10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________________________ 

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-16783

___________________________________________________ 

VCA Antech, Inc.

(Exact name of registrant as specified in its charter)

Delaware	95-4097995
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

12401 West Olympic Boulevard

Los Angeles, California 90064-1022

(Address of principal executive offices)

(310) 571-6500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ].

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ].

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer [X]	Accelerated filer [  ]
Non-accelerated filer [  ]	Smaller reporting company [  ]
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X].

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: common stock, $0.001 par value, 87,829,066 shares as of November 5, 2012.

VCA Antech, Inc. and Subsidiaries

Form 10-Q

September 30, 2012

Table of Contents

Part I.	Financial Information	Page Number
Item 1.	Financial Statements (Unaudited)
	Condensed, Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011	1
	Condensed, Consolidated Income Statements for the Three and Nine Months Ended September 30, 2012 and 2011	2
	Condensed, Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2012 and 2011	3
	Condensed, Consolidated Statements of Equity for the Nine Months Ended September 30, 2012 and 2011	4
	Condensed, Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2012 and 2011	5
	Notes to Condensed, Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	40
Part II.	Other Information
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.	Defaults Upon Senior Securities	42
Item 4.	Mine Safety Disclosures	42
Item 5.	Other Information	42
Item 6.	Exhibits	42
	Signature	43
	Exhibit Index	44

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VCA Antech, Inc. and Subsidiaries

Condensed, Consolidated Balance Sheets

(Unaudited)

(In thousands, except par value)

	September 30, 2012		December 31, 2011
Assets
Current assets:
Cash and cash equivalents	$	79,661	$	63,651
Trade accounts receivable, less allowance for uncollectible accounts of $16,156 and $14,978 at September 30, 2012 and December 31, 2011, respectively	62,061		58,279
Inventory	53,526		48,661
Prepaid expenses and other	24,302		21,883
Deferred income taxes	28,747		26,310
Prepaid income taxes	20,610		18,373
Total current assets	268,907		237,157
Property and equipment, net	392,367		370,646
Goodwill	1,366,117		1,237,607
Other intangible assets, net	116,762		92,403
Notes receivable, net	6,193		6,202
Deferred financing costs, net	4,549		5,435
Other	46,390		45,918
Total assets	$	2,201,285	$	1,995,368
Liabilities and Equity
Current liabilities:
Current portion of long-term debt	$	34,996	$	32,571
Accounts payable	37,859		37,797
Accrued payroll and related liabilities	55,152		42,658
Other accrued liabilities	56,352		43,968
Total current liabilities	184,359		156,994
Long-term debt, less current portion	604,445		586,282
Deferred income taxes	122,317		101,229
Other liabilities	37,429		25,947
Total liabilities	948,550		870,452
Commitments and contingencies
Redeemable noncontrolling interests	6,975		6,964
Preferred stock, par value $0.001, 11,000 shares authorized, none outstanding	—		—
VCA Antech, Inc. stockholders’ equity:
Common stock, par value $0.001, 175,000 shares authorized, 87,829 and 86,796 shares outstanding as of September 30, 2012 and December 31, 2011, respectively	88		87
Additional paid-in capital	382,479		361,715
Retained earnings	849,260		745,658
Accumulated other comprehensive income	2,883		418
Total VCA Antech, Inc. stockholders’ equity	1,234,710		1,107,878
Noncontrolling interests	11,050		10,074
Total equity	1,245,760		1,117,952
Total liabilities and equity	$	2,201,285	$	1,995,368

The accompanying notes are an integral part of these condensed, consolidated financial statements.

1

VCA Antech, Inc. and Subsidiaries

Condensed, Consolidated Income Statements

(Unaudited)

(In thousands, except per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Revenue	$	433,613		$	385,135		$	1,281,450		$	1,116,363
Direct costs	334,432			294,998			988,283			849,616
Gross profit	99,181			90,137			293,167			266,747
Selling, general and administrative expense	37,608			32,488			115,656			85,334
Net loss (gain) on sale of assets	387			(192		)	1,022			(43		)
Operating income	61,186			57,841			176,489			181,456
Interest expense, net	4,295			4,222			12,746			12,816
Debt retirement costs	—			2,764			—			2,764
Business combination adjustment gain	—			—			(5,719		)	—
Other (income) expense	(284		)	8			(639		)	(1		)
Income before provision for income taxes	57,175			50,847			170,101			165,877
Provision for income taxes	21,533			19,488			62,360			63,957
Net income	35,642			31,359			107,741			101,920
Net income attributable to noncontrolling interests	1,605			1,190			4,139			3,300
Net income attributable to VCA Antech, Inc	$	34,037		$	30,169		$	103,602		$	98,620
Basic earnings per share	$	0.39		$	0.35		$	1.18		$	1.14
Diluted earnings per share	$	0.38		$	0.35		$	1.17		$	1.13
Weighted-average shares outstanding for basic earnings per share	87,773			86,697			87,554			86,531
Weighted-average shares outstanding for diluted earnings per share	88,654			87,253			88,589			87,293

The accompanying notes are an integral part of these condensed, consolidated financial statements.

2

VCA Antech, Inc. and Subsidiaries

Condensed, Consolidated Statements of Comprehensive Income

(Unaudited)

(In thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net income(1)	$	35,642		$	31,359		$	107,741		$	101,920
Other comprehensive income:
Foreign currency translation adjustments	2,615			(669		)	2,173			(373		)
Unrealized gain (loss) on foreign currency	432			(608		)	479			(371		)
Tax (expense) benefit	(169		)	237			(187		)	145
Other comprehensive income (loss)	2,878			(1,040		)	2,465			(599		)
Total comprehensive income	38,520			30,319			110,206			101,321
Comprehensive income attributable to noncontrolling interests(1)	1,605			1,190			4,139			3,300
Comprehensive income attributable to VCA Antech, Inc	$	36,915		$	29,129		$	106,067		$	98,021

 ____________________________

⁽¹⁾  Includes approximately $2.1 million and $1.5 million of net income related to redeemable and mandatorily redeemable noncontrolling interests for the nine months ended September 30, 2012 and September 30, 2011, respectively.

The accompanying notes are an integral part of these condensed, consolidated financial statements.

3

VCA Antech, Inc. and Subsidiaries

Condensed, Consolidated Statements of Equity

(Unaudited)

(In thousands)

	Common Stock				Additional Paid-In Capital			Retained Earnings		Accumulated Other Comprehensive Income			Noncontrolling Interests			Total
	Shares		Amount
Balances, December 31, 2010	86,179		$	86	$	347,848		$	650,253	$	737		$	10,561		$	1,009,485
Net income (excludes $1,207 and $326 related to redeemable and mandatorily redeemable noncontrolling interests, respectively).	—		—		—			98,620		—			1,767			100,387
Other comprehensive loss	—		—		—			—		(599		)	—			(599		)
Distribution to noncontrolling interests	—		—		—			—		—			(1,046		)	(1,046		)
Purchase of noncontrolling interests	—		—		263			—		—			(875		)	(612		)
Share-based compensation	—		—		6,610			—		—			—			6,610
Issuance of common stock under stock incentive plans	596		1		2,595			—		—			—			2,596
Stock repurchases	(113	)	—		(2,663		)	—		—			—			(2,663		)
Excess tax benefit from stock options	—		—		963			—		—			—			963
Tax shortfall and other from stock options and awards	—		—		(539		)	—		—			—			(539		)
Balances, September 30, 2011	86,662		$	87	$	355,077		$	748,873	$	138		$	10,407		$	1,114,582
Balances, December 31, 2011	86,796		$	87	$	361,715		$	745,658	$	418		$	10,074		$	1,117,952
Net income (excludes $702 and $1,359 related to redeemable and mandatorily redeemable noncontrolling interests, respectively).	—		—		—			103,602		—			2,078			105,680
Other comprehensive income	—		—		—			—		2,465			—			2,465
Distribution to noncontrolling interests	—		—		—			—		—			(1,102		)	(1,102		)
Share-based compensation	—		—		10,466			—		—			—			10,466
Issuance of common stock under stock incentive plans	745		1		3,321			—		—			—			3,322
Issuance of common stock for acquisitions	473		—		10,500			—		—			—			10,500
Stock repurchases	(185	)	—		(3,933		)	—		—			—			(3,933		)
Excess tax benefit from stock options	—		—		358			—		—			—			358
Tax benefit and other from stock options and awards	—		—		52			—		—			—			52
Balances, September 30, 2012	87,829		$	88	$	382,479		$	849,260	$	2,883		$	11,050		$	1,245,760

The accompanying notes are an integral part of these condensed, consolidated financial statements.

4

VCA Antech, Inc. and Subsidiaries Condensed, Consolidated Statements of Cash Flows (Unaudited) (In thousands)
	Nine Months Ended September 30,
	2012			2011
Cash flows from operating activities:
Net income	$	107,741		$	101,920
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	56,882			41,386
Amortization of debt issue costs	961			1,169
Provision for uncollectible accounts	4,437			4,510
Debt retirement costs	—			2,764
Business combination adjustment gain	(5,719		)	—
Net loss (gain) on sale of assets	1,022			(43		)
Share-based compensation	10,466			6,610
Deferred income taxes	14,119			14,649
Excess tax benefit from exercise of stock options	(358		)	(963		)
Other	(838		)	(489		)
Changes in operating assets and liabilities:
Trade accounts receivable	(5,079		)	(7,018		)
Inventory, prepaid expense and other assets	(6,727		)	(9,806		)
Accounts payable and other accrued liabilities	3,161			(8,328		)
Accrued payroll and related liabilities	10,007			8,523
Income taxes	(1,636		)	8,707
Net cash provided by operating activities	188,439			163,591
Cash flows from investing activities:
Business acquisitions, net of cash acquired	(108,031		)	(190,363		)
Real estate acquired in connection with business acquisitions	(1,602		)	(1,900		)
Property and equipment additions	(55,257		)	(43,275		)
Proceeds from sale of assets	112			447
Other	(1,583		)	(723		)
Net cash used in investing activities	(166,361		)	(235,814		)
Cash flows from financing activities:
Repayment of debt	(52,040		)	(90,945		)
Proceeds from issuance of long-term debt	50,000			150,000
Proceeds from revolving credit facility	50,000			50,000
Repayment of revolving credit facility	(50,000		)	(50,000		)
Payment of financing costs	(122		)	(2,944		)
Distributions to noncontrolling interest partners	(2,802		)	(1,959		)
Proceeds from issuance of common stock under stock option plans	3,322			2,596
Excess tax benefit from exercise of stock options	358			963
Stock repurchases	(3,897		)	(2,663		)
Other	(1,273		)	(345		)
Net cash (used in) provided by financing activities	(6,454		)	54,703
Effect of currency exchange rate changes on cash and cash equivalents	386			(363		)
Increase (decrease) in cash and cash equivalents	16,010			(17,883		)
Cash and cash equivalents at beginning of period	63,651			97,126
Cash and cash equivalents at end of period	$	79,661		$	79,243

The accompanying notes are an integral part of these condensed, consolidated financial statements.

5

VCA Antech, Inc. and Subsidiaries Condensed, Consolidated Statements of Cash Flows - Continued (Unaudited) (In thousands)
	Nine Months Ended September 30,
	2012			2011
Supplemental disclosures of cash flow information:
Interest paid	$	11,614		$	12,214
Income taxes paid	$	48,671		$	40,601
Supplemental schedule of noncash investing and financing activities:
Detail of acquisitions:
Fair value of assets acquired	$	187,515		$	241,688
Fair value of pre-existing investment in AVC	(11,850		)	—
Noncontrolling interest	(8,161		)	—
Cash paid for acquisitions	(108,031		)	(189,255		)
Cash paid to debt holders	(25,915		)	(26,048		)
Issuance of common stock for acquisitions	(10,500		)	—
Contingent consideration	(934		)	(481		)
Holdbacks	(2,525		)	(800		)
Liabilities assumed	$	19,599		$	25,104

The accompanying notes are an integral part of these condensed, consolidated financial statements.

6

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements

September 30, 2012

(Unaudited)

1. Nature of Operations

Our company, VCA Antech, Inc. (“VCA”) is a Delaware corporation formed in 1986 and is based in Los Angeles, California. We are an animal healthcare company with the following five operating segments: animal hospitals (“Animal Hospital”), veterinary diagnostic laboratories (“Laboratory”), veterinary medical technology (“Medical Technology”), Vetstreet and ThinkPets.

Our animal hospitals offer a full range of general medical and surgical services for companion animals. Our animal hospitals treat diseases and injuries, provide pharmaceutical products and perform a variety of pet-wellness programs, including health examinations, diagnostic testing, vaccinations, spaying, neutering and dental care. At September 30, 2012, we operated 601 animal hospitals throughout 41 states and in three Canadian provinces.

We operate a full-service veterinary diagnostic laboratory network serving all 50 states and certain areas in Canada. Our laboratory network provides sophisticated testing and consulting services used by veterinarians in the detection, diagnosis, evaluation, monitoring, treatment and prevention of diseases and other conditions affecting animals. At September 30, 2012, we operated 55 laboratories of various sizes located strategically throughout the United States and certain areas in Canada.

Our Medical Technology business sells digital radiography and ultrasound imaging equipment, provides education and training on the use of that equipment, provides consulting and mobile imaging services, and sells software and ancillary services to the veterinary market.

Our Vetstreet and ThinkPets businesses combined provide online communications, professional education, marketing solutions and an ecommerce platform for independent animal hospitals. In addition, Vetstreet.com provides a robust selection of products, information and services to the pet-owning community.

The practice of veterinary medicine is subject to seasonal fluctuation. In particular, demand for veterinary services is significantly higher during the warmer months because pets spend a greater amount of time outdoors where they are more likely to be injured and are more susceptible to disease and parasites. In addition, use of veterinary services may be affected by levels of flea infestation, heartworms and ticks, and the number of daylight hours.

2. Basis of Presentation

Our accompanying unaudited, condensed, consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements as permitted under applicable rules and regulations. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. The results of operations for the three and nine months ended September 30, 2012 are not necessarily indicative of the results to be expected for the full year ending December 31, 2012. For further information, refer to our consolidated financial statements and notes thereto included in our 2011 Annual Report on Form 10-K.

The preparation of our condensed, consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in our condensed, consolidated financial statements and notes thereto. Actual results could differ from those estimates.

7

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

September 30, 2012

(Unaudited)

3. Goodwill and Other Intangible Assets

Goodwill

The following table presents the changes in the carrying amount of our goodwill for the nine months ended September 30, 2012 (in thousands):

	Animal Hospital			Laboratory		All Other			Total
Balance as of December 31, 2011	$	1,035,401		$	96,810	$	105,396		$	1,237,607
Goodwill acquired	120,505			34		11,194			131,733
Foreign translation adjustment	2,053			23		—			2,076
Other (1)	(4,271		)	—		(1,028		)	(5,299		)
Balance as of September 30, 2012 (2)	$	1,153,688		$	96,867	$	115,562		$	1,366,117

 ____________________________

⁽¹⁾  Other includes acquisition-price adjustments, which consist primarily of an adjustment related to capital leases and buy-outs.

⁽²⁾  Net of accumulated impairment losses of $21.3 million recorded in 2011, all related to our medical technology business, included in "All Other" in the above table.

We had no impairment losses during the nine months ended September 30, 2012.

Other Intangible Assets

Our amortizable intangible assets at September 30, 2012 and December 31, 2011 are as follows (in thousands):

	As of September 30, 2012							As of December 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Non-contractual customer relationships	$	113,689	$	(33,011	)	$	80,678	$	82,891	$	(21,147	)	$	61,744
Covenants not-to-compete	12,262		(7,225		)	5,037		13,035		(8,067		)	4,968
Favorable lease assets	7,163		(3,717		)	3,446		5,571		(3,210		)	2,361
Trademarks	14,017		(2,667		)	11,350		7,405		(1,686		)	5,719
Contracts	3,500		(519		)	2,981		3,500		(185		)	3,315
Technology	17,161		(3,919		)	13,242		16,589		(2,342		)	14,247
Client lists	85		(57		)	28		84		(35		)	49
Total	$	167,877	$	(51,115	)	$	116,762	$	129,075	$	(36,672	)	$	92,403

8

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

September 30, 2012

(Unaudited)

3. Goodwill and Other Intangible Assets, continued

The following table summarizes our aggregate amortization expense related to other intangible assets (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Aggregate amortization expense	$	6,612	$	3,883	$	16,830	$	9,092

The estimated amortization expense related to intangible assets for the remainder of 2012 and each of the succeeding years thereafter, as of September 30, 2012, is as follows (in thousands):

Remainder of 2012	$	6,040
2013	22,377
2014	19,935
2015	17,837
2016	14,586
Thereafter	35,987
Total	$	116,762

4. Acquisitions

The table below reflects the activity related to the acquisitions and dispositions of our animal hospitals and laboratories during the nine months ended September 30, 2012:

Animal Hospitals:
Animal Hospital acquisitions, excluding Associate Veterinary Clinics (1981) LTD ("AVC")	24
Acquisitions, merged	(4	)
AVC acquisition	44
Sold, closed or merged	(4	)
Total	60
Laboratories:
Created	2

9

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

September 30, 2012

(Unaudited)

4. Acquisitions, continued

Animal Hospital and Laboratory Acquisitions, excluding AVC

The following table summarizes the aggregate consideration for the 24 independent animal hospitals acquired during the nine months ended September 30, 2012, and the preliminary allocation of the acquisition price (in thousands):

Consideration:
Cash	$	51,744
Holdback	1,475
Earnout contingent consideration	934
Fair value of total consideration transferred	$	54,153
Allocation of the Purchase Price:
Tangible assets	$	1,995
Identifiable intangible assets	9,184
Goodwill (1)	42,974
Total	$	54,153

____________________________

⁽¹⁾     We expect that $40.0 million of the goodwill recorded for these acquisitions, as of September 30, 2012, will be deductible for income tax purposes.

In addition to the purchase price listed above, are cash payments made for real estate acquired in connection with our purchase of animal hospitals, totaling $1.6 million for the nine months ended September 30, 2012.

AVC

On January 31, 2012, we increased our investment in AVC by approximately CDN $81 million (approximately US $81 million) becoming the sole non-veterinarian shareholder of AVC. At the time of the additional investment, AVC operated 44 animal hospitals in three Canadian provinces, offering services ranging from primary care, to specialty referral services and 24-hour emergency care. This investment and planned additional investments in AVC will facilitate our continued expansion in the Canadian market. At the time of the investment, AVC had annualized revenue of approximately CDN $95 million (approximately US $95 million). Our consolidated financial statements reflect the operating results of AVC since January 31, 2012.

10

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

September 30, 2012

(Unaudited)

4. Acquisitions, continued

The following table summarizes the total investment and the preliminary allocation of the investment in AVC (in thousands):

Consideration:
Cash	$	48,819
Cash paid to debt holders	25,915
Fair value of total consideration transferred	$	74,734
Allocation of the Purchase Price:
Tangible assets	$	11,743
Identifiable intangible assets (1)	23,561
Goodwill (2)	77,565
Other liabilities assumed	(18,124		)
	94,745
Noncontrolling interest	(8,161		)
Fair value of pre-existing investment in AVC	(11,850		)
Total	$	74,734

____________________________

⁽¹⁾     Identifiable intangible assets include customer relationships, trademark and covenants-not-to-compete.

⁽²⁾     As of September 30, 2012, we expect that approximately $362,000 of the goodwill recorded for this acquisition will be deductible for income tax purposes.

Acquisition-related costs, included in corporate selling, general and administrative expense in our income statement, for the three and nine months ended September 30, 2012, were approximately $161,000 and $500,000, respectively.

The allocation of the additional investment is preliminary, because certain items have not been completed or finalized, including but not limited to, the valuation of assets, primarily property and equipment.

AVC is reported within our Animal Hospital reportable segment.

The pro forma impact on revenue and earnings have not been disclosed as the amounts were immaterial to the financial statements as a whole.

ThinkPets, Inc ("ThinkPets)

On February 1, 2012, we acquired 100% interest in ThinkPets for $21 million, payable by delivery of 473,389 shares of VCA common stock and $10.5 million in cash. We intend to combine the operations of ThinkPets with our Vetstreet business, which we expect will improve the products and services it offers to clients of both companies. Our consolidated financial statements reflect the operating results of ThinkPets since February 1, 2012.

11

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

September 30, 2012

(Unaudited)

4. Acquisitions, continued

The following table summarizes the preliminary purchase price and the preliminary allocation of the investment in ThinkPets (in thousands):

Consideration:
Cash	$	7,468
Issuance of common stock for acquisitions	10,500
Holdback	1,050
Fair value of total consideration transferred	$	19,018
Allocation of the Purchase Price:
Tangible assets	$	2,078
Identifiable intangible assets (1)	7,221
Goodwill (2)	11,194
Other liabilities assumed	(1,475		)
Total	$	19,018

____________________________

⁽¹⁾     Identifiable intangible assets include customer relationships, contracts and trademark.

⁽²⁾     As of September 30, 2012, we expect that approximately $821,000 of the goodwill recorded for this acquisition will be deductible for income tax purposes.

Acquisition-related costs, included in corporate selling, general and administrative expense in our income statement, for the three and nine months ended September 30, 2012, were approximately $35,000 and $1.0 million, respectively.

The allocation of the purchase price is preliminary because certain items have not been completed or finalized, including but not limited to, the valuation of assets, including intangible assets, and liabilities.

ThinkPets is reported within our "All Other" category in our segment disclosures combined with our Medical Technology and Vetstreet operating segments.

The pro forma impact on revenue and earnings have not been disclosed as the amounts were immaterial to the financial statements as a whole.

5. Other Accrued Liabilities

Other accrued liabilities consisted of the following (in thousands):

	September 30, 2012		December 31, 2011
Deferred revenue	$	9,481	$	7,025
Accrued health insurance	6,275		5,553
Deferred rent	4,087		3,626
Accrued consulting fees	2,886		2,886
Holdbacks and earnouts	3,795		2,250
Customer deposits	2,681		2,281
Accrued lab service rebates	426		332
Other	26,721		20,015
	$	56,352	$	43,968

12

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

September 30, 2012

(Unaudited)

6. Long-Term Obligations

Senior Credit Facility

On January 25, 2012, we executed an amendment (the "First Amendment") to our Amended and Restated Credit and Guaranty Agreement entered into as of August 16, 2011 (our "Senior Credit Facility"). On January 24, 2012, we issued new term loans in the aggregate principal amount of $50.0 million. The First Amendment replenished the aggregate principal amount of uncommitted incremental facilities by $50.0 million, permitting us to request up to an aggregate principal amount of $100.0 million in uncommitted incremental facilities. The funds borrowed from the Incremental Facility were used to fully repay amounts borrowed to fund an additional investment in Associate Veterinary Clinics (1981) LTD ("AVC") on February 1, 2012. In connection with the First Amendment we incurred $122,000 in financing costs, of which approximately $47,000 were expensed as a component of selling, general and administrative expenses and $75,000 were capitalized as deferred financing costs.

