probiotic prescription that the vet said was $30, was actually charged at $50 at check out. I refused it and got it on the Internet for $19 plus $5 for shipping.

A needle biopsy I got done at one vet for $130 three months ago sent to Antech cost me $180 at VCA two weeks ago.

The vet would quote me one price but at the front desk it would be significantly higher. The needle aspiration test was administered without my authorization, but my usual oncologist justified the unauthorized procedure after the fact by saying it indicates the cancer may be mutating.

One of the interns I saw while their says it is common knowledge that VCA overcharges and prescribes too many diagnostic tests that would not bear on treatment. Fortunately, my oncologist does not recommend a test unless results would indicate a different treatment.

Yes, their prices were higher than others when I first went there, and they have gone much higher in the last 2-3 months.

Also, in their annual statement they admitted they raised their prices and thus maintained revenue even though customer visits were down. They also claimed they cut costs and fired staff that they took over to bring costs down even more. I posted a link to the annual report on a previous post.

This analyst's opinion is consistent with my own observations and their own annual statement.

If you have different info, put it in a long comment or email it to me post my analysis and posting.

Anonymous said...

Maybe they started a pension plan for their staff. That would drive up the prices. Look at what's happening to the city and state because of those pensions.

Ed Muzika said...

They cut staff. They fired them. They state they deliberately increased prices to keep revenue up because fewer customers were coming in due to the economy.

Why don't you just speculate the price of bottle water used in their offices went up and that forced them to raise prices? You are really reaching with that speculation.

That which motivates VCA is simple: Greed.