OAKVILLE, ONTARIO--(Marketwire - May 14, 2012) - Pethealth Inc. ("Pethealth" or "the Company") (TSX:PTZ) today announced its financial results for the quarter ended March 31, 2012.

"Overall, I am pleased with the performance of the Company in Q1," said Mark Warren, President and Chief Executive Officer of Pethealth. "Most of our lines of business performed at or above expectations. We remain cautious going into Q2 as it is possible that warmer weather conditions through most of the U.S. and Canada may have pushed forward some discretionary spending in the companion animal marketplace. We also remain uncertain as to the direction of energy prices and the impact that they might have on discretionary purchases for pets. Nevertheless, we are confident that the strength of our programs and relationships will continue to deliver good results over the long term."

First quarter consolidated results:

Consolidated revenue increased 22% to $9.7 million over Q1 2011. Consolidated revenue growth was the aggregate of a 4% increase in insurance segment operating revenues and the 62% increase in the Company's non-insurance segment revenues. The positive results from the insurance segment resulted from 7% growth in the U.S. insurance revenues which were partially offset by a decline in U.K. commission revenue. The non-insurance segment revenues' continued strong growth is attributed to (i) the increase in the number of microchips sold coupled with expanding microchip margins, (ii) the data publishing revenue of $435,000 and (iii) a significant increase in the cross selling of products and services to the 24PetWatch database.

Consolidated profit increased 101% to $1.2-million. The $610,000 increase is primarily the result of the $741,000 increase in the non insurance segment's profit, due primarily to the 62% increase in Q1 2012 revenues as discussed above, and a $131,000 decline in insurance segment profit related primarily to an increased investment in marketing.

Insurance segment results:

The insurance segment results were influenced by the following:

1. In the U.S., core insurance revenues increased by $153,000 or 6% over Q1 2011 as a result of net new policy growth of 3% combined with year-on year premium increases.
   
   
2. In the U.K., the Company continued to invest in new policy acquisition adding 4% to its net UK policy count over the course of the quarter. The net policy growth was the result of the Company's ongoing engagement of aggregator websites as a source for new policy acquisition. New policies acquired through aggregator sites are lower premium policies that, in turn, offer less coverage and, while initially this has a negative impact on commission revenues, these policies are expected to have a positive impact on the loss ratios. As a result, commission revenues in the UK declined by $67,000 or 5% over the prior year while marketing expenses increased by 71% to $355,000.
   
   
3. ShelterCare enrolments increased 34% over last year which generated an additional $85,000 in revenue. The ShelterCare program enables the animal welfare organisations to provide a 30 day gift of insurance to their adopters providing the Company the opportunity to convert the adopter into one of its core policies. Related to the increase in enrolments was an increase in marketing costs of $170,000.
   
   

The non-insurance results consist of aggregate growth in the following:

PetPoint™

PetPoint had been licensed by 1,810 animal welfare organisations by March 31, 2012, an increase of 11% from those licensed at March 31, 2011. For the quarter, 508,267 intakes (animals entering the welfare organisations) and 229,059 adoptions, respectively, were completed through PetPoint, an increase in intakes of 11% and adoptions of 14% for the quarter.

24PetWatch™ & petprotect RFID Microchip and Database Management

For the quarter ended March 31, 2012, the Company sold, in aggregate, 391,000 RFID microchips in the United States, Canada and the United Kingdom, a 26% increase in unit sales from the same periods in 2011. Revenue from microchip sales for the quarter ended March 31, 2012 increased 36% to $2.5 million from the same period in the prior year.

Total individual pet and pet owner registrations in the 24PetWatch database surpassed 5.5 million by March 31, 2012, representing an increase of over 1.2 million registered cats and dogs, or 29%, compared to those registered at the end of Q1 2011.

The sale of ancillary products and services to the 24PetWatch database of pet owners accounted for $685,000 in revenue for the quarter ended March 31, 2012, a 54% increase from the same period in the prior year.

Data Publishing

Data publishing revenue for the quarter increased significantly as a result of a data report agreement with Best Friends completed in March. Under the terms of the agreement, the Company provided Best Friends with national, regional and state reports on animal intakes and outcomes from 2009 through 2011 in exchange for $435,000. In addition, Best Friends has an option for 2012 reports at an additional price of approximately USD $250,000.

Petango.com

Petango.com attracted more than 2.4 million unique visitors and generated over 28 million page views during the quarter ended March 31, 2012.

Sales via ThePetangoStore.com totalled $295,000 for the quarter ended March 31, 2012, a 77% increase from sales recorded in the same period in the prior year. Approximately 54% of sales recorded were for pet medications.

About Pethealth

For detailed financial statements for the quarter ended March 31, 2012, including Management's Discussion and Analysis, please refer to the Company's website or SEDAR at [ www.sedar.com ] after May 14, 2012.

The Company is hosting an investor conference call on Tuesday, May 15, 2012, at 8:30 AM (EST) which can be accessed at 1-888-340-9761 or on-line at [ www.pethealthinc.com ]. For those unable to participate, a replay of the call will be available shortly after the call concludes on the Company's website at [ www.pethealthinc.com ].

Pethealth is North America's second largest provider of medical insurance for dogs and cats to pet owners, operating in the United States, Canada and the United Kingdom. In addition, the Company is the leading provider of management software to North American animal welfare organisations through its SaaS-based application and is the leading provider of pet related database management services to the North American companion animal industry. Pethealth offers a unique range of products and services for veterinarians, shelters and pet owners through a number of wholly owned subsidiaries using a range of brand names including PetCare, 24PetWatch, Pet Protect, Petpals Direct, ShelterCare, PetPoint, Petango.com and ThePetangoStore.com.

Pethealth is based in Oakville, Ontario. To find out more about Pethealth, visit the web site at [ www.pethealthinc.com ].

Forward-Looking Statements

This press release contains information that is forward-looking information within the meaning of applicable securities laws. In some cases, forward-looking information can be identified by the use of terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or the negative of these terms or other similar expressions concerning matters that are not historical facts.

Forward-looking information by its nature necessarily involves risks and uncertainties including, without limitation, the difficulty of predicting the current regulatory and supervisory environment, the timing and conditions to obtaining any regulatory approval, reliance on insurance underwriters for pet insurance policies, market acceptance and demand for existing and new products and services, including PetPoint and EVE Software and the 24PetWatch microchip program, the Company's ability to maintain and service new and existing customers, the protection of intellectual property associated with its products and services, the impact of competition generally and new competitive products, currency and foreign exchange fluctuations, risks associated with the Company's customer care solutions facility, and related risks and uncertainties. Additional risks and uncertainties affecting the Company can be found in the Company's Annual Information Form available on SEDAR at [ www.sedar.com ]. If any of these risks or uncertainties were to materialize or if the factors and assumptions underlying the forward-looking information were to prove incorrect, actual results could vary materially from those that are expressed or implied by the forward-looking information contained herein. The Company disclaims any intention or obligation, other than those required by security laws, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Contributing Sources

---

Market Wire