U.S. start-up costs Pethealth

Canadian-based pet insurer Pethhealth Inc. (CDNX: PTZ) is laboring through a costly 2001 as expenses related to establishing a U.S. presence take their toll on the company’s bottom-line. Net loss after tax for the second quarter is $2.36 million, or $0.01 per share, more than double that of second-quarter 2000, which saw a loss of $1.03 million.
The company, which was started in 1998, continues to grow in terms of policy sales and premiums. For the quarter, new policy sales total 4,188, a 113% increase over the 1,976 policies sold in the same period last year. Gross written premiums also grew, to more than $700,000, up 260% from second-quarter 2000.
However, operating expenses and marketing costs, particularly those associated with the company’s expansion into the U.S. market during the quarter, were almost double that of 2000. Marketing costs alone increased to $1.61 million for the quarter, up from $563,910 last year. Part of this is marketing expenses related to advertising tests to customers of Pethealth partners Reader’s Digest and Petco Animal Supplies.
“We are pleased with the early results of our testing in the U.S. and the co-operation we have received from our partners to date,” says Pethealth president and CEO Mark Warren. “The full results of the tests have not been completely reflected in these [second-quarter] numbers, so I anticipate we will have a pretty strong third quarter when we will also be rolling out the full fall program to our partners.”
Warren notes that he expects the Canadian busines to reach the break-even point, excluding marketing costs, by the end of this fiscal year. These Canadian policies are underwritten by ING Wellington and CGU Elite, while the U.S. policies are underwritten by Kingsway subsidiary Lincoln General.