The National Veterinary Care Ltd (ASX: NVL) share price could be one to watch today after it gave an update to the market. The company didn't classify it as market sensitive, but I thought there were a few bits of up-to-date and interesting numbers.
Management firstly reminded investors that it now owns 65 clinics which is 18% growth since the start of the financial year, it owns 55 in Australia and 10 in New Zealand, with a couple more acquisitions planned for the end of July.
A new piece of information was the organic growth in GP clinics. It reported that clinic organic revenue growth was 3.11% so far and was in line with the first half of FY18. GP client visitor numbers were steady over the months of January to April 2018 compared to last year. I think this compares favourably compared to Greencross Limited's (ASX: GXL) recent standalone vet numbers.
The Wellness Program, which is a pet owner membership program, now has 18,237 members. This membership base is from 51 clinics and represents growth of 72% since 1 July 2017. On average, member average spend increases by more than 90% after joining the program. It has a current retention rate of 79%.
National Vet Care also said it now has 401 independent clinics using its management services procurement, this is 23% growth since the start of the year and it has a retention rate of 98%. It's going to expand into New Zealand in the first quarter of FY19.
Management said that the company has implemented its new IT and infrastructure so that the business has scalability and efficiencies. National Vet Care also has worked with new suppliers to secure better purchasing terms for clinics, many of which are the best in the industry.
Foolish takeaway
National Vet Care re-iterated that revenue growth is expected to be greater than 25% of FY17's statutory revenue, the gross margin is expected to be in line with FY17 and the underlying earnings before interest, tax, depreciation and amortisation (EBITDA) margin will likely be between 16% to 17%.
The company also expects to pay a dividend with the annual result.
I thought this was a solid update from National Vet Care. The organic growth of clinics is a slow burner, but it's achieving good growth in its membership program, the management division and of course through acquisitions.
I'd be happy to buy more shares of National Vet Care at the current price, considering how well the business is going. It's trading at around 23x FY18's estimated earnings.