The following table summarizes our long-term obligations at September 30, 2012 and December 31, 2011 (in thousands):

	September 30, 2012			December 31, 2011
Revolver	$	—		$	—
Senior term notes at the adjusted Eurodollar rate + 1.75% (1.97% at September 30, 2012)	600,313			573,984
Other debt and capital lease obligations	39,128			44,869
Total debt obligations	639,441			618,853
Less - current portion	(34,996		)	(32,571		)
	$	604,445		$	586,282

Interest Rate. In general, borrowings under the senior term notes and the revolving credit facility bear interest, at our option, on either:

• the base rate (as defined below) plus the applicable margin. The applicable margin for a base rate loan is an amount equal to the applicable margin for Eurodollar rate (as defined below) minus 1.00%; or

• the adjusted Eurodollar rate (as defined below), plus a margin of 1.75% (Level II, see table below), per annum until the date of delivery of the compliance certificate and the financial statements, for the period ended September 30, 2012, at which time the applicable margin will be determined by reference to the leverage ratio in effect from time to time as set forth in the following table:

Level	Leverage Ratio	Applicable Margin for Eurodollar Rate Loans	Applicable Revolving Commitment Fee %
I	≥ 2.50:1.00	2.25%	0.50%
II	< 2.50:1.00 and ≥ 1.75:1.00	1.75%	0.375%
III	< 1.75:1.00 and ≥ 1.00:1.00	1.50%	0.25%
IV	< 1.00:1.00	1.25%	0.20%

The base rate for the senior term notes is a rate per annum equal to the greatest of Wells Fargo Bank, N.A. ("Wells Fargo") prime rate in effect on such day, the Federal funds effective rate in effect on such day plus 0.5% and the adjusted Eurodollar rate for a one-month interest period commencing on such day plus 1.0%. The adjusted Eurodollar rate is defined as the rate per annum obtained by dividing (1) the rate of interest offered to Wells Fargo on the London interbank market by (2) a percentage equal to 100% minus the stated maximum rate of all reserve requirements applicable to any member bank of the Federal Reserve System in respect of “Eurocurrency liabilities.”

13

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

September 30, 2012

(Unaudited)

6. Long-Term Obligations, continued

Maturity and Principal Payments. The Amended and Restated senior term notes mature on August 19, 2016. Principal payments on the senior term notes are paid quarterly in the amount of (i) $7.9 million for the first four quarters beginning on December 31, 2012, (ii) $11.8 million for the two years following, and (iii) $15.8 million for the three quarters prior to maturity, at which time the remaining balance is due. The following table sets forth the remaining scheduled principal payments for our senior term notes (in thousands):

Remainder of 2012	$	7,891
2013	35,508
2014	47,344
2015	51,289
2016	458,281
Total	$	600,313

The revolving credit facility matures on August 19, 2016. Principal payments on the revolving credit facility are made at our discretion with the entire unpaid amount due at maturity.

Guarantees and Security. We and each of our wholly-owned subsidiaries guarantee the outstanding debt under our senior credit facility. These borrowings, along with the guarantees of the subsidiaries, are further secured by substantially all of our consolidated assets. In addition, these borrowings are secured by a pledge of substantially all of the capital stock, or similar equity interests, of our wholly-owned subsidiaries.

7. Fair Value Measurements

Fair Value of Financial Instruments

The FASB accounting guidance requires disclosure of fair value information about financial instruments, whether or not recognized in the accompanying condensed, consolidated balance sheets. Fair value as defined by the guidance is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value estimates of financial instruments are not necessarily indicative of the amounts we might pay or receive in actual market transactions. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Cash and Cash Equivalents. These balances include cash and cash equivalents with maturities of less than three months. The carrying amount approximates fair value due to the short-term maturities of these instruments.

Receivables, Less Allowance for Doubtful Accounts, Accounts Payable and Certain Other Accrued Liabilities. Due to their short-term nature, fair value approximates carrying value.

Long-Term Debt. The fair value of debt at September 30, 2012 and December 31, 2011 is based upon the ask price quoted from an external source, which is considered a Level 2 input.

14

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

September 30, 2012

(Unaudited)

7. Fair Value Measurements, continued

The following table reflects the carrying value and fair value of our variable-rate long-term debt (in thousands):

	As of September 30, 2012				As of December 31, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value
Variable-rate long-term debt	$	600,313	$	601,814	$	573,984	$	573,984

At September 30, 2012 and December 31, 2011, we did not have any material applicable nonrecurring measurements of nonfinancial assets and nonfinancial liabilities.

8. Share-Based Compensation

Stock Option Activity

A summary of our stock option activity for the nine months ended September 30, 2012 is as follows (in thousands):

	Stock Options		Weighted- Average Exercise Price
Outstanding at December 31, 2011	3,776		$	16.92
Granted	462		$	18.94
Exercised	(225	)	$	14.78
Canceled	(52	)	$	14.84
Outstanding at September 30, 2012	3,961		$	17.25
Exercisable at September 30, 2012	2,828		$	17.27
Vested and expected to vest at September 30, 2012	3,931		$	17.26

There were 462,229 stock options granted during the nine months ended September 30, 2012, which had an estimated weighted-average grant date fair value of approximately $5.48. The aggregate intrinsic value of our stock options exercised during the three and nine months ended September 30, 2012 was $360,000 and $1.6 million, respectively, and the actual tax benefit realized on options exercised during these periods was $141,000 and $629,000, respectively.

Calculation of Fair Value

The fair value of our options is estimated on the date of grant using the Black-Scholes option pricing model. We amortize the fair value of our options on a straight-line basis over the requisite service period. The following assumptions were used to determine the preliminary fair value of those options granted during the nine months ended September 30, 2012:

Expected volatility (1)	34.1	%
Weighted-average volatility (1)	34.1	%
Expected dividends	—
Expected term (years)	4.4
Risk-free rate (2)	0.62	%

_________________

(1) We estimated the volatility of our common stock on the date of grant based on using both historical and implied volatilities.

(2) The risk-free interest rate is based on the implied yield in effect at the time of option grant on U.S. Treasury zero-coupon issues with equivalent remaining terms.

15

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

September 30, 2012

(Unaudited)

8. Share-Based Compensation, continued

At September 30, 2012 there was $5.8 million of total unrecognized compensation cost related to our stock options. This cost is expected to be recognized over a weighted-average period of 3.4 years.

The compensation cost charged against income, for stock options for the three months ended September 30, 2012 and 2011, was $362,000 and $347,000, respectively. The corresponding income tax benefit recognized was $142,000 and $136,000, for the three months ended September 30, 2012 and 2011, respectively.

The compensation cost charged against income, for stock options for the nine months ended September 30, 2012 and 2011, was $1.1 million and $1.0 million, respectively. The corresponding income tax benefit recognized was $433,000 and $407,000, for the nine months ended September 30, 2012 and 2011, respectively.

Nonvested Stock Activity

During the nine months ended September 30, 2012, we granted 68,900 shares of nonvested common stock as incentives to certain employees, including 14,308 shares for the annual directors' grant. Assuming continued service through each vesting date, the majority of these awards will vest in four equal annual installments beginning February 2013 through August 2016.

Total compensation cost charged against income related to nonvested stock awards was $2.1 million and $3.7 million, for the three months ended September 30, 2012 and 2011, respectively. The corresponding income tax benefit recognized in the income statement was $805,000 and $1.5 million, for the three months ended September 30, 2012 and 2011, respectively. Total compensation cost charged against income related to nonvested stock awards was $9.1 million and $5.6 million, for the nine months ended September 30, 2012 and 2011, respectively. The corresponding income tax benefit recognized in the income statement was $3.6 million and $2.2 million, for the nine months ended September 30, 2012 and 2011, respectively.

At September 30, 2012, there was $14.8 million of unrecognized compensation cost related to these nonvested shares, which will be recognized over a weighted-average period of 2.7 years. A summary of our nonvested stock activity for the nine months ended September 30, 2012 is as follows (in thousands, except per share amounts):

	Shares		Grant Date Weighted- Average Fair Value Per Share
Outstanding at December 31, 2011	1,516		$	20.76
Granted	69		$	21.41
Vested	(437	)	$	22.15
Forfeited/Canceled	(1	)	$	42.33
Outstanding at September 30, 2012	1,147		$	20.27

Restricted Stock Unit Activity

During the three and nine months ended September 30, 2012, we granted 307,989 performance based restricted stock units ("RSUs") to our executive officers representing the right to receive one share of common stock. These RSUs will be earned upon achievement of the applicable performance criteria during the performance periods, from the fourth quarter 2012 through December 31, 2014, as set forth in the 2012 equity performance award agreements. Assuming achievement of the required performance conditions and continued service through each vesting date, these awards will vest in four equal annual installments beginning August 2013 through August 2016.

Total compensation cost charged against income, related to RSU awards was $279,000, for the three and nine months ended September 30, 2012. The corresponding income tax benefit recognized in the income statement for the same periods were $109,000.

16

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

September 30, 2012

(Unaudited)

8. Share-Based Compensation, continued

At September 30, 2012, there was $5.6 million of unrecognized compensation cost related to these RSUs, which will be recognized over a weighted-average period of 3.9 years.

9. Calculation of Earnings per Share

Basic earnings per share is calculated by dividing net income by the weighted-average number of shares outstanding during the period. Diluted earnings per share is calculated by dividing net income attributable to VCA Antech, Inc. by the weighted-average number of common shares outstanding, after giving effect to all dilutive potential common shares outstanding during the period. Basic and diluted earnings per share were calculated as follows (in thousands, except per share amounts):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Net income attributable to VCA Antech, Inc	$	34,037	$	30,169	$	103,602	$	98,620
Weighted-average common shares outstanding:
Basic	87,773		86,697		87,554		86,531
Effect of dilutive potential common shares:
Stock options	461		445		523		593
Nonvested shares and units	420		111		512		169
Diluted	88,654		87,253		88,589		87,293
Basic earnings per share	$	0.39	$	0.35	$	1.18	$	1.14
Diluted earnings per share	$	0.38	$	0.35	$	1.17	$	1.13

For the three months ended September 30, 2012 and 2011, potential common shares of 1,220,547 and 2,104,547, respectively, were excluded from the computation of diluted earnings per share because their inclusion would have had an antidilutive effect.

For the nine months ended September 30, 2012 and 2011, potential common shares of 1,100,645 and 1,139,567, respectively, were excluded from the computation of diluted earnings per share because their inclusion would have had an antidilutive effect.

10. Lines of Business

Our reportable segments are Animal Hospital and Laboratory. Our Animal Hospital segment provides veterinary services for companion animals and sells related retail and pharmaceutical products. Our Laboratory segment provides diagnostic laboratory testing services for veterinarians, both associated with our animal hospitals and those independent of us. Our other operating segments, included in “All Other” in the following tables, are our (i) Medical Technology business, which sells digital radiography and ultrasound imaging equipment, related computer hardware, software and ancillary services to the veterinary market and our (ii) Vetstreet business and our (iii) ThinkPets business. Vetstreet and ThinkPets provide online communications, professional education, marketing solutions to the veterinary community and an ecommerce platform for independent animal hospitals. These operating segments do not meet the quantitative requirements for reportable segments. Our operating segments are strategic business units that have different services, products and/or functions. The segments are managed separately because each is a distinct and different business venture with unique challenges, risks and rewards. We also operate a corporate office that provides general and administrative support services for our segments.

17

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

September 30, 2012

(Unaudited)

10. Lines of Business, continued

The accounting policies of our segments are essentially the same as those described in the summary of significant accounting policies included in our 2011 Annual Report on Form 10-K. We evaluate the performance of our segments based on gross profit and operating income. For purposes of reviewing the operating performance of our segments all intercompany sales and purchases are generally accounted for as if they were transactions with independent third parties at current market prices.

The following is a summary of certain financial data for each of our segments (in thousands):

	Animal Hospital			Laboratory		All Other			Corporate			Intercompany Eliminations			Total
Three Months Ended September 30, 2012
External revenue	$	342,840		$	68,139	$	22,634		$	—		$	—		$	433,613
Intercompany revenue	—			13,147		5,466			—			(18,613		)	—
Total revenue	342,840			81,286		28,100			—			(18,613		)	433,613
Direct costs	288,588			44,109		19,217			—			(17,482		)	334,432
Gross profit	54,252			37,177		8,883			—			(1,131		)	99,181
Selling, general and administrative expense	7,745			7,285		8,764			13,814			—			37,608
Net (gain) loss on sale and disposal of assets	(77		)	—		464			—			—			387
Operating income (loss)	$	46,584		$	29,892	$	(345	)	$	(13,814	)	$	(1,131	)	$	61,186
Depreciation and amortization	$	13,953		$	2,544	$	2,611		$	806		$	(395	)	$	19,519
Property and equipment additions	$	14,069		$	1,342	$	1,660		$	2,120		$	(1,099	)	$	18,092
Three Months Ended September 30, 2011
External revenue	$	303,203		$	67,588	$	14,344		$	—		$	—		$	385,135
Intercompany revenue	—			11,397		4,538			—			(15,935		)	—
Total revenue	303,203			78,985		18,882			—			(15,935		)	385,135
Direct costs	251,613			43,657		14,149			—			(14,421		)	294,998
Gross profit	51,590			35,328		4,733			—			(1,514		)	90,137
Selling, general and administrative expense	6,126			7,088		4,669			14,605			—			32,488
Net loss on sale and disposal of assets	(213		)	1		20			—			—			(192		)
Operating income (loss)	$	45,677		$	28,239	$	44		$	(14,605	)	$	(1,514	)	$	57,841
Depreciation and amortization	$	10,393		$	2,563	$	1,606		$	702		$	(334	)	$	14,930
Property and equipment additions	$	11,061		$	1,085	$	1,986		$	1,338		$	(629	)	$	14,841

18

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

September 30, 2012

(Unaudited)

10. Lines of Business, continued

	Animal Hospital			Laboratory			All Other			Corporate			Intercompany Eliminations			Total
Nine Months Ended September 30, 2012
External revenue	$	1,001,247		$	212,562		$	67,641		$	—		$	—		$	1,281,450
Intercompany revenue	—			40,074			14,202			—			(54,276		)	—
Total revenue	1,001,247			252,636			81,843			—			(54,276		)	1,281,450
Direct costs	852,059			132,612			54,499			—			(50,887		)	988,283
Gross profit	149,188			120,024			27,344			—			(3,389		)	293,167
Selling, general and administrative expense	22,797			22,393			27,076			43,390			—			115,656
Net loss (gain) on sale and disposal of assets	316			(14		)	704			16			—			1,022
Operating income (loss)	$	126,075		$	97,645		$	(436	)	$	(43,406	)	$	(3,389	)	$	176,489
Depreciation and amortization	$	40,536		$	7,618		$	7,456		$	2,374		$	(1,102	)	$	56,882
Property and equipment additions	$	40,132		$	4,691		$	4,430		$	8,111		$	(2,107	)	$	55,257
Nine Months Ended September 30, 2011
External revenue	$	864,476		$	209,639		$	42,248		$	—		$	—		$	1,116,363
Intercompany revenue	—			33,280			11,939			—			(45,219		)	—
Total revenue	864,476			242,919			54,187			—			(45,219		)	1,116,363
Direct costs	720,393			130,192			40,206			—			(41,175		)	849,616
Gross profit	144,083			112,727			13,981			—			(4,044		)	266,747
Selling, general and administrative expense	18,253			20,577			11,809			34,695			—			85,334
Net loss on sale and disposal of assets	(84		)	19			22			—			—			(43		)
Operating income (loss)	$	125,914		$	92,131		$	2,150		$	(34,695	)	$	(4,044	)	$	181,456
Depreciation and amortization	$	29,799		$	7,542		$	2,931		$	2,067		$	(953	)	$	41,386
Property and equipment additions	$	33,832		$	4,049		$	3,003		$	3,923		$	(1,532	)	$	43,275
At September 30, 2012
Total assets	$	1,623,778		$	244,811		$	219,630		$	139,314		$	(26,248	)	$	2,201,285
At December 31, 2011
Total assets	$	1,439,103		$	232,423		$	202,187		$	142,793		$	(21,138	)	$	1,995,368

19

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

September 30, 2012

(Unaudited)

11. Commitments and Contingencies

We have certain commitments, including operating leases, purchase agreements and acquisition agreements. These items are discussed in detail in our consolidated financial statements and notes thereto included in our 2011 Annual Report on Form 10-K. We also have contingencies as follows:

a. Earn-Out Payments

We have contractual arrangements in connection with certain acquisitions that were accounted for under previous business combinations accounting guidance, whereby additional cash may be paid to former owners of acquired companies upon attainment of specified financial criteria, as set forth in the respective agreements. The amount to be paid cannot be determined until the earn-out periods expire and the attainment of criteria is established. If the specified financial criteria are attained, we will be obligated to pay approximately $2.5 million. Under the current business combination accounting guidance, contingent consideration, such as earn-out liabilities, is recognized as part of the consideration transferred on the acquisition date. A corresponding liability is recorded based on the fair value of the liability, if the fair value is known or determinable. The changes in fair value are recognized in earnings where applicable for each reporting period.

b. Other Contingencies

We have certain contingent liabilities resulting from litigation and claims incident to the ordinary course of our business. We believe that the probable resolution of such contingencies will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

12. Income Taxes

The effective tax rates of income attributable to VCA for the three and nine months ended September 30, 2012, were 38.7% and 37.6%, respectively, as compared to the three and nine months ended September 30, 2011, of 39.2% and 39.3%, respectively. The decreases in rates are, in part, due to the non-taxable gain of $5.7 million related to the increase in value of our historic noncontrolling interest in AVC, realized upon the acquisition of the remaining equity interest, in addition to lower tax rates in Canada.

13. Noncontrolling Interests

We own some of our animal hospitals in partnerships with noncontrolling interest holders. We consolidate our partnerships in our consolidated financial statements because our ownership interest in these partnerships is equal to or greater than 50.1% and we control these entities. We record noncontrolling interest in income of subsidiaries equal to our partners’ percentage ownership of the partnerships’ income. We also record changes in the redemption value of our redeemable noncontrolling interests in net income attributable to noncontrolling interests in our condensed, consolidated income statements. We reflect our noncontrolling partners’ cumulative share in the equity of the respective partnerships as either noncontrolling interests in equity, mandatorily redeemable noncontrolling interests in other liabilities, or redeemable noncontrolling interests in temporary equity (mezzanine).

a. Mandatorily Redeemable Noncontrolling Interests

The terms of some of our partnership agreements require us to purchase the partner’s equity in the partnership in the event of the partner’s death. We report these redeemable noncontrolling interests at their estimated redemption value and classify them as liabilities due to the certainty of the related event. We recognize redemption value changes in the obligation in interest expense. At September 30, 2012 and December 31, 2011, these liabilities were $11.7 million and $3.1 million, respectively, and are included in other liabilities in our consolidated balance sheets.

b. Redeemable Noncontrolling Interests

We also enter into partnership agreements whereby the minority partner is issued certain “put” rights. These rights are normally exercisable at the sole discretion of the minority partner. We report these redeemable noncontrolling interests at their estimated redemption value and classify them in temporary equity (mezzanine). We recognize changes in the obligation in net

20

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

September 30, 2012

(Unaudited)

income attributable to noncontrolling interests.

21

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

September 30, 2012

(Unaudited)

13. Noncontrolling Interests, continued

The following table provides a summary of redeemable noncontrolling interests (in thousands):

	Income Statement Impact		Redeemable Noncontrolling Interests
Balance as of December 31, 2010			$	5,799
Noncontrolling interest	$	660
Redemption value change	547		1,207
Formation of noncontrolling interests			510
Distribution to noncontrolling interests			(625		)
Balance as of September 30, 2011			$	6,891
Balance as of December 31, 2011			$	6,964
Noncontrolling interest	$	666
Redemption value change	36		702
Distribution to noncontrolling interests			(691		)
Balance as of September 30, 2012			$	6,975

14. Recent Accounting Pronouncements

In June 2011, the FASB finalized the accounting guidance for the Presentation of Comprehensive Income. The objective of the new guidance is to improve the comparability, consistency, and transparency of financial reporting, to increase the prominence of the items reported in other comprehensive income and to facilitate convergence of GAAP and IFRS. The guidance eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholder's equity and requires that all nonowner changes in stockholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. Regardless of which option is chosen, it is required that reclassification adjustments for items that are reclassified from other comprehensive income to net income be presented on the face of the financial statements.

The new guidance does not change the following: the items that must be reported in other comprehensive income; when an item of other comprehensive income must be reclassified to net income; the option for an entity to present components of other comprehensive income either net of related tax effects or before related tax effects with a single amount shown for aggregate income tax expense; and does not affect how earnings per share is calculated or presented.

The guidance was effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and should be applied retrospectively. Early adoption was permitted. We adopted the new accounting guidance on January 1, 2012. The adoption did not significantly impact our consolidated financial statements other than the changes to presentation outlined.

In December 2011, the FASB deferred the effective date for amendments to the presentation of reclassifications of items out of accumulated other comprehensive income. The effective date deferral is to allow the FASB to redeliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income.

22

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

September 30, 2012

(Unaudited)

14. Recent Accounting Pronouncements, continued

In September 2011, the FASB amended the accounting guidance on Intangibles--Goodwill and Other - Testing Goodwill for Impairment. The objective of this guidance is to reduce the cost and complexity of performing the annual goodwill impairment test and to improve the previous guidance by expanding the examples of events and circumstances that an entity should consider in the qualitative evaluation about the likelihood of goodwill impairment. The amendments allow an entity the option of first assessing qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

The examples of events and circumstances included in the amendment that an entity should consider in performing its qualitative assessment about whether to proceed to the first step of the goodwill impairment test supersede the examples in the existing guidance. If it is determined that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. Under the amendments, an entity has the option to bypass the qualitative assessment for any reporting unit in any period and may resume performing the qualitative assessment in any subsequent period. An entity is no longer permitted to carry forward its detailed calculation of a reporting unit's fair value from a prior year as previously permitted under the existing guidance. The amended guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011 with early adoption permitted. We adopted the amended goodwill impairment testing procedures on January 1, 2012. The adoption does not significantly impact our consolidated financial statements.

