The National Veterinary Care Ltd (ASX: NVL) share price has surged higher today following the release of a solid full-year result.
At the time of writing its shares are up 4% to $2.45.
Highlights from the release include:
- Revenue up 51% to $66.9 million.
- Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) up 57% to $12.1 million.
- Underlying EBITDA margin increased 70 bps to 18.1%.
- Underlying net profit after tax up 52.8% to $5.9 million.
- Underlying earnings per share of 11.4 cents.
- Fully franked dividend of 3 cents per share.
- Outlook: Revenue growth greater than 25% in FY 2018.
Overall I was very impressed with National Veterinary Care's performance in FY 2017.
Key to its growth were the 14 veterinary services businesses that were acquired and integrated during the year.
This brought the number of clinics under ownership to 56 and complemented the 4.2% organic revenue growth of its general practices during the year.
Furthermore, these acquisitions saw the company successfully enter into the New Zealand market and expanded its addressable market from $2.4 billion to over $3 billion.
Another highlight was the growth of its Best for Pet Wellness program. Thanks to its rollout into 43 new clinics, including in New Zealand, there was a 143% increase in membership numbers to 11,710.
Whilst it is still early days, I do see the Wellness program as a key driver of future growth. After all, the most recent data shows that the average spend of a member increases by 94% after joining the program.
Should you invest?
I continue to believe that National Veterinary Care is one of the best buy and hold investment options in the small-cap space.
As well as the potential for solid organic growth, I remain confident that there is a significant opportunity for further industry consolidation in the veterinary services sector due to its fragmented nature.
This should provide the company with a long runway for growth, making it an ideal investment option in my opinion.
While its shares may not be as cheap as rival Greencross Limited (ASX: GXL), I still think they could be the marginally better option of the two.
