National Veterinary Care Limited (ASX: NVL) gears up on acquisitions while price dips significantly

A strong revenue growth has been experienced by NVL in FY 2018 and it expects underlying revenue for the year to be in the range of $81.5m to $82.3m, however, underlying EBITDA margins have been impacted by weaker trading conditions in the final two months of the year.

What impacted underlying EBITDA margin is the revenue across the general practice clinics, which was below expectations in May and June. Particularly over the last quarter, considerable progress has been made on recruitment initiatives. However, a targeted program to reduce employee expenses relative to revenue (primarily wages) has taken longer to implement than forecast.

Two of the three acquisitions settled late in the fourth quarter, with the third expected to settle by 31 July 2018. The effect of three recent acquisitions settling later than initially forecast impacted on projected revenue in the last quarter. Below the previous guidance range, the mid-point of the revised underlying EBITDA margin guidance represents less than 5% of previous guidance. The underlying revenue for FY 2019 guidance is 25% above the FY 2018 guidance. While the gross margin is in line with FY 2018, underlying EBITDA margin guidance for FY 2019 is 16%.

National Veterinary Care Limited is currently trading at a market price of $2.350 and has seen a daily price change of -$0.210 or -8.2% in terms of percentage as on July 11, 2018.


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