In July 2012, the FASB issued accounting guidance on testing indefinite-lived intangible assets for impairment. The objective of this guidance is to reduce the cost and complexity of performing an impairment test for indefinite-lived intangible assets by simplifying how an entity tests those assets for impairment and to improve consistency in impairment testing guidance among long-lived asset categories. The amendments permit an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test. An entity will have an option not to calculate annually the fair value of an indefinite-lived intangible asset if the entity determines that it is not more likely than not that the asset is impaired. Permitting an entity to assess qualitative factors when testing indefinite-lived intangible assets for impairment results in guidance that is similar to the goodwill impairment testing guidance, as mentioned above. The amended guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. We currently do not have any indefinite-lived intangible assets.

23

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

	Page
Introduction	25
Executive Overview	25
Critical Accounting Policies	28
Consolidated Results of Operations	30
Segment Results	31
Liquidity and Capital Resources	36

24

Introduction

The following discussion should be read in conjunction with our condensed, consolidated financial statements provided under Part I, Item I of this Quarterly report on Form 10-Q. We have included herein statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We generally identify forward-looking statements in this report using words like “believe,” “intend,” “expect,” “estimate,” “may,” “plan,” “should plan,” “project,” “contemplate,” “anticipate,” “predict,” “potential,” “continue,” or similar expressions. You may find some of these statements below and elsewhere in this report. These forward-looking statements are not historical facts and are inherently uncertain and outside of our control. Any or all of our forward-looking statements in this report may turn out to be wrong. They can be affected by inaccurate assumptions we might make, or by known or unknown risks and uncertainties. Many factors mentioned in our discussion in this report will be important in determining future results. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially. Factors that may cause our plans, expectations, future financial condition and results to change are described throughout this report and in our Annual Report on Form 10-K, particularly in “Risk Factors,” Part I, Item 1A of that report.

The forward-looking information set forth in this Quarterly Report on Form 10-Q is as of November 9, 2012, and we undertake no duty to update this information unless required by law. Shareholders and prospective investors can find information filed with the SEC after November 9, 2012 at our website at http://investor.vcaantech.com or at the SEC’s website at www.sec.gov.

We are a leading North American animal healthcare company. We provide veterinary services and diagnostic testing services to support veterinary care and we sell diagnostic imaging equipment and other medical technology products and related services to veterinarians. We also provide both online and printed communications, education and information, and analytical based marketing solutions to the veterinary community.

Our reportable segments are as follows:

• Our Animal Hospital segment operates the largest network of freestanding, full-service animal hospitals in the United States and Canada. Our animal hospitals offer a full range of general medical and surgical services for companion animals. We treat diseases and injuries, offer pharmaceutical and retail products and perform a variety of pet wellness programs, including health examinations, diagnostic testing, routine vaccinations, spaying, neutering and dental care. At September 30, 2012, our animal hospital network consisted of 601 animal hospitals in 41 states and in three Canadian provinces.

• Our Laboratory segment operates the largest network of veterinary diagnostic laboratories in the nation. Our laboratories provide sophisticated testing and consulting services used by veterinarians in the detection, diagnosis, evaluation, monitoring, treatment and prevention of diseases and other conditions affecting animals. At September 30, 2012, our laboratory network consisted of 55 laboratories serving all 50 states and certain areas in Canada.

Our "All Other" category includes the results of our Medical Technology, Vetstreet and ThinkPets operating segments. Each of these segments did not meet the materiality thresholds to be reported individually.

The practice of veterinary medicine is subject to seasonal fluctuation. In particular, demand for veterinary services is significantly higher during the warmer months because pets spend a greater amount of time outdoors where they are more likely to be injured and are more susceptible to disease and parasites. In addition, use of veterinary services may be affected by levels of flea infestation, heartworms and ticks, and the number of daylight hours.

The unstable path and slow pace of the economic recovery and continued competition predominantly in the laboratory business, continues to negatively impact our revenue. We are unable to forecast the timing or degree of an economic recovery. Further, trends in the general economy may not be reflected in our business at the same time or in the same degree as in the general economy. The timing and degree of any economic recovery, and its impact on our business, are among the important factors that could cause our actual results to differ from our forward-looking information.

Executive Overview

During the three and nine months ended September 30, 2012, we achieved an increase in consolidated revenue primarily from acquired animal hospitals and other acquired businesses, as well as, organic growth in our animal hospital and laboratory businesses. Our Animal Hospital same-store revenue increased 1.1%, adjusted for one less business day in 2012 compared to

25

2011, for the three months ended September 30, 2012 and increased 1.3%, for the nine months ended September 30, 2012. Our Laboratory internal revenue, adjusted for differences in billing days, increased 3.5% and 3.7%, for the three and nine months ended September 30, 2012, respectively. Our overall operating income increased 5.8% for the three months ended September 30, 2012, as compared to the prior-year comparable period. The increase was primarily due to the acquisition of Associate Veterinary Clinics (1981) LTD ("AVC"), ThinkPets, Inc. (“ThinkPets”) and improved results from our laboratory business segment. Our overall operating income for the nine months ended September 30, 2012 declined 2.7%, as compared to the prior-year comparable period. The decline was primarily due to a decrease in gross margins in our Animal Hospital segment, which was caused by an increase in labor and other costs, and increased selling, general and administrative expenses.

Financing Transaction

On January 25, 2012 we amended our Amended and Restated Credit and Guaranty Agreement, dated as of August 16, 2011. The amendment replenishes the aggregate amount of uncommitted incremental facilities available under our senior credit facility to a maximum of $100 million, after giving effect to the funding of $50 million of new term loan commitments on January 24, 2012, which were drawn in connection with the additional investment made in AVC, detailed below.

Acquisitions

Our growth strategy includes the acquisition of independent animal hospitals. We currently anticipate that during the current year, we will acquire $100 million to $120 million of annualized Animal Hospital revenue, exclusive of the acquisition of AVC. We evaluate the acquisition of animal hospital chains and laboratories, or related businesses, if favorable opportunities are presented. The following table summarizes the changes in the number of facilities operated by our Animal Hospital and Laboratory segments during the nine months ended September 30, 2012:

Animal Hospitals:
Beginning of period	541
Acquisitions, excluding AVC	24
Acquisitions, merged	(4	)
AVC acquisition	44
Sold, closed or merged	(4	)
End of period	601
Laboratories:
Beginning of period	53
Created	2
End of period	55

26

The following table summarizes the aggregate consideration for the 24 independent animal hospitals acquired during the nine months ended September 30, 2012, and the allocation of the acquisition price (in thousands):

Consideration:
Cash	$	51,744
Holdback	1,475
Earnout contingent consideration	934
Fair value of total consideration transferred	$	54,153
Allocation of the Purchase Price:
Tangible assets	$	1,995
Identifiable intangible assets	9,184
Goodwill (1)	42,974
Total	$	54,153

____________________________

⁽¹⁾     We expect that $40.0 million of the goodwill recorded for these acquisitions, as of September 30, 2012, will be deductible for income tax purposes.

AVC

On January 31, 2012, we increased our investment in AVC by approximately CDN $81 million (approximately US $81 million) becoming the sole non-veterinarian shareholder of AVC. At the time of the additional investment, AVC operated 44 animal hospitals in three Canadian provinces, offering services ranging from primary care, to specialty referral services and 24-hour emergency care. This investment and planned additional investments in AVC will facilitate our continued expansion in the Canadian market. At the time of the investment, AVC had annualized revenue of approximately CDN $95 million (approximately US $95 million). Our consolidated financial statements reflect the operating results of AVC since January 31, 2012.

The following table summarizes the total investment and the preliminary allocation of the investment in AVC (in thousands):

Consideration:
Cash	$	48,819
Cash paid to debt holders	25,915
Fair value of total consideration transferred	$	74,734
Allocation of the Purchase Price:
Tangible assets	$	11,743
Identifiable intangible assets	23,561
Goodwill (1)	77,565
Other liabilities assumed	(18,124		)
	94,745
Noncontrolling interest	(8,161		)
Fair value of pre-existing investment in AVC	(11,850		)
Total	$	74,734

____________________________

⁽¹⁾     As of September 30, 2012, we expect that approximately $362,000 of the goodwill recorded for this acquisition will be deductible for income tax purposes.

The allocation of the additional investment is preliminary, because certain items have not been completed or finalized,

27

including but not limited to, the valuation of assets, primarily property and equipment.

The pro forma impact on revenue and earnings have not been disclosed as the amounts were immaterial to the financial statements as a whole.

ThinkPets

On February 1, 2012, we acquired 100% interest in ThinkPets for $21 million, payable by delivery of 473,389 shares of VCA common stock and $10.5 million in cash. We intend to consolidate the business of ThinkPets with our Vetstreet business, which we expect will improve the products and services it offers to clients of both companies. Our consolidated financial statements reflect the operating results of ThinkPets since February 1, 2012.

The following table summarizes the preliminary purchase price and the preliminary allocation of the investment in ThinkPets (in thousands):

Consideration:
Cash	$	7,468
Issuance of common stock for acquisitions	10,500
Holdback	1,050
Fair value of total consideration transferred	$	19,018
Allocation of the Purchase Price:
Tangible assets	$	2,078
Identifiable intangible assets	7,221
Goodwill (1)	11,194
Other liabilities assumed	(1,475		)
Total	$	19,018

____________________________

⁽¹⁾     As of September 30, 2012, we expect that approximately $821,000 of the goodwill recorded for this acquisition will be deductible for income tax purposes.

The allocation of the purchase price is preliminary because certain items have not been completed or finalized, including but not limited to, the valuation of assets, including intangible assets, and liabilities.

The pro forma impact on revenue and earnings have not been disclosed as the amounts were immaterial to the financial statements as a whole.

Critical Accounting Policies

Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), which require management to make estimates and assumptions that affect reported amounts. The estimates and assumptions are based on historical experience and on other factors that management believes to be reasonable. Actual results may differ from those estimates. Critical accounting policies represent the areas where more significant judgments and estimates are used in the preparation of our consolidated financial statements. A discussion of such critical accounting policies, which include revenue recognition, other intangible assets, capitalized software costs, income taxes, and self-insured liabilities can be found in our 2011 Annual Report on Form 10-K. There have been no material changes to the policies noted above as of this quarterly report on Form 10-Q for the period ended September 30, 2012. A summary of our valuation of goodwill accounting policy is discussed below.

28

Valuation of Goodwill

At September 30, 2012, we had $1.4 billion of goodwill, accounting for 62% of our total assets. Our goodwill represents the excess of the cost of our acquired entities over the net of the amounts assigned to identifiable assets acquired and liabilities assumed.

We test our goodwill for impairment annually, or sooner if circumstances indicate impairment may exist, in accordance with goodwill guidance. We adopted the end of October as our annual impairment testing date, which allows us time to accurately complete our impairment testing process in order to incorporate the results in our annual financial statements and timely file those statements with the Securities and Exchange Commission (“SEC”) in accordance with our accelerated filing requirements. We monitor our reporting units on a quarterly basis and have not identified any events subsequent to the 2011 testing date which would indicate any impairment may have occurred in any of our reporting units.

The recognition and measurement of a goodwill impairment loss involves either a high-level qualitative assessment of the fair value of each reporting unit or a more detailed calculation. We have not presently elected to rely on a qualitative assessment, as a result of the narrow margin between the fair value and carrying value of certain reporting units that existed at the previous measurement date.

Accordingly, we first identify a potential impairment by comparing the estimated fair value of our reporting units with the carrying value of our reporting units, with carrying value defined as the reporting unit's net assets, including goodwill. If the estimated fair value of our reporting units is greater than our carrying value, there is no impairment and the second step is not needed.

If we identify a potential impairment in the first step, we then measure the amount of impairment. The amount of the impairment is determined by allocating the estimated fair value of the reporting unit, as determined in step one, to the reporting unit's net assets based on fair value as calculated in an acquisition. In this hypothetical acquisition, the residual estimated fair value, after allocation to the reporting units' identifiable net assets, is the estimated fair value of goodwill. If the estimated fair value of goodwill is less than the carrying amount of goodwill, goodwill is considered impaired and written down to the estimated fair value with a corresponding charge to earnings. However, if the estimated fair value of goodwill is greater than the carrying amount of goodwill, goodwill is not considered impaired and is not adjusted to the estimated fair value.

Our estimated fair values are calculated in accordance with generally accepted accounting principles related to fair value and utilize generally accepted valuation techniques, consisting primarily of discounted cash flow techniques and market comparables, where applicable. These valuation methods involve the use of significant assumptions and estimates such as forecasted growth rates, valuation multiples, the weighted-average cost of capital, and risk premiums, which are based upon the best available market information and are consistent with our long-term strategic plans. Changes in our estimates, such as forecasted cash flows, could affect the estimated fair value of our reporting units and could result in a goodwill impairment charge that could be material, particularly for our Animal Hospital and Vetstreet reporting units. Our laboratory reporting unit exceeded its carrying value by a substantial margin as of our last testing date. No events have occurred subsequent to December 31,2011, which would indicate any impairment may have occurred in any of our reporting units.

Our Animal Hospital reporting unit, which has approximately $1.2 billion of goodwill as of September 30, 2012, marginally exceeded its carrying value during the 2011 testing. Negative changes in the undiscounted cash flows related to variables, such as revenue growth rates, margins, or the discount rate, could result in a decrease in the estimated fair value of our Animal Hospital reporting unit and could ultimately result in a substantial goodwill impairment charge. The performance of our Animal Hospital reporting unit, and in turn, the risk of goodwill impairment, is subject to a number of risks and uncertainties, some of which are outside of our control.

Our Vetstreet reporting unit, which has approximately $96.1 million of goodwill as of September 30, 2012, has faced operational delays in part due to our upgrading and migration of their information technology systems from their former parent MediMedia, to their own Corporate data center. Additionally, certain aspects of its planned product offerings have also been delayed. Any continued delays, strengthening of competitive product offerings and future strategic plans may affect the timing of undiscounted cash flows for the overall business and accordingly could result in a decrease in the estimated fair value of our Vetstreet reporting unit. As a result we could experience a substantial goodwill impairment charge.

29

Consolidated Results of Operations

The following table sets forth components of our condensed, consolidated income statements expressed as a percentage of revenue:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Revenue:
Animal Hospital	79.1	%	78.7	%	78.1	%	77.4	%
Laboratory	18.7		20.5		19.7		21.8
All Other	6.5		4.9		6.4		4.9
Intercompany	(4.3	)	(4.1	)	(4.2	)	(4.1	)
Total revenue	100.0		100.0		100.0		100.0
Direct costs	77.1		76.6		77.1		76.1
Gross profit	22.9		23.4		22.9		23.9
Selling, general and administrative expense	8.7		8.4		9.0		7.6
Net loss on sale of assets	0.1		—		0.1		—
Operating income	14.1		15.0		13.8		16.3
Interest expense, net	1.0		1.1		0.9		1.2
Debt retirement costs	—		0.7		—		0.2
Business combination adjustment gain	—		—		(0.4	)	—
Other income	(0.1	)	—		—		—
Income before provision for income taxes	13.2		13.2		13.3		14.9
Provision for income taxes	5.0		5.1		4.9		5.8
Net income	8.2		8.1		8.4		9.1
Net income attributable to noncontrolling interests	0.4		0.3		0.3		0.3
Net income attributable to VCA Antech, Inc	7.8	%	7.8	%	8.1	%	8.8	%

Revenue

The following table summarizes our revenue (in thousands, except percentages):

	Three Months Ended September 30,												Nine Months Ended September 30,
	2012					2011							2012					2011
	$			% of Total		$			% of Total		% Change		$			% of Total		$			% of Total		% Change
Animal Hospital	$	342,840		79.1	%	$	303,203		78.7	%	13.1	%	$	1,001,247		78.1	%	$	864,476		77.4	%	15.8	%
Laboratory	81,286			18.7	%	78,985			20.5	%	2.9	%	252,636			19.7	%	242,919			21.8	%	4.0	%
All Other	28,100			6.5	%	18,882			4.9	%	48.8	%	81,843			6.4	%	54,187			4.9	%	51.0	%
Intercompany	(18,613		)	(4.3	)%	(15,935		)	(4.1	)%	16.8	%	(54,276		)	(4.2	)%	(45,219		)	(4.1	)%	20.0	%
Total revenue	$	433,613		100.0	%	$	385,135		100.0	%	12.6	%	$	1,281,450		100.0	%	$	1,116,363		100.0	%	14.8	%

Consolidated revenue increased $48.5 million, for the three months ended September 30, 2012, and $165.1 million, for the nine months ended September 30, 2012, as compared to the same periods in the prior year. The increases were primarily attributable to revenue from acquisitions including animal hospitals, Vetstreet and ThinkPets and organic revenue from both our Animal Hospital and Laboratory segments. Excluding the impact of acquisitions, revenue remained relatively flat for the three months ended September 30, 2012, and revenue increased $25.8 million for the nine months ended September 30, 2012, primarily related to organic

30

growth in our Laboratory and Animal Hospital segments.

Gross Profit

The following table summarizes our gross profit in both dollars and as a percentage of applicable revenue, or gross margin (in thousands, except percentages):

	Three Months Ended September 30,												Nine Months Ended September 30,
	2012					2011							2012					2011
	$			Gross Margin		$			Gross Margin		% Change		$			Gross Margin		$			Gross Margin		% Change
Animal Hospital	$	54,252		15.8	%	$	51,590		17.0	%	5.2	%	$	149,188		14.9	%	$	144,083		16.7	%	3.5	%
Laboratory	37,177			45.7	%	35,328			44.7	%	5.2	%	120,024			47.5	%	112,727			46.4	%	6.5	%
All Other	8,883			31.6	%	4,733			25.1	%	87.7	%	27,344			33.4	%	13,981			25.8	%	95.6	%
Intercompany	(1,131		)			(1,514		)					(3,389		)			(4,044		)
Total gross profit	$	99,181		22.9	%	$	90,137		23.4	%	10.0	%	$	293,167		22.9	%	$	266,747		23.9	%	9.9	%

Consolidated gross profit increased $9.0 million, for the three months ended September 30, 2012 and $26.4 million, for the nine months ended September 30, 2012, as compared to the same periods in the prior year. The increases for the three and nine months ended September 30, 2012 were primarily due to $7.4 million and $27.9 million, respectively, in gross profit from our acquisitions. Excluding the impact of acquisitions, the remaining increase in gross profit of $1.6 million, for the three months ended September 30, 2012, was primarily related to internal revenue growth in our Laboratory segment, partially offset by a decrease in same-store gross profit in our Animal Hospital segment. Excluding the impact of acquisitions, the consolidated gross profit decreased $1.5 million, for the nine months ended September 30, 2012, related to a decrease in same-store gross profit in our Animal Hospital segment, partially offset by internal revenue growth in our Laboratory segment.

Segment Results

Animal Hospital Segment

The following table summarizes revenue, gross profit and gross margin for our Animal Hospital segment (in thousands, except percentages):

	Three Months Ended September 30,								Nine Months Ended September 30,
	2012			2011			% Change		2012			2011			% Change
Revenue	$	342,840		$	303,203		13.1	%	$	1,001,247		$	864,476		15.8	%
Gross profit	$	54,252		$	51,590		5.2	%	$	149,188		$	144,083		3.5	%
Gross margin	15.8		%	17.0		%			14.9		%	16.7		%

31

Animal Hospital revenue increased $39.6 million, for the three months ended September 30, 2012 and $136.8 million, for the nine months ended September 30, 2012, as compared to the same periods in the prior year. The components of the increases are summarized in the following table (in thousands, except percentages and average revenue per order):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012		2011		% Change		2012		2011		% Change
Same-store facilities:
Orders (1)	1,751		1,780		(1.6	)%	5,143		5,210		(1.3	)%
Average revenue per order (2)	$	164.09	$	159.70	2.7	%	$	165.34	$	161.09	2.6	%
Same-store revenue (1)	$	287,355	$	284,326	1.1	%	$	850,259	$	839,324	1.3	%
Business day adjustment (3)	—		2,400				—		—
AVC	27,699		—				70,791		—
Acquisitions	27,786		14,345				79,448		19,010
Closures	—		2,132				749		6,142
Net acquired revenue (4)	$	55,485	$	16,477			$	150,988	$	25,152
Total	$	342,840	$	303,203	13.1	%	$	1,001,247	$	864,476	15.8	%

____________________________

⁽¹⁾  Same-store revenue and orders were calculated using Animal Hospital operating results, adjusted to exclude the operating results for newly acquired animal hospitals that we did not own, as of the beginning of the comparable period in the prior year. Same-store revenue also includes revenue generated by customers referred from our relocated or combined animal hospitals, including those merged upon acquisition.

⁽²⁾  Computed by dividing same-store revenue by same-store orders. The average revenue per order may not calculate exactly due to rounding.

⁽³⁾  The 2011 business day adjustment reflects the impact of one additional business day in 2011, as compared to 2012.

⁽⁴⁾  Net acquired revenue represents the revenue from animal hospitals acquired, net of revenue from animal hospitals sold or closed, on or after the beginning of the comparable period, which was July 1, 2011, for the three month analysis and January 1, 2011, for the nine month analysis. Fluctuations in net acquired revenue occur due to the volume, size, and timing of acquisitions and dispositions during the periods from this date through the end of the applicable period.

During the three and nine months ended September 30, 2012, the slow economic recovery and the wide availability of many pet-related products traditionally sold in our animal hospitals, retail stores and other distribution channels such as the Internet, continues to negatively impact our volume of same-store orders.

Additionally, our business strategy is to place a greater emphasis on comprehensive wellness visits and advanced medical procedures, which typically generate higher priced orders. The migration of lower priced orders from our animal hospitals to other distribution channels mentioned above and our emphasis on comprehensive wellness visits has, over the past several years, resulted in a decrease in lower priced orders and an increase in higher priced orders. During the three and nine months ended September 30, 2012, we experienced a decrease in the number of both lower and higher priced orders, which we believe continues to be a consequence of the slow economic recovery and the impact of changes in our overall business environment on the mix of procedures performed.

