In its first earnings report following a major acquisition, veterinary and dental supply firm Patterson Cos. posted strong first-quarter gains Thursday and noted that it is on track to sell its medical division in the next eight weeks.
Fiscal first-quarter revenue rose 22 percent to $1.1 billion, while adjusted profits from continuing operations rose 17 percent to $47 million, or 47 cents a share. Including the soon-to be-sold medical division, profits were 57 cents a share.
On average, analysts expected sales of $1.15 billion and adjusted earnings of 54 cents a share.
Including recent acquisition costs for an animal health company, net income fell from $50.3 million or 50 cents a share, to $29.7 million, or 30 cents a share, in the same quarter last year.
Patterson's stock price fell 6 percent or $3.09 to close at $45.94 a share Thursday.
In June, Patterson completed its $1.1 billion purchase of Dallas-based Animal Health International, a move that doubled the size of its veterinary supply business.
Patterson officials said at the time that they intend to grow the animal products division and will continue focusing on its largest and most profitable business — dental equipment. Dental represents about 50 percent of total company sales.
During the quarter, dental sales rose 7 percent and animal health sales rose 48 percent.
"The past several months have been a particularly exciting time for Patterson Companies as we move forward with our efforts to transform the long-term growth profile of our business," said Patterson CEO and Chairman Scott Anderson in a statement.
He said integration efforts have begun to unify Animal Health with the rest of Patterson's "legacy" veterinary business.
Last month, Patterson announced that it found a buyer for its medical therapy division, which provides health and therapy products for humans. The medical unit, with first quarter sales of about $130.8 million, is expected to sell for $715 million to Madison Dearborn Partners during the second quarter that ends in October, officials said.
Excluding the discontinued medical division and including Animal Health, Patterson upgraded its prior guidance for fiscal 2016. It now expects earnings of $2.40 to $2.50 per share, up from the prior guidance of $1.98 to $2.06.
Anderson told analysts during a conference call Thursday that he is already seeing the cross-selling of products between Patterson's legacy vet supply business and the newly acquired Animal Health.
"We are already seeing the benefits of the brother product portfolio," he said. "Given that we are only two months into the integration process, I am very pleased."
The acquisition gave Patterson a meaningful presence in the farm animal supply business. Previously, its emphasis was mostly in veterinary supplies for house pets.