Price increases contributed to the increase in the average revenue per order. Prices at each of our animal hospitals are reviewed regularly and adjustments are made based on market considerations, demographics and our costs. These adjustments historically have approximated 3% to 6% on most services at the majority of our animal hospitals and are typically implemented in February of each year; price increases in 2012, however, approximated 3% to 4% on most services at the majority of our animal hospitals.

Animal Hospital gross profit is calculated as Animal Hospital revenue less Animal Hospital direct costs. Animal Hospital direct cost comprises all costs of services and products at the animal hospitals including, but not limited to, salaries of veterinarians, technicians and all other animal hospital-based personnel, facilities rent, occupancy costs, supply costs, depreciation and amortization, certain marketing and promotional expense and costs of goods sold associated with the retail sales of pet food and pet supplies.

Our consolidated Animal Hospital gross margin decreased to 15.8% and 14.9%, for the three and nine months ended

32

September 30, 2012, respectively, as compared to 17.0% and 16.7%, for the three and nine months ended September 30, 2011, respectively. Our same-store gross margin decreased to 16.5% and 15.3%, for the three and nine months ended September 30, 2012, respectively, as compared to 17.2% and 16.8%, for the respective prior-year periods.

The decrease in Animal Hospital gross margin for the three and nine months ended September 30, 2012, was primarily attributable to increase in labor and other costs combined with the impact of operating cost deleverage and decreased same store orders.

Over the last several years we have acquired a significant number of animal hospitals. Certain newly acquired animal hospitals have a lower gross margin at the time of acquisition than our same-store facilities. Subsequently, we have improved the gross margin at our acquired animal hospitals, in the aggregate, by reducing costs and/or increasing operating leverage.

Laboratory Segment

The following table summarizes revenue and gross profit for our Laboratory segment (in thousands, except percentages):

	Three Months Ended September 30,								Nine Months Ended September 30,
	2012			2011			% Change		2012			2011			% Change
Revenue	$	81,286		$	78,985		2.9	%	$	252,636		$	242,919		4.0	%
Gross profit	$	37,177		$	35,328		5.2	%	$	120,024		$	112,727		6.5	%
Gross margin	45.7		%	44.7		%			47.5		%	46.4		%

Laboratory revenue increased $2.3 million for the three months ended September 30, 2012 and increased $9.7 million for the nine months ended September 30, 2012, as compared to the same periods in the prior year. The components of the changes in Laboratory revenue are detailed below (in thousands, except percentages and average revenue per requisition):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012		2011		% Change		2012		2011		% Change
Internal growth:
Requisitions (1)	3,145		3,076		2.2	%	9,756		9,553		2.1	%
Average revenue per requisition (2)	$	25.83	$	25.51	1.3	%	$	25.83	$	25.43	1.6	%
Total internal revenue (1)	$	81,229	$	78,472	3.5	%	$	251,951	$	242,919	3.7	%
Billing-day adjustment (3)	—		513				548		—
Acquired revenue (4)	57		—				137		—
Total	$	81,286	$	78,985	2.9	%	$	252,636	$	242,919	4.0	%

  ____________________________

⁽¹⁾  Internal revenue and requisitions were calculated using Laboratory operating results, adjusted (i) to exclude the operating results of acquired laboratories that we did not own as of the beginning of the comparable period in the prior year, and (ii) for the impact resulting from any differences in the number of billing days in comparable periods, if applicable.

⁽²⁾  Computed by dividing internal revenue by the number of requisitions.

⁽³⁾  The 2012 year-to-date billing-day adjustment reflects the impact of one fewer billing day in 2012, as compared to 2011. The 2011 quarter-to-date billing-day adjustment reflects the impact of one additional billing day in 2011, as compared to 2012.

⁽⁴⁾  Acquired revenue represents the current-year period revenue recognized from our acquired laboratories that we did not own as of the beginning of the comparable prior-year period.

The increase in Laboratory revenue for the three and nine months ended September 30, 2012, was due to an increase in average revenue per requisition and an increase in the number of requisitions. Consistent with prior years, the significant increase in

33

requisitions from internal growth have been driven by an ongoing trend in veterinary medicine to focus on the importance of laboratory diagnostic testing in the diagnosis, early detection and treatment of diseases, and the migration of certain tests to outside laboratories that have historically been performed in animal hospitals.

The average revenue per requisition increased for the three and nine months ended September 30, 2012, as compared to the prior periods, due to price increases in February 2012. The average revenue per requisition was also impacted by various factors, including increased pricing discounts, changes in the mix, and inclusion of lower-priced tests historically performed at the animal hospitals.

Laboratory gross profit is calculated as Laboratory revenue less Laboratory direct costs. Laboratory direct cost comprises all costs of laboratory services including, but not limited to, salaries of veterinarians, specialists, technicians and other laboratory-based personnel, transportation and delivery costs, facilities rent, occupancy costs, depreciation and amortization and supply costs.

Our Laboratory gross margin increased to 45.7% and 47.5%, for the three and nine months ended September 30, 2012, respectively, as compared to 44.7% and 46.4% for the prior-year periods, respectively. The increase in gross margin was primarily due to operating leverage related to the increase in revenue mentioned above. Specifically, salaries, transportation and other costs decreased as lab supplies increased at a lesser rate compared to increased revenue.

Intercompany Revenue

Laboratory revenue, for the three and nine months ended September 30, 2012, included intercompany revenue of $13.1 million and $40.1 million, respectively, generated by providing laboratory services to our animal hospitals. For purposes of reviewing the operating performance of our segments, all intercompany transactions are accounted for as if the transaction was with an independent third party at current market prices. For financial reporting purposes, intercompany transactions are eliminated as part of our consolidation.

Selling, General and Administrative Expense

The following table summarizes our selling, general and administrative expense (“SG&A”) in both dollars and as a percentage of applicable revenue (in thousands, except percentages):

	Three Months Ended September 30,										Nine Months Ended September 30,
	2012				2011						2012				2011
	$		% of Revenue		$		% of Revenue		% Change		$		% of Revenue		$		% of Revenue		% Change
Animal Hospital	$	7,745	2.3	%	$	6,126	2.0	%	26.4	%	$	22,797	2.3	%	$	18,253	2.1	%	24.9	%
Laboratory	7,285		9.0	%	7,088		9.0	%	2.8	%	22,393		8.9	%	20,577		8.5	%	8.8	%
All Other	8,764		31.2	%	4,669		24.7	%	87.7	%	27,076		33.1	%	11,809		21.8	%	129.3	%
Corporate	13,814		3.2	%	14,605		3.8	%	(5.4	)%	43,390		3.4	%	34,695		3.1	%	25.1	%
Total SG&A	$	37,608	8.7	%	$	32,488	8.4	%	15.8	%	$	115,656	9.0	%	$	85,334	7.6	%	35.5	%

Consolidated SG&A increased by $5.1 million and $30.3 million, for the three and nine months ended September 30, 2012, respectively, compared to the prior-year periods. The increases in consolidated SG&A, for the three and nine months ended September 30, 2012, included approximately $3.3 million and $15.5 million, respectively, from the acquisition of AVC, Vetstreet and ThinkPets. Excluding the impact of these acquisitions, consolidated SG&A increased by $1.8 million and $14.8 million for the three and nine months ended September 30, 2012, respectively. The remaining increase for the three months ended September 30, 2012, was primarily due to increases in payroll related costs incurred in each of the segments listed above. The remaining increase for the nine months ended September 30, 2012, was primarily due to increases in corporate costs of which $3.9 million was related to corporate share based compensation expense, and increased compensation-related expenses in the Animal Hospital and Laboratory segments.

34

Operating Income

The following table summarizes our operating income in both dollars and as a percentage of applicable revenue (in thousands, except percentages):

	Three Months Ended September 30,												Nine Months Ended September 30,
	2012					2011							2012					2011
	$			% of Revenue		$			% of Revenue		% Change		$			% of Revenue		$			% of Revenue		% Change
Animal Hospital	$	46,584		13.6	%	$	45,677		15.1	%	2.0	%	$	126,075		12.6	%	$	125,914		14.6	%	0.1	%
Laboratory	29,892			36.8	%	28,239			35.8	%	5.9	%	97,645			38.7	%	92,131			37.9	%	6.0	%
All Other	(345		)	(1.2	)%	44			0.2	%	(884.1	)%	(436		)	(0.5	)%	2,150			4.0	%	(120.3	)%
Corporate	(13,814		)			(14,605		)			(5.4	)%	(43,406		)			(34,695		)			25.1	%
Intercompany	(1,131		)			(1,514		)			(25.3	)%	(3,389		)			(4,044		)			(16.2	)%
Total	$	61,186		14.1	%	$	57,841		15.0	%	5.8	%	$	176,489		13.8	%	$	181,456		16.3	%	(2.7	)%

Consolidated operating income increased by $3.3 million during the three months ended September 30, 2012 primarily due to $2.8 million from the acquisition of AVC, Vetstreet and ThinkPets. Excluding the impact of these acquisitions, consolidated operating income increased approximately $500,000, due to gross profit in our Laboratory business, partially offset by a decline in our Animal Hospital gross profit. Consolidated operating income decreased by $5.0 million during the nine months ended September 30, 2012. The acquisition of AVC, Vetstreet and ThinkPets added $6.1 million in consolidated operating income for the nine months ended September 30, 2012. Excluding the operating income from these acquisitions, consolidated operating income decreased by $11.1 million for the nine months ended September 30, 2012, primarily due to the decline in Animal Hospital gross profit and increased SG&A, partially offset by improved performance in our Laboratory business.

Interest Expense, Net

The following table summarizes our interest expense, net of interest income (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Interest expense:
Senior term notes	$	3,101		$	3,086		$	9,377		$	9,267
Capital leases and other	1,000			872			2,849			2,846
Amortization of debt costs	319			395			961			1,169
	4,420			4,353			13,187			13,282
Interest income	(125		)	(131		)	(441		)	(466		)
Total interest expense, net of interest income	$	4,295		$	4,222		$	12,746		$	12,816

The increase in net interest expense for the three months ended September 30, 2012 was driven primarily by an increase in mandatorily redeemable partnership interest and interest accrued on executive retirement related liabilities. The increase was partially offset by a decrease in amortized debt costs as a result of deferred financing costs written off in the prior year related to the refinancing our senior term notes on August 16, 2011. The change in interest expense, for the three and nine months ended September 30, 2012, was relatively flat. We experienced a decline in the year over year weighted average interest rate paid on these notes in both periods related to the aforementioned 2011 refinancing. The decrease in interest expense attributable to the decline in weighted average interest rate offset the effect of the increase in weighted average balance related to the additional borrowings completed in associated with the purchase of AVC.

The decrease in net interest expense for the nine months ended September 30, 2012 was primarily due to the above mentioned decrease in amortized debt costs as a result of our August 16, 2011 refinancing of our senior term note.

35

Provision for Income Taxes

The effective rate for the nine months ended September 30, 2012 was 37.6%, as compared to 39.3% for the same prior-year period. The decrease in rate is in part due to (i) the non-taxable gain of $5.7 million related to the increase in value of our historic noncontrolling interest in AVC realized upon the acquisition of the remaining equity interest and (ii) lower tax rates in Canada.

Liquidity and Capital Resources

Introduction

We generate cash primarily from (i) payments made by customers for our veterinary services, (ii) payments from animal hospitals and other clients for our laboratory services, (iii) proceeds received from the sale of our imaging equipment and other related services and (iv) payments received from participating hospitals for Vetstreet subscriptions and Vetstreet and ThinkPets appointment reminder notices. Our business historically has experienced strong liquidity, as fees for services provided in our animal hospitals are generally due at the time of service and fees for laboratory services are collected under standard industry terms. Our cash disbursements are primarily for payments related to the compensation of our employees, supplies and inventory purchases for our operating segments, occupancy and other administrative costs, interest expense, payments on long-term borrowings, capital expenditures and acquisitions. Cash outflows fluctuate with the amount and timing of the settlement of these transactions.

We manage our cash, investments and capital structure so we are able to meet the short-term and long-term obligations of our business while maintaining financial flexibility and liquidity. We forecast, analyze and monitor our cash flows to enable investment and financing within the overall constraints of our financial strategy.

At September 30, 2012, our consolidated cash and cash equivalents totaled $79.7 million, representing an increase of $16.0 million, compared to December 31, 2011. Cash flows generated from operating activities totaled $188.4 million for the nine months ended September 30, 2012, representing a increase of $24.8 million, compared to the nine months ended September 30, 2011.

We have historically funded our working capital requirements, capital expenditures and investment in individual animal hospitals primarily from internally generated cash flows and we expect to continue to do so in the future. During the first quarter of the 2012 fiscal year, we amended our Amended and Restated Credit & Guaranty Agreement, dated as of August 16, 2011. The First Amendment replenishes the aggregate amount of New Term Loan Commitments available under the Credit Agreement to a maximum of $100 million, after giving effect to the funding of $50 million of New Term Loan Commitments on January 24, 2012, which were drawn in connection with the additional investment made in AVC. As of September 30, 2012, we have access to an unused $125 million revolving credit facility, which expires August 2016, allowing us to maintain further operating and financial flexibility.

Historically, we have been able to access the capital markets to fund acquisitions that could not be funded out of internally generated cash flows. The availability of financing in the form of debt or equity, however, is influenced by many factors including our profitability, operating cash flows, debt levels, debt ratings, contractual restrictions, and market conditions. Although in the past we have been able to obtain financing for material transactions on terms we believe to be reasonable, there is a possibility that we may not be able to obtain financing on favorable terms in the future.

Future Cash Flows

Short-Term

Other than our larger acquisitions, we historically have funded our working capital requirements, capital expenditures and investments in animal hospital acquisitions from internally generated cash flows. We anticipate that our cash on hand, net cash provided by operations, available funds under our revolving credit agreement and incremental facilities will be sufficient to meet our anticipated cash requirements for the next 12 months. If we consummate significant acquisitions of animal hospital chains or other businesses during this period, we may seek additional debt or equity financing.

For the year ended December 31, 2012, we expect to spend between $100 million to $120 million for the acquisition of independent animal hospitals. The ultimate number of acquisitions and cash used is largely dependent upon the attractiveness of the candidates and the strategic fit within our operations. From January 1, 2012 to September 30, 2012, we spent $51.7 million in connection with the acquisition of 24 independent animal hospitals, as well as, $48.8 million for the acquisition of

36

AVC and approximately $7.5 million, net of acquired cash, for the acquisition of ThinkPets. In addition, we expect to spend approximately $80 million in 2012 for both property and equipment additions and capital costs necessary to maintain our existing facilities, of which approximately $55.3 million had been expended at September 30, 2012.

Long-Term

Our long-term liquidity needs, other than those related to the day-to-day operations of our business, including commitments for operating leases, generally comprises scheduled principal and interest payments for our outstanding long-term indebtedness, capital expenditures related to the expansion of our business, and acquisitions in accordance with our growth strategy.

We are unable to project with certainty whether our long-term cash flow from operations will be sufficient to repay our long-term debt when it comes due. If this cash flow is insufficient, we expect that we will need to refinance such indebtedness, amend its terms to extend maturity dates, or issue common stock of our company. Our management cannot make any assurances that such refinancing, amendments or equity offerings, if necessary, will be available on attractive terms, if at all.

Debt Related Covenants

Our senior credit facility contains certain financial covenants pertaining to fixed-charge coverage and leverage ratios. In addition, the senior credit facility has restrictions pertaining to capital expenditures, acquisitions and the payment of cash dividends. As of September 30, 2012, we were in compliance with these covenants, including the two covenant ratios, the fixed-charge coverage ratio and the leverage ratio.

At September 30, 2012, we had a fixed-charge coverage ratio of 1.56 to 1.00, which was in compliance with the required ratio of no less than 1.20 to 1.00. The senior credit facility defines the fixed-charge coverage ratio as that ratio that is calculated on a last 12-month basis by dividing pro forma earnings before interest, taxes, depreciation and amortization, as defined by the senior credit facility (“Pro Forma Earnings”), by fixed charges. Fixed charges are defined as cash interest expense, scheduled principal payments on debt obligations, capital expenditures, and provisions for current cash taxes based on income. Pro forma earnings include 12 months of operating results for businesses acquired during the period.

At September 30, 2012, we had a leverage ratio of 2.10 to 1.00, which was in compliance with the required ratio of no more than 3.00 to 1.00. The senior credit facility defines the leverage ratio as that ratio which is calculated as total debt divided by Pro Forma Earnings.

Historical Cash Flows

The following table summarizes our cash flows (in thousands):

	Nine Months Ended September 30,
	2012			2011
Cash provided by (used in):
Operating activities	$	188,439		$	163,591
Investing activities	(166,361		)	(235,814		)
Financing activities	(6,454		)	54,703
Effect of currency exchange rate changes on cash and cash equivalents	386			(363		)
Increase (decrease) in cash and cash equivalents	16,010			(17,883		)
Cash and cash equivalents at beginning of period	63,651			97,126
Cash and cash equivalents at end of period	$	79,661		$	79,243

Cash Flows from Operating Activities

Net cash provided by operating activities increased$24.8 million for the nine months ended September 30, 2012, as compared to the prior-year period. Operating cash flow for the nine months ended September 30, 2012 included $107.7 million of net income, net non cash expenses of $81.0 million and net cash used as a result of changes in operating assets and liabilities of $274,000. The changes in operating assets and liabilities included a $6.7 million increase in inventory, prepaid expenses and

37

other assets, a $5.1 million increase in accounts receivable and a $1.6 million increase in prepaid income taxes, mostly offset by a $10.0 million increase in accrued payroll and related liabilities and a $3.1 million increase in accounts payable and accrued liabilities. The increase in inventory, prepaid expenses and other assets was primarily a result of an increase in lease receivables, as a result of entering into additional Laboratory segment related contracts with clients. The increase in accounts receivable was primarily due to increases in third quarter 2012 net revenue compared to 2011. The increase in prepaid income taxes was related to the timing of payment obligations. The increase in accrued payroll and related liabilities and the increase in accounts payable and accrued liabilities were both the result of timing of payment obligations.

Cash provided by operating activities of $163.6 million, for the nine months ended September 30, 2011, consisted of $101.9 million of net income and net non-cash expenses of $69.6 million, partially offset by $7.9 million of net cash used as a result of changes in operating assets and liabilities during the nine months ended September 30, 2011. The changes in operating assets and liabilities included a $9.8 million increase in inventory, prepaid expense and other assets, a $7.0 million increase in trade accounts receivable and an $8.3 million decrease in accounts payable and other accrued liabilities, partially offset by an $8.7 million increase in prepaid income taxes and an $8.5 million increase in accrued payroll and related liabilities. The increase in inventory, prepaid expense and other assets was primarily due to the build-up of inventory and an increase in lease receivables as a result of executing additional Laboratory segment related contracts. The decrease in accounts payable and other accrued liabilities and the increase in accrued payroll and related liabilities were all a result of normal timing of payment obligations. The increase in accounts receivable was primarily due to an increase in third quarter 2011 net revenue compared to 2010.

Cash Flows from Investing Activities

The table below presents the components of the changes in investing cash flows (in thousands):

	Nine Months Ended September 30,
Investing Cash Flows:	2012			2011			Change
Acquisition of independent animal hospitals and laboratories	$	(51,744	)	$	(19,499	)	$	(32,245	)	(1)
Acquisition of AVC	(48,819		)	—			(48,819		)
Acquisition of ThinkPets	(7,468		)	—			(7,468		)
Acquisition of BrightHeart	—			(23,490		)	23,490
Acquisition of Vetstreet	—			(146,420		)	146,420
Other	—			(954		)	954
Total cash used for acquisitions	(108,031		)	(190,363		)	82,332
Property and equipment additions	(55,257		)	(43,275		)	(11,982		)	(2)
Real estate acquired with acquisitions	(1,602		)	(1,900		)	298
Proceeds from sale of assets	112			447			(335		)
Other	(1,583		)	(723		)	(860		)
Net cash used in investing activities	$	(166,361	)	$	(235,814	)	$	69,453

 ____________________________

(1) The number of acquisitions will vary from year to year based upon the available pool of suitable candidates. A discussion of our acquisitions is provided above in our Executive Overview.

(2) The cash used to acquire property and equipment will vary from period to period based on upgrade requirements and expansion of our animal hospital and laboratory facilities.

38

Cash Flows from Financing Activities

The table below presents the components of the changes in financing cash flows (in thousands):

	Nine Months Ended September 30,
Financing Cash Flows:	2012			2011			Change
Repayment of debt	$	(52,040	)	$	(90,945	)	$	38,905		(1)
Proceeds from issuance of long-term debt	50,000			150,000			(100,000		)	(2)
Proceeds from revolving credit facility	50,000			50,000			—			(3)
Repayment of revolving credit facility	(50,000		)	(50,000		)	—			(3)
Payment of financing costs	(122		)	(2,944		)	2,822			(4)
Distributions to noncontrolling interest partners	(2,802		)	(1,959		)	(843		)
Proceeds from issuance of common stock under stock option plans	3,322			2,596			726
Excess tax benefit from exercise of stock options	358			963			(605		)
Stock repurchases	(3,897		)	(2,663		)	(1,234		)	(5)
Other	(1,273		)	(345		)	(928		)
Net cash (used in) provided by financing activities	$	(6,454	)	$	54,703		$	(61,157	)

____________________________

(1) For the nine months ended September 30, 2012, we paid $25.9 million to fully repay AVC acquisition debt. Additionally, we paid $26.1 million in scheduled senior-term note principal and capital lease payments.

(2) The proceeds from issuance of long term debt, for the nine months ended September 30, 2012, included $50 million of new term loans borrowed pursuant to our incremental facilities permitted under our August 16, 2011 credit and guaranty agreement, used to fund the AVC acquisition. The proceeds from issuance of long-term debt, for the nine months ended September 30, 2011, included $50 million of new term loans borrowed pursuant to our incremental facilities permitted under our August 19, 2010 credit and guaranty agreement, and $100 million of additional borrowings received in accordance with the amended and restated credit and guaranty agreement dated August 16, 2011.

(3) For the nine months ended September 30, 2012, we borrowed against our revolving credit facility to fund the AVC acquisition, which was subsequently repaid with the proceeds from the issuance of $50 million of new term loans, as mentioned above. For the nine months ended September 30, 2011, we borrowed against our revolving credit facility to partially fund the Vetstreet acquisition and subsequently repaid the funds with the proceeds from issuance of additional senior term debt under our August 16, 2011 restated and amended credit and guaranty agreement, as noted above.

(4) The payment of financing costs, during the nine months ended September 30, 2012, was attributable to the costs incurred with the issuance of the new term loans borrowed pursuant to our incremental facilities, noted above.The payment of financing costs during the nine months ended September 30, 2011, was attributable to the costs incurred with the August 16, 2011 amended and restated credit and guaranty agreement.

(5) The stock repurchases represent cash paid for income taxes on behalf of employees who elected to settle their tax obligation for vested stock compensation with a portion of their vested shares.

39

Future Contractual Cash Requirements

The following table sets forth material changes from the amounts reported in our 2011 Form 10-K to our scheduled principal and interest obligations due by us for each of the years indicated as of September 30, 2012 (in thousands):

	Payment due by period
	Total		Less than 1 year		1-3 years		3-5 years
Contractual Obligations:
Long-term debt	$	600,313	$	31,563	$	94,688	$	474,062
Variable cash interest expense Term A (1)	40,309		11,593		20,777		7,939
	$	640,622	$	43,156	$	115,465	$	482,001

____________________________

(1) The interest payments on our variable-rate senior term notes are based on rates effective as of September 30, 2012.

Off-Balance-Sheet Financing Arrangements

Other than operating leases, as of September 30, 2012, we do not have any off-balance-sheet financing arrangements.

Description of Indebtedness

Senior Credit Facility

At September 30, 2012, we had $600.3 million principal outstanding under our senior term notes and no borrowings outstanding under our $125 million revolving credit facility.

We pay interest on our senior term notes and revolving credit facility based on the interest rate offered to our administrative agent on the adjusted Eurodollar rate plus a margin determined by reference to the leverage ratio in effect from time to time as set forth in the table in Note 5, Long-Term Obligations, in our condensed, consolidated financial statements of this quarterly report on Form 10-Q, which ranges from 1.25% to 2.25% per annum. The senior term notes and the revolving credit facility mature in August 2016.

Other Debt and Capital Lease Obligations

At September 30, 2012, we had seller notes secured by assets of certain animal hospitals and capital leases that totaled $39.1 million, which are included in long-term debt in our condensed, consolidated balance sheet of this quarterly report on Form 10-Q. Our seller notes have various maturities through 2013 and various interest rates ranging from 9.0% to 10.0%. Our capital leases have various maturities through 2030 and various interest rates ranging from 1.4% to 14.6%.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

At September 30, 2012, we had borrowings of $600.3 million under our senior credit facility with fluctuating interest rates based on market benchmarks such as the adjusted Eurodollar rate. Changes in interest rates could adversely affect the market value of our variable-rate debt. If the adjusted Eurodollar rate increases or decreases 1% from September 30, 2012, the additional annual interest expense or savings will amount to $5.9 million. This represents an increase of approximately $300,000 in both additional interest payments and interest savings, in comparison to our estimate included in Item 7A of our 2011 Annual Report on Form 10-K, due to the issuance of $50 million in additional senior term notes.

ITEM 4. CONTROLS AND PROCEDURES

We carried out an evaluation required by the Exchange Act, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act, as of the end of the period covered by this report. Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit

40

under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and to provide reasonable assurance that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

During our most recent fiscal quarter, there were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as specified above. Management does not expect, however, that our disclosure controls and procedures will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur, or that all control issues and instances of fraud, if any, within the company have been detected.

41

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not subject to any legal proceedings other than ordinarily routine litigation incidental to the conduct of our business.

ITEM 1A. RISK FACTORS

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A, of our 2011 Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure, other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

42

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on November 9, 2012.

Date:	November 9, 2012	By: /s/ Tomas W. Fuller
		Tomas W. Fuller
		Chief Financial Officer, Principal Accounting Officer, and Vice President and Secretary

43

EXHIBIT INDEX

Exhibit No.	Description
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 101.INS	XBRL Instance Document
Exhibit 101.SCH	XBRL Extension Schema Document
Exhibit 101.CAL	XBRL Extension Calculation Linkbase Document
Exhibit 101.LAB	XBRL Extension Label Linkbase Document
Exhibit 101.PRE	XBRL Extension Presentation Linkbase Document
Exhibit 101.DEF	XBRL Extension Definition Linkbase Document

44

EX-31.1

EXHIBIT 31.1

Certification of

Chief Executive Officer

of VCA Antech, Inc.

I, Robert L. Antin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of VCA Antech, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2012

/s/ Robert L. Antin

Robert L. Antin

Chairman of the Board, President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Certification of

Chief Executive Officer

of VCA Antech, Inc.

I, Tomas W. Fuller, certify that:

1. I have reviewed this quarterly report on Form 10-Q of VCA Antech, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2012

/s/ Tomas W. Fuller

Tomas W. Fuller

Chief Financial Officer, Principal Accounting Officer, and Vice President and Secretary

EX-32.1

EXHIBIT 32.1

Certification of

Chief Executive Officer & Chief Financial Officer

of VCA Antech, Inc.

This certification is provided pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and accompanies this quarterly report on Form 10-Q (the “Report”) for the period ended September 30, 2012 of VCA Antech, Inc. (the “Issuer”).

Each of the undersigned, who are the Chief Executive Officer and Chief Financial Officer, respectively, of VCA Antech, Inc., hereby certify that, to the best of each such officer’s knowledge:

(i) the Report fully complies with the requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer.

Dated:November 9, 2012
	/s/ Robert L. Antin
	Robert L. Antin
	Chairman of the Board, President and Chief Executive Officer
	/s/ Tomas W. Fuller
	Tomas W. Fuller
	Chief Financial Officer, Principal Accounting Officer, and Vice President and Secretary

XML

Long-Term Obligations (Details 1)	9 Months Ended
	Sep. 30, 2012
Level One [Member]
Summary of Leverage ratios in effect from time to time
Leverage Ratio	≥ 2.50:1.00
Debt Instrument, Basis Spread on Variable Rate	2.25%
Applicable Revolving Commitment Fee %	0.50%
Level Two [Member]
Summary of Leverage ratios in effect from time to time
Leverage Ratio	< 2.50:1.00 and ≥ 1.75:1.00
Debt Instrument, Basis Spread on Variable Rate	1.75%
Applicable Revolving Commitment Fee %	0.375%
Level Three [Member]
Summary of Leverage ratios in effect from time to time
Leverage Ratio	< 1.75:1.00 and ≥ 1.00:1.00
Debt Instrument, Basis Spread on Variable Rate	1.50%
Applicable Revolving Commitment Fee %	0.25%
Level Four [Member]
Summary of Leverage ratios in effect from time to time
Leverage Ratio	< 1.00:1.00
Debt Instrument, Basis Spread on Variable Rate	1.25%
Applicable Revolving Commitment Fee %	0.20%

XML

Commitments and Contingencies (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012
Commitments and Contingencies (Textuals) [Abstract]
Additional payment for specified financial criteria	$ 2.5

XML

Calculation of Earnings per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Calculation of Basic and Diluted Earnings per Share
Net income attributable to VCA Antech, Inc.	$ 34,037	$ 30,169	$ 103,602	$ 98,620
Weighted-average common shares outstanding:
Basic	87,773,000	86,697,000	87,554,000	86,531,000
Effect of dilutive potential common shares:
Stock options	461,000	445,000	523,000	593,000
Nonvested shares	420,000	111,000	512,000	169,000
Diluted	88,654,000	87,253,000	88,589,000	87,293,000
Basic earnings per share	$ 0.39	$ 0.35	$ 1.18	$ 1.14
Diluted earnings per share	$ 0.38	$ 0.35	$ 1.17	$ 1.13
Calculation of Earnings per Share (Textuals) [Abstract]
Potential common shares excluded from the computation of diluted earnings per share	1,220,547	2,104,547	1,100,645	1,139,567

XML

Nature of Operations (Details)	Sep. 30, 2012 Laboratory State Hospital
Nature of Operations (Textuals) [Abstract]
Number of hospitals operated	601
Number of states in which hospitals are operated	41
Number of states in which the company operate a full-service veterinary diagnostic laboratory network	50
Number of laboratories operated	55

XML

Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

	Animal Hospital			Laboratory		All Other			Total
Balance as of December 31, 2011	$	1,035,401		$	96,810	$	105,396		$	1,237,607
Goodwill acquired	120,505			34		11,194			131,733
Foreign translation adjustment	2,053			23		—			2,076
Other (1)	(4,271		)	—		(1,028		)	(5,299		)
Balance as of September 30, 2012 (2)	$	1,153,688		$	96,867	$	115,562		$	1,366,117

 ____________________________

⁽¹⁾  Other includes acquisition-price adjustments, which consist primarily of an adjustment related to capital leases and buy-outs.

⁽²⁾  Net of accumulated impairment losses of $21.3 million recorded in 2011, all related to our medical technology business, included in "All Other" in the above table.

Other Intangible Assets

	As of September 30, 2012							As of December 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Non-contractual customer relationships	$	113,689	$	(33,011	)	$	80,678	$	82,891	$	(21,147	)	$	61,744
Covenants not-to-compete	12,262		(7,225		)	5,037		13,035		(8,067		)	4,968
Favorable lease assets	7,163		(3,717		)	3,446		5,571		(3,210		)	2,361
Trademarks	14,017		(2,667		)	11,350		7,405		(1,686		)	5,719
Contracts	3,500		(519		)	2,981		3,500		(185		)	3,315
Technology	17,161		(3,919		)	13,242		16,589		(2,342		)	14,247
Client lists	85		(57		)	28		84		(35		)	49
Total	$	167,877	$	(51,115	)	$	116,762	$	129,075	$	(36,672	)	$	92,403

Aggregate amortization expense

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Aggregate amortization expense	$	6,612	$	3,883	$	16,830	$	9,092

Estimated amortization expense related to intangible assets

Remainder of 2012	$	6,040
2013	22,377
2014	19,935
2015	17,837
2016	14,586
Thereafter	35,987
Total	$	116,762

XML

Noncontrolling Interests (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Mar. 31, 2011
Summary of redeemable noncontrolling interests
Redeemable noncontrolling interests, Beginning balance	$ 6,964	$ 5,799	$ 6,891
Noncontrolling interest	666	660
Redemption value change	36	547
Redeemable noncontrolling interests	702	1,207
Formation of noncontrolling interests		510
Distribution to noncontrolling interests	(691)	(625)
Redeemable noncontrolling interests, Ending balance	$ 6,975		$ 6,891

XML

Fair Value Measurements (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Carrying value and fair value of long-term debt
Variable-rate long-term debt, Carrying Value	$ 600,313	$ 573,984
Variable-rate long-term debt, Fair Value	$ 601,814	$ 573,984

XML

Other Accrued Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Other accrued liabilities
Deferred revenue	$ 9,481	$ 7,025
Accrued health insurance	6,275	5,553
Deferred rent	4,087	3,626
Accrued consulting fees	2,886	2,886
Holdbacks and earnouts	3,795	2,250
Customer deposits	2,681	2,281
Accrued lab service rebates	426	332
Other	26,721	20,015
Other accrued liabilities	$ 56,352	$ 43,968

XML

Lines of Business (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Lines of Business
External revenue	$ 433,613	$ 385,135	$ 1,281,450	$ 1,116,363
Intercompany revenue	0		0
Total revenue	433,613	385,135	1,281,450	1,116,363
Direct costs	334,432	294,998	988,283	849,616
Gross profit	99,181	90,137	293,167	266,747
Selling, general and administrative expense	37,608	32,488	115,656	85,334
Net (gain) loss on sale of assets	387	(192)	1,022	(43)
Operating income (loss)	61,186	57,841	176,489	181,456
Depreciation and amortization	19,519	14,930	56,882	41,386
Property and equipment additions	18,092	14,841	55,257	43,275
Total assets	2,201,285		2,201,285		1,995,368
Animal Hospital [Member]
Lines of Business
External revenue	342,840	303,203	1,001,247	864,476
Intercompany revenue	0		0
Total revenue	342,840	303,203	1,001,247	864,476
Direct costs	288,588	251,613	852,059	720,393
Gross profit	54,252	51,590	149,188	144,083
Selling, general and administrative expense	7,745	6,126	22,797	18,253
Net (gain) loss on sale of assets	(77)	(213)	316	(84)
Operating income (loss)	46,584	45,677	126,075	125,914
Depreciation and amortization	13,953	10,393	40,536	29,799
Property and equipment additions	14,069	11,061	40,132	33,832
Total assets	1,623,778		1,623,778		1,439,103
Laboratory [Member]
Lines of Business
External revenue	68,139	67,588	212,562	209,639
Intercompany revenue	13,147	11,397	40,074	33,280
Total revenue	81,286	78,985	252,636	242,919
Direct costs	44,109	43,657	132,612	130,192
Gross profit	37,177	35,328	120,024	112,727
Selling, general and administrative expense	7,285	7,088	22,393	20,577
Net (gain) loss on sale of assets	0	1	(14)	19
Operating income (loss)	29,892	28,239	97,645	92,131
Depreciation and amortization	2,544	2,563	7,618	7,542
Property and equipment additions	1,342	1,085	4,691	4,049
Total assets	244,811		244,811		232,423
All Other [Member]
Lines of Business
External revenue	22,634	14,344	67,641	42,248
Intercompany revenue	5,466	4,538	14,202	11,939
Total revenue	28,100	18,882	81,843	54,187
Direct costs	19,217	14,149	54,499	40,206
Gross profit	8,883	4,733	27,344	13,981
Selling, general and administrative expense	8,764	4,669	27,076	11,809
Net (gain) loss on sale of assets	464	20	704	22
Operating income (loss)	(345)	44	(436)	2,150
Depreciation and amortization	2,611	1,606	7,456	2,931
Property and equipment additions	1,660	1,986	4,430	3,003
Total assets	219,630		219,630		202,187
Corporate [Member]
Lines of Business
External revenue	0		0
Intercompany revenue	0		0
Total revenue	0		0
Direct costs	0		0
Gross profit	0		0
Selling, general and administrative expense	13,814	14,605	43,390	34,695
Net (gain) loss on sale of assets	0		16
Operating income (loss)	(13,814)	(14,605)	(43,406)	(34,695)
Depreciation and amortization	806	702	2,374	2,067
Property and equipment additions	2,120	1,338	8,111	3,923
Total assets	139,314		139,314		142,793
Intercompany Eliminations [Member]
Lines of Business
External revenue	0		0
Intercompany revenue	(18,613)	(15,935)	(54,276)	(45,219)
Total revenue	(18,613)	(15,935)	(54,276)	(45,219)
Direct costs	(17,482)	(14,421)	(50,887)	(41,175)
Gross profit	(1,131)	(1,514)	(3,389)	(4,044)
Selling, general and administrative expense	0		0
Net (gain) loss on sale of assets	0		0
Operating income (loss)	(1,131)	(1,514)	(3,389)	(4,044)
Depreciation and amortization	(395)	(334)	(1,102)	(953)
Property and equipment additions	(1,099)	(629)	(2,107)	(1,532)
Total assets	$ (26,248)		$ (26,248)		$ (21,138)

XML

Nature of Operations

9 Months Ended

Sep. 30, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations

Nature of Operations

Our company, VCA Antech, Inc. (“VCA”) is a Delaware corporation formed in 1986 and is based in Los Angeles, California. We are an animal healthcare company with the following five operating segments: animal hospitals (“Animal Hospital”), veterinary diagnostic laboratories (“Laboratory”), veterinary medical technology (“Medical Technology”), Vetstreet and ThinkPets.

Our animal hospitals offer a full range of general medical and surgical services for companion animals. Our animal hospitals treat diseases and injuries, provide pharmaceutical products and perform a variety of pet-wellness programs, including health examinations, diagnostic testing, vaccinations, spaying, neutering and dental care. At September 30, 2012, we operated 601 animal hospitals throughout 41 states and in three Canadian provinces.

We operate a full-service veterinary diagnostic laboratory network serving all 50 states and certain areas in Canada. Our laboratory network provides sophisticated testing and consulting services used by veterinarians in the detection, diagnosis, evaluation, monitoring, treatment and prevention of diseases and other conditions affecting animals. At September 30, 2012, we operated 55 laboratories of various sizes located strategically throughout the United States and certain areas in Canada.

Our Medical Technology business sells digital radiography and ultrasound imaging equipment, provides education and training on the use of that equipment, provides consulting and mobile imaging services, and sells software and ancillary services to the veterinary market.

Our Vetstreet and ThinkPets businesses combined provide online communications, professional education, marketing solutions and an ecommerce platform for independent animal hospitals. In addition, Vetstreet.com provides a robust selection of products, information and services to the pet-owning community.

The practice of veterinary medicine is subject to seasonal fluctuation. In particular, demand for veterinary services is significantly higher during the warmer months because pets spend a greater amount of time outdoors where they are more likely to be injured and are more susceptible to disease and parasites. In addition, use of veterinary services may be affected by levels of flea infestation, heartworms and ticks, and the number of daylight hours.

XML

Share-Based Compensation (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Summary of stock option activity
Stock Options, Beginning balance	3,776,000
Stock option granted	462,229
Stock Options, Exercised	(225,000)
Stock option, Canceled	(52,000)
Stock Options, Ending balance	3,961,000
Stock Options, Exercisable	2,828,000
Stock Options, Vested and Expected to vest	3,931,000
Weighted-Average Exercise Price, Beginning balance	$ 16.92
Weighted-Average Exercise Price, Granted	$ 18.94
Weighted-Average Exercise Price, Exercised	$ 14.78
Weighted-Average Exercise Price, Canceled	$ 14.84
Weighted-Average Exercise Price, Ending balance	$ 17.25
Weighted-Average Exercise Price, Exercisable	$ 17.27
Weighted-Average Exercise Price, Vested and Expected to vest	$ 17.26
Summary of nonvested stock activity
Shares, Beginning balance	1,516,000
Shares, Granted	68,900
Shares, Vested	(437,000)
Shares, Forfeited/Canceled	(1,000)
Shares, Ending balance	1,147,000
Grant Date Weighted-Average Fair Value Per Share, Beginning balance	$ 20.76
Grant Date Weighted-Average Fair Value Per Share, Granted	$ 21.41
Grant Date Weighted-Average Fair Value Per Share, Vested	$ 22.15
Grant Date Weighted-Average Fair Value Per Share, Forfeited/Canceled	$ 42.33
Grant Date Weighted-Average Fair Value Per Share, Ending balance	$ 20.27

XML

Share-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of stock option activity

	Stock Options		Weighted- Average Exercise Price
Outstanding at December 31, 2011	3,776		$	16.92
Granted	462		$	18.94
Exercised	(225	)	$	14.78
Canceled	(52	)	$	14.84
Outstanding at September 30, 2012	3,961		$	17.25
Exercisable at September 30, 2012	2,828		$	17.27
Vested and expected to vest at September 30, 2012	3,931		$	17.26

Summary of nonvested stock activity

	Shares		Grant Date Weighted- Average Fair Value Per Share
Outstanding at December 31, 2011	1,516		$	20.76
Granted	69		$	21.41
Vested	(437	)	$	22.15
Forfeited/Canceled	(1	)	$	42.33
Outstanding at September 30, 2012	1,147		$	20.27

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

The fair value of our options is estimated on the date of grant using the Black-Scholes option pricing model. We amortize the fair value of our options on a straight-line basis over the requisite service period. The following assumptions were used to determine the preliminary fair value of those options granted during the nine months ended September 30, 2012:

Expected volatility (1)	34.1	%
Weighted-average volatility (1)	34.1	%
Expected dividends	—
Expected term (years)	4.4
Risk-free rate (2)	0.62	%

_________________

(1) We estimated the volatility of our common stock on the date of grant based on using both historical and implied volatilities.

(2) The risk-free interest rate is based on the implied yield in effect at the time of option grant on U.S. Treasury zero-coupon issues with equivalent remaining terms.

XML

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value Disclosures [Abstract]

Carrying value and fair value of variable rate long-term debt

	As of September 30, 2012				As of December 31, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value
Variable-rate long-term debt	$	600,313	$	601,814	$	573,984	$	573,984

XML

Share-Based Compensation (Details 1)	9 Months Ended
	Sep. 30, 2012
Assumptions used to determine fair value of options granted
Expected volatility	34.10%
Weighted-average volatility	34.10%
Expected dividends	0.00%
Expected term	4.4
Risk-free rate	0.62%

XML

Calculation of Earnings per Share (Tables)

9 Months Ended

Sep. 30, 2012

Earnings Per Share [Abstract]

Calculation of Basic and Diluted Earnings per Share

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Net income attributable to VCA Antech, Inc	$	34,037	$	30,169	$	103,602	$	98,620
Weighted-average common shares outstanding:
Basic	87,773		86,697		87,554		86,531
Effect of dilutive potential common shares:
Stock options	461		445		523		593
Nonvested shares and units	420		111		512		169
Diluted	88,654		87,253		88,589		87,293
Basic earnings per share	$	0.39	$	0.35	$	1.18	$	1.14
Diluted earnings per share	$	0.38	$	0.35	$	1.17	$	1.13

XML

Lines of Business (Tables)

9 Months Ended

Sep. 30, 2012

Segment Reporting [Abstract]

Lines of Business

	Animal Hospital			Laboratory		All Other			Corporate			Intercompany Eliminations			Total
Three Months Ended September 30, 2012
External revenue	$	342,840		$	68,139	$	22,634		$	—		$	—		$	433,613
Intercompany revenue	—			13,147		5,466			—			(18,613		)	—
Total revenue	342,840			81,286		28,100			—			(18,613		)	433,613
Direct costs	288,588			44,109		19,217			—			(17,482		)	334,432
Gross profit	54,252			37,177		8,883			—			(1,131		)	99,181
Selling, general and administrative expense	7,745			7,285		8,764			13,814			—			37,608
Net (gain) loss on sale and disposal of assets	(77		)	—		464			—			—			387
Operating income (loss)	$	46,584		$	29,892	$	(345	)	$	(13,814	)	$	(1,131	)	$	61,186
Depreciation and amortization	$	13,953		$	2,544	$	2,611		$	806		$	(395	)	$	19,519
Property and equipment additions	$	14,069		$	1,342	$	1,660		$	2,120		$	(1,099	)	$	18,092
Three Months Ended September 30, 2011
External revenue	$	303,203		$	67,588	$	14,344		$	—		$	—		$	385,135
Intercompany revenue	—			11,397		4,538			—			(15,935		)	—
Total revenue	303,203			78,985		18,882			—			(15,935		)	385,135
Direct costs	251,613			43,657		14,149			—			(14,421		)	294,998
Gross profit	51,590			35,328		4,733			—			(1,514		)	90,137
Selling, general and administrative expense	6,126			7,088		4,669			14,605			—			32,488
Net loss on sale and disposal of assets	(213		)	1		20			—			—			(192		)
Operating income (loss)	$	45,677		$	28,239	$	44		$	(14,605	)	$	(1,514	)	$	57,841
Depreciation and amortization	$	10,393		$	2,563	$	1,606		$	702		$	(334	)	$	14,930
Property and equipment additions	$	11,061		$	1,085	$	1,986		$	1,338		$	(629	)	$	14,841

XML

Condensed, Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash flows from operating activities:
Net income	$ 107,741	$ 101,920
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	56,882	41,386
Amortization of debt issue costs	961	1,169
Provision for uncollectible accounts	4,437	4,510
Business Combination, Step Acquisition, Equity Interest in Acquiree, Remeasurement Gain	(5,719)	0
Debt retirement costs	0	2,764
Net (gain) loss on sale of assets	1,022	(43)
Share-based compensation	10,466	6,610
Deferred income taxes	14,119	14,649
Excess tax benefit from exercise of stock options	(358)	(963)
Other	(838)	(489)
Changes in operating assets and liabilities:
Trade accounts receivable	(5,079)	(7,018)
Inventory, prepaid expense and other assets	(6,727)	(9,806)
Accounts payable and other accrued liabilities	3,161	(8,328)
Accrued payroll and related liabilities	10,007	8,523
Income taxes	(1,636)	8,707
Net cash provided by operating activities	188,439	163,591
Cash flows from investing activities:
Business acquisitions, net of cash acquired	(108,031)	(190,363)
Real estate acquired in connection with business acquisitions	(1,602)	(1,900)
Property and equipment additions	(55,257)	(43,275)
Proceeds from sale of assets	112	447
Other	(1,583)	(723)
Net cash used in investing activities	(166,361)	(235,814)
Cash flows from financing activities:
Repayment of debt	(52,040)	(90,945)
Proceeds from issuance of long-term debt	50,000	150,000
Proceeds from revolving credit facility	50,000	50,000
Repayment of revolving credit facility	(50,000)	(50,000)
Payment of financing costs	(122)	(2,944)
Distributions to noncontrolling interest partners	(2,802)	(1,959)
Proceeds from issuance of common stock under stock option plans	3,322	2,596
Excess tax benefit from exercise of stock options	358	963
Stock repurchases	(3,897)	(2,663)
Other	(1,273)	(345)
Net cash provided by (used in) financing activities	(6,454)	54,703
Effect of currency exchange rate changes on cash and cash equivalents	386	(363)
Decrease in cash and cash equivalents	16,010	(17,883)
Cash and cash equivalents at beginning of period	63,651	97,126
Cash and cash equivalents at end of period	79,661
Supplemental disclosures of cash flow information:
Interest paid	11,614	12,214
Income taxes paid	48,671	40,601
Detail of acquisitions:
Fair value of assets acquired	187,515	241,688
Business Combination, Step Acquisition, Equity Interest in Acquiree, Fair Value	(11,850)	0
Noncontrolling Interest, Increase from Business Combination	(8,161)	0
Cash paid for acquisitions	(108,031)	(189,255)
CashPaidToDebtHolders	(25,915)	(26,048)
Stock Issued During Period, Value, Acquisitions	(10,500)	0
Contingent consideration	(934)	(481)
Holdbacks	(2,525)	(800)
Liabilities assumed	$ 19,599	$ 25,104

XML

Noncontrolling Interests (Tables)

9 Months Ended

Sep. 30, 2012

Noncontrolling Interest [Abstract]

Summary of redeemable noncontrolling interests

	Income Statement Impact		Redeemable Noncontrolling Interests
Balance as of December 31, 2010			$	5,799
Noncontrolling interest	$	660
Redemption value change	547		1,207
Formation of noncontrolling interests			510
Distribution to noncontrolling interests			(625		)
Balance as of September 30, 2011			$	6,891
Balance as of December 31, 2011			$	6,964
Noncontrolling interest	$	666
Redemption value change	36		702
Distribution to noncontrolling interests			(691		)
Balance as of September 30, 2012			$	6,975

XML

Long-Term Obligations (Details 2) (Senior Notes [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2012
Senior Notes [Member]
Scheduled principal payments for senior term notes
2011	$ 7,891
2012	35,508
2013	47,344
2014	51,289
2015	458,281
Total	$ 600,313

XML

Condensed, Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 79,661	$ 63,651
Trade accounts receivable, less allowance for uncollectible accounts of $15,212 and $14,978 at March 31, 2012 and December 31, 2011, respectively	62,061	58,279
Inventory	53,526	48,661
Prepaid expenses and other	24,302	21,883
Deferred income taxes	28,747	26,310
Prepaid income taxes	20,610	18,373
Total current assets	268,907	237,157
Property and equipment, net	392,367	370,646
Goodwill	1,366,117	1,237,607
Other intangible assets, net	116,762	92,403
Notes receivable, net	6,193	6,202
Deferred financing costs, net	4,549	5,435
Other	46,390	45,918
Total assets	2,201,285	1,995,368
Current liabilities:
Current portion of long-term debt	34,996	32,571
Accounts payable	37,859	37,797
Accrued payroll and related liabilities	55,152	42,658
Other accrued liabilities	56,352	43,968
Total current liabilities	184,359	156,994
Long-term debt, less current portion	604,445	586,282
Deferred income taxes	122,317	101,229
Other liabilities	37,429	25,947
Total liabilities	948,550	870,452
Commitments and contingencies
Redeemable noncontrolling interests	6,975	6,964
Preferred stock, par value $0.001, 11,000 shares authorized, none outstanding	0	0
VCA Antech, Inc. stockholders' equity:
Common stock, par value $0.001, 175,000 shares authorized, 87,498 and 86,796 shares outstanding as of March 31, 2012 and December 31, 2011, respectively	88	87
Additional paid-in capital	382,479	361,715
Retained earnings	849,260	745,658
Accumulated other comprehensive income	2,883	418
Total VCA Antech, Inc. stockholders' equity	1,234,710	1,107,878
Noncontrolling interests	11,050	10,074
Total equity	1,245,760	1,117,952
Total liabilities and equity	$ 2,201,285	$ 1,995,368

XML

Share-Based Compensation (Details Textuals) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012 Years	Sep. 30, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate			34.10%
Share-Based Compensation (Textuals) [Abstract]
Stock option granted			462,229
Estimated weighted- average grant date fair value of stock options			$ 5.48
Aggregate intrinsic value of stock options exercised	$ 360,000		$ 1,600,000
Actual tax benefit realized on options exercised	141,000		629,000
Nonvested common stock awards granted			68,900
Vesting rights of Performance-based shares			four
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Weighted Average Volatility Rate			34.10%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate			0.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term			4.4
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate			0.62%
Director [Member]
Share-Based Compensation (Textuals) [Abstract]
Nonvested common stock awards granted			14,308
Employee Stock Option [Member]
Share-Based Compensation (Textuals) [Abstract]
Weighted-average period of recognition of unrecognized compensation cost			3.4
Total unrecognized compensation cost	5,800,000		5,800,000
Compensation cost charged against income	362,000	347,000	1,100,000	1,000,000
Income tax benefit recognized during the period	142,000	136,000	433,000	407,000
Nonvested Stock Awards [Member]
Share-Based Compensation (Textuals) [Abstract]
Weighted-average period of recognition of unrecognized compensation cost			2.7
Total unrecognized compensation cost	14,800,000		14,800,000
Compensation cost charged against income	2,100,000	3,700,000	9,100,000	5,600,000
Income tax benefit recognized during the period	805,000	1,500,000	3,600,000	2,200,000
Restricted Stock Units (RSUs) [Member]
Share-Based Compensation (Textuals) [Abstract]
Weighted-average period of recognition of unrecognized compensation cost			3.9
Total unrecognized compensation cost	5,600,000		5,600,000
Compensation cost charged against income	279,000
Income tax benefit recognized during the period	$ 109,000
Nonvested common stock awards granted			307,989

XML

Condensed, Consolidated Statements of Equity (Unaudited) (USD $) In Thousands	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Loss (Income)	Noncontrolling Interests
Beginning Balances at Dec. 31, 2010	$ 1,009,485	$ 86	$ 347,848	$ 650,253	$ 737	$ 10,561
Beginning Balances, shares at Dec. 31, 2010		86,179
Net income	100,387	0	0	98,620	0	1,767
Foreign currency translation adjustment	(373)
Other Comprehensive Income (Loss), Net of Tax	(599)	0	0	0	(599)	0
Distribution to noncontrolling interests	(1,046)	0	0	0	0	(1,046)
Purchase of noncontrolling interests	(612)	0	263	0	0	(875)
Share-based compensation	6,610	0	6,610	0	0	0
Issuance of common stock under stock incentive plans	2,596	1	2,595	0	0	0
Stock Repurchased During Period, Shares		(113)
Stock Issued During Period, Value, Acquisitions	0
Issuance of common stock under stock incentive plans, shares		596
Stock repurchases	(2,663)	0	(2,663)	0	0	0
Excess tax benefit from stock options	963	0	963	0	0	0
Tax shortfall and other from stock options and awards	(539)	0	(539)	0	0	0
Ending Balances at Sep. 30, 2011
Beginning Balances at Dec. 31, 2011	1,117,952	87	361,715	745,658	418	10,074
Beginning Balances, shares at Dec. 31, 2011		86,796
Net income	105,680	0	0	103,602	0	2,078
Foreign currency translation adjustment	2,173
Other Comprehensive Income (Loss), Net of Tax	2,465	0	0	0	2,465	0
Distribution to noncontrolling interests	(1,102)	0	0	0	0	(1,102)
Share-based compensation	10,466	0	10,466	0	0	0
Issuance of common stock under stock incentive plans	3,322	1	3,321	0	0	0
Stock Repurchased During Period, Shares		(185)
Stock Issued During Period, Shares, Acquisitions		473
Stock Issued During Period, Value, Acquisitions	10,500	0	10,500	0	0	0
Issuance of common stock under stock incentive plans, shares		745
Stock repurchases	(3,933)	0	(3,933)	0	0	0
Excess tax benefit from stock options	358	0	358	0	0	0
Tax shortfall and other from stock options and awards	52	0	52	0	0	0
Ending Balances at Sep. 30, 2012	$ 1,245,760	$ 88	$ 382,479	$ 849,260	$ 2,883	$ 11,050
Ending Balances, shares at Sep. 30, 2012		87,829

XML

Goodwill and Other Intangible Assets Goodwill and Other Intangible Assets (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Goodwill [Line Items]
Goodwill, Impaired, Accumulated Impairment Loss	$ 21,300,000
Goodwill, Beginning Balance	1,237,607,000
Goodwill acquired	131,733,000
Goodwill, Translation Adjustments	2,076,000
Other	(5,299,000)
Goodwill, Ending Balance	1,366,117,000
Goodwill, Impairment Loss	0
Animal Hospital [Member]
Goodwill [Line Items]
Goodwill, Beginning Balance	1,035,401,000
Goodwill acquired	120,505,000
Goodwill, Translation Adjustments	2,053,000
Other	(4,271,000)
Goodwill, Ending Balance	1,153,688,000
Laboratory [Member]
Goodwill [Line Items]
Goodwill, Beginning Balance	96,810,000
Goodwill acquired	34,000
Goodwill, Translation Adjustments	23,000
Other	0
Goodwill, Ending Balance	96,867,000
All Other [Member]
Goodwill [Line Items]
Goodwill, Beginning Balance	105,396,000
Goodwill acquired	11,194,000
Goodwill, Translation Adjustments	0
Other	(1,028,000)
Goodwill, Ending Balance	$ 115,562,000

XML

Lines of Business (Policies)

9 Months Ended

Sep. 30, 2012

Segment Reporting [Abstract]

Segment Reporting

Our reportable segments are Animal Hospital and Laboratory. Our Animal Hospital segment provides veterinary services for companion animals and sells related retail and pharmaceutical products. Our Laboratory segment provides diagnostic laboratory testing services for veterinarians, both associated with our animal hospitals and those independent of us. Our other operating segments, included in “All Other” in the following tables, are our (i) Medical Technology business, which sells digital radiography and ultrasound imaging equipment, related computer hardware, software and ancillary services to the veterinary market and our (ii) Vetstreet business and our (iii) ThinkPets business. Vetstreet and ThinkPets provide online communications, professional education, marketing solutions to the veterinary community and an ecommerce platform for independent animal hospitals. These operating segments do not meet the quantitative requirements for reportable segments. Our operating segments are strategic business units that have different services, products and/or functions. The segments are managed separately because each is a distinct and different business venture with unique challenges, risks and rewards. We also operate a corporate office that provides general and administrative support services for our segments.

10. Lines of Business, continued

The accounting policies of our segments are essentially the same as those described in the summary of significant accounting policies included in our 2011 Annual Report on Form 10-K. We evaluate the performance of our segments based on gross profit and operating income. For purposes of reviewing the operating performance of our segments all intercompany sales and purchases are generally accounted for as if they were transactions with independent third parties at current market prices.

Presentation of Comprehensive Income

In June 2011, the FASB finalized the accounting guidance for the Presentation of Comprehensive Income. The objective of the new guidance is to improve the comparability, consistency, and transparency of financial reporting, to increase the prominence of the items reported in other comprehensive income and to facilitate convergence of GAAP and IFRS. The guidance eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholder's equity and requires that all nonowner changes in stockholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. Regardless of which option is chosen, it is required that reclassification adjustments for items that are reclassified from other comprehensive income to net income be presented on the face of the financial statements.

The new guidance does not change the following: the items that must be reported in other comprehensive income; when an item of other comprehensive income must be reclassified to net income; the option for an entity to present components of other comprehensive income either net of related tax effects or before related tax effects with a single amount shown for aggregate income tax expense; and does not affect how earnings per share is calculated or presented.

The guidance was effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and should be applied retrospectively. Early adoption was permitted. We adopted the new accounting guidance on January 1, 2012. The adoption did not significantly impact our consolidated financial statements other than the changes to presentation outlined.

In December 2011, the FASB deferred the effective date for amendments to the presentation of reclassifications of items out of accumulated other comprehensive income. The effective date deferral is to allow the FASB to redeliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income.

Goodwill and Intangible Assets

In September 2011, the FASB amended the accounting guidance on Intangibles--Goodwill and Other - Testing Goodwill for Impairment. The objective of this guidance is to reduce the cost and complexity of performing the annual goodwill impairment test and to improve the previous guidance by expanding the examples of events and circumstances that an entity should consider in the qualitative evaluation about the likelihood of goodwill impairment. The amendments allow an entity the option of first assessing qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

The examples of events and circumstances included in the amendment that an entity should consider in performing its qualitative assessment about whether to proceed to the first step of the goodwill impairment test supersede the examples in the existing guidance. If it is determined that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. Under the amendments, an entity has the option to bypass the qualitative assessment for any reporting unit in any period and may resume performing the qualitative assessment in any subsequent period. An entity is no longer permitted to carry forward its detailed calculation of a reporting unit's fair value from a prior year as previously permitted under the existing guidance. The amended guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011 with early adoption permitted. We adopted the amended goodwill impairment testing procedures on January 1, 2012. The adoption does not significantly impact our consolidated financial statements.

In July 2012, the FASB issued accounting guidance on testing indefinite-lived intangible assets for impairment. The objective of this guidance is to reduce the cost and complexity of performing an impairment test for indefinite-lived intangible assets by simplifying how an entity tests those assets for impairment and to improve consistency in impairment testing guidance among long-lived asset categories. The amendments permit an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test. An entity will have an option not to calculate annually the fair value of an indefinite-lived intangible asset if the entity determines that it is not more likely than not that the asset is impaired. Permitting an entity to assess qualitative factors when testing indefinite-lived intangible assets for impairment results in guidance that is similar to the goodwill impairment testing guidance, as mentioned above. The amended guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. We currently do not have any indefinite-lived intangible assets.

XML

Goodwill and Other Intangible Assets (Details 1) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Finite-Lived Intangible Assets, Future Amortization Expense [Abstract]
Remainder of 2012			$ 6,040,000
2013			22,377,000
2014			19,935,000
2015			17,837,000
2016			14,586,000
Thereafter			35,987,000
Total			116,762,000
Finite-Lived Intangible Assets [Line Items]
Goodwill, Acquired During Period			131,733,000
Other Intangible Assets
Gross Carrying Amount	167,877,000		167,877,000		129,075,000
Accumulated Amortization	(51,115,000)		(51,115,000)		(36,672,000)
Net Carrying Amount	116,762,000		116,762,000		92,403,000
Aggregate amortization expense	6,612,000	3,883,000	16,830,000	9,092,000
Goodwill and Other Intangible Assets (Textuals) [Abstract]
Accumulated impairment losses	21,300,000		21,300,000
Noncontractual customer relationships [Member]
Other Intangible Assets
Gross Carrying Amount	113,689,000		113,689,000		82,891,000
Accumulated Amortization	(33,011,000)		(33,011,000)		(21,147,000)
Net Carrying Amount	80,678,000		80,678,000		61,744,000
Covenants not-to-compete [Member]
Other Intangible Assets
Gross Carrying Amount	12,262,000		12,262,000		13,035,000
Accumulated Amortization	(7,225,000)		(7,225,000)		(8,067,000)
Net Carrying Amount	5,037,000		5,037,000		4,968,000
Favorable lease asset [Member]
Other Intangible Assets
Gross Carrying Amount	7,163,000		7,163,000		5,571,000
Accumulated Amortization	(3,717,000)		(3,717,000)		(3,210,000)
Net Carrying Amount	3,446,000		3,446,000		2,361,000
Trademarks [Member]
Other Intangible Assets
Gross Carrying Amount	14,017,000		14,017,000		7,405,000
Accumulated Amortization	(2,667,000)		(2,667,000)		(1,686,000)
Net Carrying Amount	11,350,000		11,350,000		5,719,000
Contracts [Member]
Other Intangible Assets
Gross Carrying Amount	3,500,000		3,500,000		3,500,000
Accumulated Amortization	(519,000)		(519,000)		(185,000)
Net Carrying Amount	2,981,000		2,981,000		3,315,000
Technology [Member]
Other Intangible Assets
Gross Carrying Amount	17,161,000		17,161,000		16,589,000
Accumulated Amortization	(3,919,000)		(3,919,000)		(2,342,000)
Net Carrying Amount	13,242,000		13,242,000		14,247,000
Client lists [Member]
Other Intangible Assets
Gross Carrying Amount	85,000		85,000		84,000
Accumulated Amortization	(57,000)		(57,000)		(35,000)
Net Carrying Amount	28,000		28,000		49,000
Laboratory [Member]
Finite-Lived Intangible Assets [Line Items]
Goodwill, Acquired During Period			34,000
All Other [Member]
Finite-Lived Intangible Assets [Line Items]
Goodwill, Acquired During Period			11,194,000
Animal Hospital [Member]
Finite-Lived Intangible Assets [Line Items]
Goodwill, Acquired During Period			$ 120,505,000

XML

Acquisitions Schedule Of Purchase Price Allocation (Tables)

9 Months Ended

Sep. 30, 2012

Animal Hospitals And Laboratory Acquisitions [Member]

Business Acquisition [Line Items]

Schedule of Purchase Price Allocation [Table Text Block]

The following table summarizes the aggregate consideration for the 24 independent animal hospitals acquired during the nine months ended September 30, 2012, and the preliminary allocation of the acquisition price (in thousands):

Consideration:
Cash	$	51,744
Holdback	1,475
Earnout contingent consideration	934
Fair value of total consideration transferred	$	54,153
Allocation of the Purchase Price:
Tangible assets	$	1,995
Identifiable intangible assets	9,184
Goodwill (1)	42,974
Total	$	54,153

AVC Acquisition [Member]

Business Acquisition [Line Items]

Schedule of Purchase Price Allocation [Table Text Block]

The following table summarizes the total investment and the preliminary allocation of the investment in AVC (in thousands):

Consideration:
Cash	$	48,819
Cash paid to debt holders	25,915
Fair value of total consideration transferred	$	74,734
Allocation of the Purchase Price:
Tangible assets	$	11,743
Identifiable intangible assets (1)	23,561
Goodwill (2)	77,565
Other liabilities assumed	(18,124		)
	94,745
Noncontrolling interest	(8,161		)
Fair value of pre-existing investment in AVC	(11,850		)
Total	$	74,734

ThinkPetsAcquisition [Member]

Business Acquisition [Line Items]

Schedule of Purchase Price Allocation [Table Text Block]

The following table summarizes the preliminary purchase price and the preliminary allocation of the investment in ThinkPets (in thousands):

Consideration:
Cash	$	7,468
Issuance of common stock for acquisitions	10,500
Holdback	1,050
Fair value of total consideration transferred	$	19,018
Allocation of the Purchase Price:
Tangible assets	$	2,078
Identifiable intangible assets (1)	7,221
Goodwill (2)	11,194
Other liabilities assumed	(1,475		)
Total	$	19,018

XML

Condensed, Consolidated Statements of Equity (Unaudited) (Parenthetical) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Redeemable noncontrolling interests	$ 702	$ 1,207
Mandatorily redeemable noncontrolling interests	$ 1,359	$ 326

XML

Condensed, Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Current assets:
Allowance for uncollectible accounts	$ 16,156	$ 14,978
Liabilities and Equity
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	11,000	11,000
Preferred stock, shares outstanding	0
VCA Antech, Inc. stockholders' equity:
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	175,000	175,000
Common stock, shares outstanding	87,829	86,796

XML

Calculation of Earnings per Share

9 Months Ended

Sep. 30, 2012

Earnings Per Share [Abstract]

Calculation of Earnings per Share

Calculation of Earnings per Share

Basic earnings per share is calculated by dividing net income by the weighted-average number of shares outstanding during the period. Diluted earnings per share is calculated by dividing net income attributable to VCA Antech, Inc. by the weighted-average number of common shares outstanding, after giving effect to all dilutive potential common shares outstanding during the period. Basic and diluted earnings per share were calculated as follows (in thousands, except per share amounts):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Net income attributable to VCA Antech, Inc	$	34,037	$	30,169	$	103,602	$	98,620
Weighted-average common shares outstanding:
Basic	87,773		86,697		87,554		86,531
Effect of dilutive potential common shares:
Stock options	461		445		523		593
Nonvested shares and units	420		111		512		169
Diluted	88,654		87,253		88,589		87,293
Basic earnings per share	$	0.39	$	0.35	$	1.18	$	1.14
Diluted earnings per share	$	0.38	$	0.35	$	1.17	$	1.13

For the three months ended September 30, 2012 and 2011, potential common shares of 1,220,547 and 2,104,547, respectively, were excluded from the computation of diluted earnings per share because their inclusion would have had an antidilutive effect.

For the nine months ended September 30, 2012 and 2011, potential common shares of 1,100,645 and 1,139,567, respectively, were excluded from the computation of diluted earnings per share because their inclusion would have had an antidilutive effect.

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 05, 2012
Entity Registrant Name	VCA ANTECH INC.
Entity Central Index Key	0000817366
Document Type	10-Q
Document Period End Date	Sep. 30, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		87,829,066

XML

Lines of Business

9 Months Ended

Sep. 30, 2012

Segment Reporting [Abstract]

Lines of Business

ines of Business

Our reportable segments are Animal Hospital and Laboratory. Our Animal Hospital segment provides veterinary services for companion animals and sells related retail and pharmaceutical products. Our Laboratory segment provides diagnostic laboratory testing services for veterinarians, both associated with our animal hospitals and those independent of us. Our other operating segments, included in “All Other” in the following tables, are our (i) Medical Technology business, which sells digital radiography and ultrasound imaging equipment, related computer hardware, software and ancillary services to the veterinary market and our (ii) Vetstreet business and our (iii) ThinkPets business. Vetstreet and ThinkPets provide online communications, professional education, marketing solutions to the veterinary community and an ecommerce platform for independent animal hospitals. These operating segments do not meet the quantitative requirements for reportable segments. Our operating segments are strategic business units that have different services, products and/or functions. The segments are managed separately because each is a distinct and different business venture with unique challenges, risks and rewards. We also operate a corporate office that provides general and administrative support services for our segments.

10. Lines of Business, continued

The accounting policies of our segments are essentially the same as those described in the summary of significant accounting policies included in our 2011 Annual Report on Form 10-K. We evaluate the performance of our segments based on gross profit and operating income. For purposes of reviewing the operating performance of our segments all intercompany sales and purchases are generally accounted for as if they were transactions with independent third parties at current market prices.

The following is a summary of certain financial data for each of our segments (in thousands):

	Animal Hospital			Laboratory		All Other			Corporate			Intercompany Eliminations			Total
Three Months Ended September 30, 2012
External revenue	$	342,840		$	68,139	$	22,634		$	—		$	—		$	433,613
Intercompany revenue	—			13,147		5,466			—			(18,613		)	—
Total revenue	342,840			81,286		28,100			—			(18,613		)	433,613
Direct costs	288,588			44,109		19,217			—			(17,482		)	334,432
Gross profit	54,252			37,177		8,883			—			(1,131		)	99,181
Selling, general and administrative expense	7,745			7,285		8,764			13,814			—			37,608
Net (gain) loss on sale and disposal of assets	(77		)	—		464			—			—			387
Operating income (loss)	$	46,584		$	29,892	$	(345	)	$	(13,814	)	$	(1,131	)	$	61,186
Depreciation and amortization	$	13,953		$	2,544	$	2,611		$	806		$	(395	)	$	19,519
Property and equipment additions	$	14,069		$	1,342	$	1,660		$	2,120		$	(1,099	)	$	18,092
Three Months Ended September 30, 2011
External revenue	$	303,203		$	67,588	$	14,344		$	—		$	—		$	385,135
Intercompany revenue	—			11,397		4,538			—			(15,935		)	—
Total revenue	303,203			78,985		18,882			—			(15,935		)	385,135
Direct costs	251,613			43,657		14,149			—			(14,421		)	294,998
Gross profit	51,590			35,328		4,733			—			(1,514		)	90,137
Selling, general and administrative expense	6,126			7,088		4,669			14,605			—			32,488
Net loss on sale and disposal of assets	(213		)	1		20			—			—			(192		)
Operating income (loss)	$	45,677		$	28,239	$	44		$	(14,605	)	$	(1,514	)	$	57,841
Depreciation and amortization	$	10,393		$	2,563	$	1,606		$	702		$	(334	)	$	14,930
Property and equipment additions	$	11,061		$	1,085	$	1,986		$	1,338		$	(629	)	$	14,841

10. Lines of Business, continued

	Animal Hospital			Laboratory			All Other			Corporate			Intercompany Eliminations			Total
Nine Months Ended September 30, 2012
External revenue	$	1,001,247		$	212,562		$	67,641		$	—		$	—		$	1,281,450
Intercompany revenue	—			40,074			14,202			—			(54,276		)	—
Total revenue	1,001,247			252,636			81,843			—			(54,276		)	1,281,450
Direct costs	852,059			132,612			54,499			—			(50,887		)	988,283
Gross profit	149,188			120,024			27,344			—			(3,389		)	293,167
Selling, general and administrative expense	22,797			22,393			27,076			43,390			—			115,656
Net loss (gain) on sale and disposal of assets	316			(14		)	704			16			—			1,022
Operating income (loss)	$	126,075		$	97,645		$	(436	)	$	(43,406	)	$	(3,389	)	$	176,489
Depreciation and amortization	$	40,536		$	7,618		$	7,456		$	2,374		$	(1,102	)	$	56,882
Property and equipment additions	$	40,132		$	4,691		$	4,430		$	8,111		$	(2,107	)	$	55,257
Nine Months Ended September 30, 2011
External revenue	$	864,476		$	209,639		$	42,248		$	—		$	—		$	1,116,363
Intercompany revenue	—			33,280			11,939			—			(45,219		)	—
Total revenue	864,476			242,919			54,187			—			(45,219		)	1,116,363
Direct costs	720,393			130,192			40,206			—			(41,175		)	849,616
Gross profit	144,083			112,727			13,981			—			(4,044		)	266,747
Selling, general and administrative expense	18,253			20,577			11,809			34,695			—			85,334
Net loss on sale and disposal of assets	(84		)	19			22			—			—			(43		)
Operating income (loss)	$	125,914		$	92,131		$	2,150		$	(34,695	)	$	(4,044	)	$	181,456
Depreciation and amortization	$	29,799		$	7,542		$	2,931		$	2,067		$	(953	)	$	41,386
Property and equipment additions	$	33,832		$	4,049		$	3,003		$	3,923		$	(1,532	)	$	43,275
At September 30, 2012
Total assets	$	1,623,778		$	244,811		$	219,630		$	139,314		$	(26,248	)	$	2,201,285
At December 31, 2011
Total assets	$	1,439,103		$	232,423		$	202,187		$	142,793		$	(21,138	)	$	1,995,368

XML

Condensed, Consolidated Income Statements (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Revenue	$ 433,613	$ 385,135	$ 1,281,450	$ 1,116,363
Direct costs	334,432	294,998	988,283	849,616
Gross profit	99,181	90,137	293,167	266,747
Selling, general and administrative expense	37,608	32,488	115,656	85,334
Net (gain) loss on sale of assets	387	(192)	1,022	(43)
Operating income	61,186	57,841	176,489	181,456
Interest expense, net	4,295	4,222	12,746	12,816
Business Combination, Step Acquisition, Equity Interest in Acquiree, Remeasurement Gain	0	0	(5,719)	0
Debt retirement costs	0	2,764	0	2,764
Other expense (income)	(284)	8	(639)	(1)
Income before provision for income taxes	57,175	50,847	170,101	165,877
Provision for income taxes	21,533	19,488	62,360	63,957
Net income	35,642	31,359	107,741	101,920
Net income attributable to noncontrolling interests	(1,605)	(1,190)	(4,139)	(3,300)
Net income attributable to VCA Antech, Inc.	34,037	30,169	103,602	98,620
Basic earnings per share	$ 0.39	$ 0.35	$ 1.18	$ 1.14
Diluted earnings per share	$ 0.38	$ 0.35	$ 1.17	$ 1.13
Weighted-average shares outstanding for basic earnings per share	87,773	86,697	87,554	86,531
Weighted-average shares outstanding for diluted earnings per share	88,654	87,253	88,589	87,293
Animal Hospital [Member]
Revenue	342,840	303,203	1,001,247	864,476
Direct costs	288,588	251,613	852,059	720,393
Gross profit	54,252	51,590	149,188	144,083
Selling, general and administrative expense	7,745	6,126	22,797	18,253
Net (gain) loss on sale of assets	(77)	(213)	316	(84)
Operating income	$ 46,584	$ 45,677	$ 126,075	$ 125,914

XML

Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

3. Goodwill and Other Intangible Assets

Goodwill

The following table presents the changes in the carrying amount of our goodwill for the nine months ended September 30, 2012 (in thousands):

	Animal Hospital			Laboratory		All Other			Total
Balance as of December 31, 2011	$	1,035,401		$	96,810	$	105,396		$	1,237,607
Goodwill acquired	120,505			34		11,194			131,733
Foreign translation adjustment	2,053			23		—			2,076
Other (1)	(4,271		)	—		(1,028		)	(5,299		)
Balance as of September 30, 2012 (2)	$	1,153,688		$	96,867	$	115,562		$	1,366,117

 ____________________________

⁽¹⁾  Other includes acquisition-price adjustments, which consist primarily of an adjustment related to capital leases and buy-outs.

⁽²⁾  Net of accumulated impairment losses of $21.3 million recorded in 2011, all related to our medical technology business, included in "All Other" in the above table.

We had no impairment losses during the nine months ended September 30, 2012.

Other Intangible Assets

Our amortizable intangible assets at September 30, 2012 and December 31, 2011 are as follows (in thousands):

	As of September 30, 2012							As of December 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Non-contractual customer relationships	$	113,689	$	(33,011	)	$	80,678	$	82,891	$	(21,147	)	$	61,744
Covenants not-to-compete	12,262		(7,225		)	5,037		13,035		(8,067		)	4,968
Favorable lease assets	7,163		(3,717		)	3,446		5,571		(3,210		)	2,361
Trademarks	14,017		(2,667		)	11,350		7,405		(1,686		)	5,719
Contracts	3,500		(519		)	2,981		3,500		(185		)	3,315
Technology	17,161		(3,919		)	13,242		16,589		(2,342		)	14,247
Client lists	85		(57		)	28		84		(35		)	49
Total	$	167,877	$	(51,115	)	$	116,762	$	129,075	$	(36,672	)	$	92,403

3. Goodwill and Other Intangible Assets, continued

The following table summarizes our aggregate amortization expense related to other intangible assets (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Aggregate amortization expense	$	6,612	$	3,883	$	16,830	$	9,092

The estimated amortization expense related to intangible assets for the remainder of 2012 and each of the succeeding years thereafter, as of September 30, 2012, is as follows (in thousands):

Remainder of 2012	$	6,040
2013	22,377
2014	19,935
2015	17,837
2016	14,586
Thereafter	35,987
Total	$	116,762

XML

Acquisitions

9 Months Ended

Sep. 30, 2012

Business Acquisition [Line Items]

Business Combination Disclosure [Text Block]

4. Acquisitions

The table below reflects the activity related to the acquisitions and dispositions of our animal hospitals and laboratories during the nine months ended September 30, 2012:

Animal Hospitals:
Animal Hospital acquisitions, excluding Associate Veterinary Clinics (1981) LTD ("AVC")	24
Acquisitions, merged	(4	)
AVC acquisition	44
Sold, closed or merged	(4	)
Total	60
Laboratories:
Created	2

4. Acquisitions, continued

Animal Hospital and Laboratory Acquisitions, excluding AVC

The following table summarizes the aggregate consideration for the 24 independent animal hospitals acquired during the nine months ended September 30, 2012, and the preliminary allocation of the acquisition price (in thousands):

Consideration:
Cash	$	51,744
Holdback	1,475
Earnout contingent consideration	934
Fair value of total consideration transferred	$	54,153
Allocation of the Purchase Price:
Tangible assets	$	1,995
Identifiable intangible assets	9,184
Goodwill (1)	42,974
Total	$	54,153

____________________________

⁽¹⁾     We expect that $40.0 million of the goodwill recorded for these acquisitions, as of September 30, 2012, will be deductible for income tax purposes.

In addition to the purchase price listed above, are cash payments made for real estate acquired in connection with our purchase of animal hospitals, totaling $1.6 million for the nine months ended September 30, 2012.

AVC

On January 31, 2012, we increased our investment in AVC by approximately CDN $81 million (approximately US $81 million) becoming the sole non-veterinarian shareholder of AVC. At the time of the additional investment, AVC operated 44 animal hospitals in three Canadian provinces, offering services ranging from primary care, to specialty referral services and 24-hour emergency care. This investment and planned additional investments in AVC will facilitate our continued expansion in the Canadian market. At the time of the investment, AVC had annualized revenue of approximately CDN $95 million (approximately US $95 million). Our consolidated financial statements reflect the operating results of AVC since January 31, 2012.

4. Acquisitions, continued

The following table summarizes the total investment and the preliminary allocation of the investment in AVC (in thousands):

Consideration:
Cash	$	48,819
Cash paid to debt holders	25,915
Fair value of total consideration transferred	$	74,734
Allocation of the Purchase Price:
Tangible assets	$	11,743
Identifiable intangible assets (1)	23,561
Goodwill (2)	77,565
Other liabilities assumed	(18,124		)
	94,745
Noncontrolling interest	(8,161		)
Fair value of pre-existing investment in AVC	(11,850		)
Total	$	74,734

____________________________

⁽¹⁾     Identifiable intangible assets include customer relationships, trademark and covenants-not-to-compete.

⁽²⁾     As of September 30, 2012, we expect that approximately $362,000 of the goodwill recorded for this acquisition will be deductible for income tax purposes.

Acquisition-related costs, included in corporate selling, general and administrative expense in our income statement, for the three and nine months ended September 30, 2012, were approximately $161,000 and $500,000, respectively.

The allocation of the additional investment is preliminary, because certain items have not been completed or finalized, including but not limited to, the valuation of assets, primarily property and equipment.

AVC is reported within our Animal Hospital reportable segment.

The pro forma impact on revenue and earnings have not been disclosed as the amounts were immaterial to the financial statements as a whole.

ThinkPets, Inc ("ThinkPets)

On February 1, 2012, we acquired 100% interest in ThinkPets for $21 million, payable by delivery of 473,389 shares of VCA common stock and $10.5 million in cash. We intend to combine the operations of ThinkPets with our Vetstreet business, which we expect will improve the products and services it offers to clients of both companies. Our consolidated financial statements reflect the operating results of ThinkPets since February 1, 2012.

4. Acquisitions, continued

The following table summarizes the preliminary purchase price and the preliminary allocation of the investment in ThinkPets (in thousands):

Consideration:
Cash	$	7,468
Issuance of common stock for acquisitions	10,500
Holdback	1,050
Fair value of total consideration transferred	$	19,018
Allocation of the Purchase Price:
Tangible assets	$	2,078
Identifiable intangible assets (1)	7,221
Goodwill (2)	11,194
Other liabilities assumed	(1,475		)
Total	$	19,018

____________________________

⁽¹⁾     Identifiable intangible assets include customer relationships, contracts and trademark.

⁽²⁾     As of September 30, 2012, we expect that approximately $821,000 of the goodwill recorded for this acquisition will be deductible for income tax purposes.

Acquisition-related costs, included in corporate selling, general and administrative expense in our income statement, for the three and nine months ended September 30, 2012, were approximately $35,000 and $1.0 million, respectively.

The allocation of the purchase price is preliminary because certain items have not been completed or finalized, including but not limited to, the valuation of assets, including intangible assets, and liabilities.

ThinkPets is reported within our "All Other" category in our segment disclosures combined with our Medical Technology and Vetstreet operating segments.

The pro forma impact on revenue and earnings have not been disclosed as the amounts were immaterial to the financial statements as a whole.

XML

Acquisitions Business Acquisition Summary Of Acquired Properties (Tables)

9 Months Ended

Sep. 30, 2012

Business Acquisition Summary Of Acquired Properties [Line Items]

Business Acquisition Summary Of Acquired Properties [Table Text Block]

The table below reflects the activity related to the acquisitions and dispositions of our animal hospitals and laboratories during the nine months ended September 30, 2012:

Animal Hospitals:
Animal Hospital acquisitions, excluding Associate Veterinary Clinics (1981) LTD ("AVC")	24
Acquisitions, merged	(4	)
AVC acquisition	44
Sold, closed or merged	(4	)
Total	60
Laboratories:
Created	2

XML

Commitments and Contingencies

9 Months Ended

Sep. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

11. Commitments and Contingencies

We have certain commitments, including operating leases, purchase agreements and acquisition agreements. These items are discussed in detail in our consolidated financial statements and notes thereto included in our 2011 Annual Report on Form 10-K. We also have contingencies as follows:

a. Earn-Out Payments

We have contractual arrangements in connection with certain acquisitions that were accounted for under previous business combinations accounting guidance, whereby additional cash may be paid to former owners of acquired companies upon attainment of specified financial criteria, as set forth in the respective agreements. The amount to be paid cannot be determined until the earn-out periods expire and the attainment of criteria is established. If the specified financial criteria are attained, we will be obligated to pay approximately $2.5 million. Under the current business combination accounting guidance, contingent consideration, such as earn-out liabilities, is recognized as part of the consideration transferred on the acquisition date. A corresponding liability is recorded based on the fair value of the liability, if the fair value is known or determinable. The changes in fair value are recognized in earnings where applicable for each reporting period.

b. Other Contingencies

We have certain contingent liabilities resulting from litigation and claims incident to the ordinary course of our business. We believe that the probable resolution of such contingencies will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

XML

Fair Value Measurements

9 Months Ended

Sep. 30, 2012

Fair Value Disclosures [Abstract]

Fair Value Measurements

The FASB accounting guidance requires disclosure of fair value information about financial instruments, whether or not recognized in the accompanying condensed, consolidated balance sheets. Fair value as defined by the guidance is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value estimates of financial instruments are not necessarily indicative of the amounts we might pay or receive in actual market transactions. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Cash and Cash Equivalents. These balances include cash and cash equivalents with maturities of less than three months. The carrying amount approximates fair value due to the short-term maturities of these instruments.

Receivables, Less Allowance for Doubtful Accounts, Accounts Payable and Certain Other Accrued Liabilities. Due to their short-term nature, fair value approximates carrying value.

Long-Term Debt. The fair value of debt at September 30, 2012 and December 31, 2011 is based upon the ask price quoted from an external source, which is considered a Level 2 input.

7. Fair Value Measurements, continued

The following table reflects the carrying value and fair value of our variable-rate long-term debt (in thousands):

	As of September 30, 2012				As of December 31, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value
Variable-rate long-term debt	$	600,313	$	601,814	$	573,984	$	573,984

At September 30, 2012 and December 31, 2011, we did not have any material applicable nonrecurring measurements of nonfinancial assets and nonfinancial liabilities.

XML

Other Accrued Liabilities

9 Months Ended

Sep. 30, 2012

Payables and Accruals [Abstract]

Other Accrued Liabilities

Other Accrued Liabilities

Other accrued liabilities consisted of the following (in thousands):

	September 30, 2012		December 31, 2011
Deferred revenue	$	9,481	$	7,025
Accrued health insurance	6,275		5,553
Deferred rent	4,087		3,626
Accrued consulting fees	2,886		2,886
Holdbacks and earnouts	3,795		2,250
Customer deposits	2,681		2,281
Accrued lab service rebates	426		332
Other	26,721		20,015
	$	56,352	$	43,968

XML

Long-Term Obligations

9 Months Ended

Sep. 30, 2012

Debt Disclosure [Abstract]

Long-Term Obligations

Long-Term Obligations

Senior Credit Facility

On January 25, 2012, we executed an amendment (the "First Amendment") to our Amended and Restated Credit and Guaranty Agreement entered into as of August 16, 2011 (our "Senior Credit Facility"). On January 24, 2012, we issued new term loans in the aggregate principal amount of $50.0 million. The First Amendment replenished the aggregate principal amount of uncommitted incremental facilities by $50.0 million, permitting us to request up to an aggregate principal amount of $100.0 million in uncommitted incremental facilities. The funds borrowed from the Incremental Facility were used to fully repay amounts borrowed to fund an additional investment in Associate Veterinary Clinics (1981) LTD ("AVC") on February 1, 2012. In connection with the First Amendment we incurred $122,000 in financing costs, of which approximately $47,000 were expensed as a component of selling, general and administrative expenses and $75,000 were capitalized as deferred financing costs.

The following table summarizes our long-term obligations at September 30, 2012 and December 31, 2011 (in thousands):

	September 30, 2012			December 31, 2011
Revolver	$	—		$	—
Senior term notes at the adjusted Eurodollar rate + 1.75% (1.97% at September 30, 2012)	600,313			573,984
Other debt and capital lease obligations	39,128			44,869
Total debt obligations	639,441			618,853
Less - current portion	(34,996		)	(32,571		)
	$	604,445		$	586,282

Interest Rate. In general, borrowings under the senior term notes and the revolving credit facility bear interest, at our option, on either:

• the base rate (as defined below) plus the applicable margin. The applicable margin for a base rate loan is an amount equal to the applicable margin for Eurodollar rate (as defined below) minus 1.00%; or

• the adjusted Eurodollar rate (as defined below), plus a margin of 1.75% (Level II, see table below), per annum until the date of delivery of the compliance certificate and the financial statements, for the period ended September 30, 2012, at which time the applicable margin will be determined by reference to the leverage ratio in effect from time to time as set forth in the following table:

Level	Leverage Ratio	Applicable Margin for Eurodollar Rate Loans	Applicable Revolving Commitment Fee %
I	≥ 2.50:1.00	2.25%	0.50%
II	< 2.50:1.00 and ≥ 1.75:1.00	1.75%	0.375%
III	< 1.75:1.00 and ≥ 1.00:1.00	1.50%	0.25%
IV	< 1.00:1.00	1.25%	0.20%

The base rate for the senior term notes is a rate per annum equal to the greatest of Wells Fargo Bank, N.A. ("Wells Fargo") prime rate in effect on such day, the Federal funds effective rate in effect on such day plus 0.5% and the adjusted Eurodollar rate for a one-month interest period commencing on such day plus 1.0%. The adjusted Eurodollar rate is defined as the rate per annum obtained by dividing (1) the rate of interest offered to Wells Fargo on the London interbank market by (2) a percentage equal to 100% minus the stated maximum rate of all reserve requirements applicable to any member bank of the Federal Reserve System in respect of “Eurocurrency liabilities.”

6. Long-Term Obligations, continued

Maturity and Principal Payments. The Amended and Restated senior term notes mature on August 19, 2016. Principal payments on the senior term notes are paid quarterly in the amount of (i) $7.9 million for the first four quarters beginning on December 31, 2012, (ii) $11.8 million for the two years following, and (iii) $15.8 million for the three quarters prior to maturity, at which time the remaining balance is due. The following table sets forth the remaining scheduled principal payments for our senior term notes (in thousands):

Remainder of 2012	$	7,891
2013	35,508
2014	47,344
2015	51,289
2016	458,281
Total	$	600,313

The revolving credit facility matures on August 19, 2016. Principal payments on the revolving credit facility are made at our discretion with the entire unpaid amount due at maturity.

Guarantees and Security. We and each of our wholly-owned subsidiaries guarantee the outstanding debt under our senior credit facility. These borrowings, along with the guarantees of the subsidiaries, are further secured by substantially all of our consolidated assets. In addition, these borrowings are secured by a pledge of substantially all of the capital stock, or similar equity interests, of our wholly-owned subsidiaries.

XML

Share-Based Compensation

9 Months Ended

Sep. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

Share-Based Compensation

Stock Option Activity

A summary of our stock option activity for the nine months ended September 30, 2012 is as follows (in thousands):

	Stock Options		Weighted- Average Exercise Price
Outstanding at December 31, 2011	3,776		$	16.92
Granted	462		$	18.94
Exercised	(225	)	$	14.78
Canceled	(52	)	$	14.84
Outstanding at September 30, 2012	3,961		$	17.25
Exercisable at September 30, 2012	2,828		$	17.27
Vested and expected to vest at September 30, 2012	3,931		$	17.26

There were 462,229 stock options granted during the nine months ended September 30, 2012, which had an estimated weighted-average grant date fair value of approximately $5.48. The aggregate intrinsic value of our stock options exercised during the three and nine months ended September 30, 2012 was $360,000 and $1.6 million, respectively, and the actual tax benefit realized on options exercised during these periods was $141,000 and $629,000, respectively.

Calculation of Fair Value

The fair value of our options is estimated on the date of grant using the Black-Scholes option pricing model. We amortize the fair value of our options on a straight-line basis over the requisite service period. The following assumptions were used to determine the preliminary fair value of those options granted during the nine months ended September 30, 2012:

Expected volatility (1)	34.1	%
Weighted-average volatility (1)	34.1	%
Expected dividends	—
Expected term (years)	4.4
Risk-free rate (2)	0.62	%

_________________

(1) We estimated the volatility of our common stock on the date of grant based on using both historical and implied volatilities.

(2) The risk-free interest rate is based on the implied yield in effect at the time of option grant on U.S. Treasury zero-coupon issues with equivalent remaining terms.

8. Share-Based Compensation, continued

At September 30, 2012 there was $5.8 million of total unrecognized compensation cost related to our stock options. This cost is expected to be recognized over a weighted-average period of 3.4 years.

The compensation cost charged against income, for stock options for the three months ended September 30, 2012 and 2011, was $362,000 and $347,000, respectively. The corresponding income tax benefit recognized was $142,000 and $136,000, for the three months ended September 30, 2012 and 2011, respectively.

The compensation cost charged against income, for stock options for the nine months ended September 30, 2012 and 2011, was $1.1 million and $1.0 million, respectively. The corresponding income tax benefit recognized was $433,000 and $407,000, for the nine months ended September 30, 2012 and 2011, respectively.

Nonvested Stock Activity

During the nine months ended September 30, 2012, we granted 68,900 shares of nonvested common stock as incentives to certain employees, including 14,308 shares for the annual directors' grant. Assuming continued service through each vesting date, the majority of these awards will vest in four equal annual installments beginning February 2013 through August 2016.

Total compensation cost charged against income related to nonvested stock awards was $2.1 million and $3.7 million, for the three months ended September 30, 2012 and 2011, respectively. The corresponding income tax benefit recognized in the income statement was $805,000 and $1.5 million, for the three months ended September 30, 2012 and 2011, respectively. Total compensation cost charged against income related to nonvested stock awards was $9.1 million and $5.6 million, for the nine months ended September 30, 2012 and 2011, respectively. The corresponding income tax benefit recognized in the income statement was $3.6 million and $2.2 million, for the nine months ended September 30, 2012 and 2011, respectively.

At September 30, 2012, there was $14.8 million of unrecognized compensation cost related to these nonvested shares, which will be recognized over a weighted-average period of 2.7 years. A summary of our nonvested stock activity for the nine months ended September 30, 2012 is as follows (in thousands, except per share amounts):

	Shares		Grant Date Weighted- Average Fair Value Per Share
Outstanding at December 31, 2011	1,516		$	20.76
Granted	69		$	21.41
Vested	(437	)	$	22.15
Forfeited/Canceled	(1	)	$	42.33
Outstanding at September 30, 2012	1,147		$	20.27

Restricted Stock Unit Activity

During the three and nine months ended September 30, 2012, we granted 307,989 performance based restricted stock units ("RSUs") to our executive officers representing the right to receive one share of common stock. These RSUs will be earned upon achievement of the applicable performance criteria during the performance periods, from the fourth quarter 2012 through December 31, 2014, as set forth in the 2012 equity performance award agreements. Assuming achievement of the required performance conditions and continued service through each vesting date, these awards will vest in four equal annual installments beginning August 2013 through August 2016.

Total compensation cost charged against income, related to RSU awards was $279,000, for the three and nine months ended September 30, 2012. The corresponding income tax benefit recognized in the income statement for the same periods were $109,000.

8. Share-Based Compensation, continued

At September 30, 2012, there was $5.6 million of unrecognized compensation cost related to these RSUs, which will be recognized over a weighted-average period of 3.9 years.

XML

Acquisitions Acquisition (Details) (USD $)	9 Months Ended					3 Months Ended	9 Months Ended		3 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012 Animal Hospital [Member] Hospital	Sep. 30, 2012 Animal Hospitals And Laboratory Acquisitions [Member]	Sep. 30, 2012 AVC [Member]	Sep. 30, 2011 ThinkPetsAcquisition [Member]	Sep. 30, 2012 ThinkPetsAcquisition [Member]	Sep. 30, 2011 ThinkPetsAcquisition [Member]	Sep. 30, 2012 AVC Acquisition [Member]	Sep. 30, 2012 AVC Acquisition [Member] Hospital	Sep. 30, 2012 Laboratories Acquisitions [Member] Laboratory
Business Acquisition Summary Of Acquired Properties [Line Items]
Number of Businesses Acquired			24							44
Annualized Revenue At Acquisition CAD										$ 95,000,000
Business Acquisition, Purchase Price Allocation, Goodwill, Expected Tax Deductible Amount				40,000,000			821,000		362,000	362,000
Payments To Acquire Real Estate For Use By Owner	1,602,000	1,900,000
Preliminary Purchase Price CAD										81,000,000
Business Acquisition, Cost of Acquired Entity, Cash Paid	108,031,000	189,255,000		51,744,000			7,468,000		48,819,000	48,819,000
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned							10,500,000
Business Acquisition Cost Of Acquired Entity Cash Paid For Hold Backs				1,475,000			1,050,000
Business Acquisition, Contingent Consideration, at Fair Value	(934,000)	(481,000)		934,000
Business Combination, Consideration Transferred				54,153,000			19,018,000		74,734,000	74,734,000
Business Acquisition, Purchase Price Allocation, Tangible Assets				1,995,000			2,078,000		11,743,000	11,743,000
Business Acquisition, Purchase Price Allocation, Amortizable Intangible Assets				9,184,000			7,221,000		23,561,000	23,561,000
Business Acquisition, Purchase Price Allocation, Goodwill Amount				42,974,000			11,194,000		77,565,000	77,565,000
Business Acquisition, Purchase Price Allocation, Liabilities Assumed							(1,475,000)		(18,124,000)	(18,124,000)
business acquisition purchase price allocation total									94,745,000	94,745,000
Noncontrolling Interest, Increase from Business Combination	(8,161,000)	0								(8,161,000)
Business Combination, Step Acquisition, Equity Interest in Acquiree, Fair Value	(11,850,000)	0							(11,850,000)	(11,850,000)
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net				54,153,000			19,018,000		74,734,000	74,734,000
Business Acquisitions Cash Paid To Debtholders									25,915,000	25,915,000
Business Combination, Acquisition Related Costs						35,000		1,000,000	161,000	500,000
Business Acquisition, Percentage of Voting Interests Acquired							100.00%
Business Acquisition Cost Of Acquired Entity Preliminary Purchase Price					81,000,000		21,000,000
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares							473,389
business acquisition cash including acquired cash							10,500,000
Number Of Acquired Hospitals Relocated To Existing Hospitals			(4)
Number Of Properties Sold Closed Or Merged			(4)
Change In Number Of Animal Hospitals Owned During The Period			60
Number Of Laboratories Created											2
US Annualized Revenue At Acquisition										$ 95,000,000

XML

Noncontrolling Interests (Details Textuals) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Noncontrolling Interests (Textuals) [Abstract]
Percentage of ownership interest in partnership	50.10%
Mandatorily Redeemable Noncontrolling Interests included in other liabilities	$ 11.7	$ 3.1

XML

Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2012

Accounting Changes and Error Corrections [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In June 2011, the FASB finalized the accounting guidance for the Presentation of Comprehensive Income. The objective of the new guidance is to improve the comparability, consistency, and transparency of financial reporting, to increase the prominence of the items reported in other comprehensive income and to facilitate convergence of GAAP and IFRS. The guidance eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholder's equity and requires that all nonowner changes in stockholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. Regardless of which option is chosen, it is required that reclassification adjustments for items that are reclassified from other comprehensive income to net income be presented on the face of the financial statements.

The new guidance does not change the following: the items that must be reported in other comprehensive income; when an item of other comprehensive income must be reclassified to net income; the option for an entity to present components of other comprehensive income either net of related tax effects or before related tax effects with a single amount shown for aggregate income tax expense; and does not affect how earnings per share is calculated or presented.

The guidance was effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and should be applied retrospectively. Early adoption was permitted. We adopted the new accounting guidance on January 1, 2012. The adoption did not significantly impact our consolidated financial statements other than the changes to presentation outlined.

In December 2011, the FASB deferred the effective date for amendments to the presentation of reclassifications of items out of accumulated other comprehensive income. The effective date deferral is to allow the FASB to redeliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income.

14. Recent Accounting Pronouncements, continued

In September 2011, the FASB amended the accounting guidance on Intangibles--Goodwill and Other - Testing Goodwill for Impairment. The objective of this guidance is to reduce the cost and complexity of performing the annual goodwill impairment test and to improve the previous guidance by expanding the examples of events and circumstances that an entity should consider in the qualitative evaluation about the likelihood of goodwill impairment. The amendments allow an entity the option of first assessing qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

The examples of events and circumstances included in the amendment that an entity should consider in performing its qualitative assessment about whether to proceed to the first step of the goodwill impairment test supersede the examples in the existing guidance. If it is determined that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. Under the amendments, an entity has the option to bypass the qualitative assessment for any reporting unit in any period and may resume performing the qualitative assessment in any subsequent period. An entity is no longer permitted to carry forward its detailed calculation of a reporting unit's fair value from a prior year as previously permitted under the existing guidance. The amended guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011 with early adoption permitted. We adopted the amended goodwill impairment testing procedures on January 1, 2012. The adoption does not significantly impact our consolidated financial statements.

In July 2012, the FASB issued accounting guidance on testing indefinite-lived intangible assets for impairment. The objective of this guidance is to reduce the cost and complexity of performing an impairment test for indefinite-lived intangible assets by simplifying how an entity tests those assets for impairment and to improve consistency in impairment testing guidance among long-lived asset categories. The amendments permit an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test. An entity will have an option not to calculate annually the fair value of an indefinite-lived intangible asset if the entity determines that it is not more likely than not that the asset is impaired. Permitting an entity to assess qualitative factors when testing indefinite-lived intangible assets for impairment results in guidance that is similar to the goodwill impairment testing guidance, as mentioned above. The amended guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. We currently do not have any indefinite-lived intangible assets.

XML

Other Accrued Liabilities (Tables)

9 Months Ended

Sep. 30, 2012

Payables and Accruals [Abstract]

Other Accrued Liabilities

Other accrued liabilities consisted of the following (in thousands):

	September 30, 2012		December 31, 2011
Deferred revenue	$	9,481	$	7,025
Accrued health insurance	6,275		5,553
Deferred rent	4,087		3,626
Accrued consulting fees	2,886		2,886
Holdbacks and earnouts	3,795		2,250
Customer deposits	2,681		2,281
Accrued lab service rebates	426		332
Other	26,721		20,015
	$	56,352	$	43,968

XML

Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Operating Loss Carryforwards [Line Items]
Effective Income Tax Rate, Continuing Operations	38.70%	39.20%	37.60%	39.30%
Business Combination, Step Acquisition, Equity Interest in Acquiree, Remeasurement Gain	$ 0	$ 0	$ (5,719)	$ 0

XML

Long-Term Obligations (Details Textuals) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Debt Instrument [Line Items]
BaseRateAndAdjustedRateDescription	The base rate for the senior term notes is a rate per annum equal to the greatest of Wells Fargo Bank, N.A. ("Wells Fargo") prime rate in effect on such day, the Federal funds effective rate in effect on such day plus 0.5% and the adjusted Eurodollar rate for a one-month interest period commencing on such day plus 1.0%. The adjusted Eurodollar rate is defined as the rate per annum obtained by dividing (1) the rate of interest offered to Wells Fargo on the London interbank market by (2) a percentage equal to 100% minus the stated maximum rate of all reserve requirements applicable to any member bank of the Federal Reserve System in respect of “Eurocurrency liabilities.”
Debt Instrument, Interest Rate Terms	the base rate (as defined below) plus the applicable margin. The applicable margin for a base rate loan is an amount equal to the applicable margin for Eurodollar rate (as defined below) minus 1.00%; or
Deferred financing costs	$ 75,000
Debt retirement costs	122,000	2,944,000
Senior Term Notes description of variable interest rate basis	LIBOR
Long-Term Obligations (Textuals) [Abstract]
Senior term notes	50,000,000
Long term revolving credit facility interest rate	the base rate or the adjusted Eurodollar rate plus a margin of 1.75%
Principal payment for senior term notes	7,900,000
Principal payment for senior term notes quarterly payments	11,800,000
Principal payment for senior term notes quarterly payments prior to maturity	15,800,000
Revolving credit facility maturity date	August 19, 2016
Increase in Incremental Facilities	50,000,000
Incremental Facilities After Amendment	100,000,000
Debt [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate	1.75%
Basis spread on adjusted eurodollar rate	1.75%
Line of Credit [Member]
Debt Instrument [Line Items]
Senior Term Notes description of variable interest rate basis	Base rate or adjusted Eurodollar rate
Senior Notes [Member]
Debt Instrument [Line Items]
Debt retirement costs	122,000
Income from continuing operations	$ 47,000
Senior Term Notes description of variable interest rate basis	The base rate for the senior term notes is a rate per annum equal to the greatest of Wells Fargo’s prime rate in effect on such day, the Federal funds effective rate in effect on such day plus 0.5% and the adjusted Eurodollar rate for a one-month interest period commencing on such day plus 1.0%.
Senior notes Description of Euro Dollar rate basis	The adjusted Eurodollar rate is defined as the rate per annum obtained by dividing (1) the rate of interest offered to Wells Fargo on the London interbank market by (2) a percentage equal to 100% minus the stated maximum rate of all reserve requirements applicable to any member bank of the Federal Reserve System in respect of “Eurocurrency liabilities.”
Senior term notes at LIBOR + 1.75% (2.00% at March 31, 2012) [Member]
Debt Instrument [Line Items]
Interest rate of Senior term notes	LIBOR plus 1.75%
Debt Instrument, Basis Spread on Variable Rate	1.75%
Basis spread on adjusted eurodollar rate	1.75%
Senior term notes at LIBOR + 2.25% (2.51% at December 31, 2010) [Member]
Debt Instrument [Line Items]
Interest rate of Senior term notes	LIBOR plus 2.25%
Debt Instrument, Basis Spread on Variable Rate	1.75%
Basis spread on adjusted eurodollar rate	1.75%

XML

Condensed, Consolidated Statements of Comprehensive Income (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	$ 35,642,000	$ 31,359,000	$ 107,741,000	$ 101,920,000
Other Comprehensive Income (Loss), Net of Tax [Abstract]
Foreign currency translation adjustment	2,615,000	(669,000)	2,173,000	(373,000)
Adjustment for Long-term Intercompany Transactions, Gross of Tax	432,000	(608,000)	479,000	(371,000)
Adjustment for Long-term Intercompany Transactions, Tax Benefit (Expense)	(169,000)	237,000	(187,000)	145,000
Other Comprehensive Income (Loss), Net of Tax	2,878,000	(1,040,000)	2,465,000	(599,000)
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest	38,520,000	30,319,000	110,206,000	101,321,000
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest	1,605,000	1,190,000	4,139,000	3,300,000
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	36,915,000	29,129,000	106,067,000	98,021,000
Comprehensive Income Attributable To Redeemable Noncontrolling Interests			$ 2,100,000	$ 1,500,000

XML

Basis of Presentation

9 Months Ended

Sep. 30, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

Our accompanying unaudited, condensed, consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements as permitted under applicable rules and regulations. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. The results of operations for the three and nine months ended September 30, 2012 are not necessarily indicative of the results to be expected for the full year ending December 31, 2012. For further information, refer to our consolidated financial statements and notes thereto included in our 2011 Annual Report on Form 10-K.

The preparation of our condensed, consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in our condensed, consolidated financial statements and notes thereto. Actual results could differ from those estimates.

XML

Long-Term Obligations (Tables)

9 Months Ended

Sep. 30, 2012

Debt Disclosure [Abstract]

Summary of long-term obligations

	September 30, 2012			December 31, 2011
Revolver	$	—		$	—
Senior term notes at the adjusted Eurodollar rate + 1.75% (1.97% at September 30, 2012)	600,313			573,984
Other debt and capital lease obligations	39,128			44,869
Total debt obligations	639,441			618,853
Less - current portion	(34,996		)	(32,571		)
	$	604,445		$	586,282

Summary of Leverage ratios in effect from time to time

Level	Leverage Ratio	Applicable Margin for Eurodollar Rate Loans	Applicable Revolving Commitment Fee %
I	≥ 2.50:1.00	2.25%	0.50%
II	< 2.50:1.00 and ≥ 1.75:1.00	1.75%	0.375%
III	< 1.75:1.00 and ≥ 1.00:1.00	1.50%	0.25%
IV	< 1.00:1.00	1.25%	0.20%

Scheduled principal payments for senior term notes

Remainder of 2012	$	7,891
2013	35,508
2014	47,344
2015	51,289
2016	458,281
Total	$	600,313

XML

Long-Term Obligations (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Summary of long-term obligations
Revolver	$ 0	$ 0
Senior term notes	600,313	573,984
Other debt and capital lease obligations	39,128	44,869
Debt and Capital Lease Obligations	639,441	618,853
Less - current portion	34,996	32,571
Long-term debt and capital lease obligations	$ 604,445	$ 586,282

XML

Noncontrolling Interests

9 Months Ended

Sep. 30, 2012

Noncontrolling Interest [Abstract]

Non controlling interests

Noncontrolling Interests

We own some of our animal hospitals in partnerships with noncontrolling interest holders. We consolidate our partnerships in our consolidated financial statements because our ownership interest in these partnerships is equal to or greater than 50.1% and we control these entities. We record noncontrolling interest in income of subsidiaries equal to our partners’ percentage ownership of the partnerships’ income. We also record changes in the redemption value of our redeemable noncontrolling interests in net income attributable to noncontrolling interests in our condensed, consolidated income statements. We reflect our noncontrolling partners’ cumulative share in the equity of the respective partnerships as either noncontrolling interests in equity, mandatorily redeemable noncontrolling interests in other liabilities, or redeemable noncontrolling interests in temporary equity (mezzanine).

a. Mandatorily Redeemable Noncontrolling Interests

The terms of some of our partnership agreements require us to purchase the partner’s equity in the partnership in the event of the partner’s death. We report these redeemable noncontrolling interests at their estimated redemption value and classify them as liabilities due to the certainty of the related event. We recognize redemption value changes in the obligation in interest expense. At September 30, 2012 and December 31, 2011, these liabilities were $11.7 million and $3.1 million, respectively, and are included in other liabilities in our consolidated balance sheets.

b. Redeemable Noncontrolling Interests

We also enter into partnership agreements whereby the minority partner is issued certain “put” rights. These rights are normally exercisable at the sole discretion of the minority partner. We report these redeemable noncontrolling interests at their estimated redemption value and classify them in temporary equity (mezzanine). We recognize changes in the obligation in net income attributable to noncontrolling interests.

13. Noncontrolling Interests, continued

The following table provides a summary of redeemable noncontrolling interests (in thousands):

	Income Statement Impact		Redeemable Noncontrolling Interests
Balance as of December 31, 2010			$	5,799
Noncontrolling interest	$	660
Redemption value change	547		1,207
Formation of noncontrolling interests			510
Distribution to noncontrolling interests			(625		)
Balance as of September 30, 2011			$	6,891
Balance as of December 31, 2011			$	6,964
Noncontrolling interest	$	666
Redemption value change	36		702
Distribution to noncontrolling interests			(691		)
Balance as of September 30, 2012			$	6,975