Inspire Veterinary Partners(US:IVP)2025-08-13 20:02Company Overview - Inspire Veterinary Partners, Inc. operates 14 clinics across 9 states, focusing on small animal general practice and expanding into equine care and emergency services [167]. - The company utilizes a distributed leadership and support structure to facilitate acquisitions across various states [168]. Acquisition Strategy - The company has acquired multiple veterinary practices, with total transaction values including Kauai Veterinary Clinic at $1,505,000 and Pony Express Veterinary Hospital at $3,108,652 [180]. - The acquisition strategy emphasizes purchasing existing hospitals with strong financial track records and growth potential, aiming for clusters of 2 to 6 hospitals to accelerate growth [178]. - Future growth plans include entering emergency care and mixed animal services, with a focus on markets with large pet populations [174]. - The acquisition method requires measuring identifiable assets and liabilities at fair values on the closing date, impacting financial reporting [179]. - The Company acquired Dietz Family Pet Hospital for $500,000, financed by a loan of $382,500 from WealthSouth [189]. - The acquisition of Aberdeen Veterinary Clinic was completed for $574,683, with financing of $445,981 from WealthSouth [190]. - All Breed Pet Care Veterinary Clinic was acquired for $952,000, alongside real estate for $1,200,000, totaling $1,945,450 in loans from WealthSouth [191]. - The Pony Express Veterinary Hospital acquisition cost $2,608,652, with an additional $500,000 for real estate, financed by loans totaling $2,853,314 [192]. - Williamsburg Animal Clinic was acquired for $850,000, financed by a loan of $637,500 from WealthSouth [193]. - The Old 41 Animal Hospital acquisition totaled $1,465,000, financed by loans of $1,208,000 from First Southern National Bank [194]. - Valley Veterinary Service was acquired for $800,000 in cash, with a holdback of $200,000 and $400,000 in restricted shares, alongside real estate for $590,000 [195]. - The DeBary animal clinic was acquired in Q2 2025, contributing to service revenue despite the exclusion of KVC [206][219]. Financial Performance - The Company reported total revenue of $7,922,743 for the six months ended June 30, 2025, a decrease of 14% from $9,221,948 in 2024 [197]. - Service revenue decreased by 12% to $5,936,295, while product revenue fell by 19% to $1,986,448 [198]. - The Company aims for service revenue to constitute 70% to 80% of gross revenue, currently at 75% for service and 25% for product revenue [202]. - Service revenue decreased by $24,972 or 1% to $3,195,266 for the three months ended June 30, 2025, compared to $3,220,238 for the same period in 2024, primarily due to the exclusion of KVC from 2025 results [219]. - Product revenue decreased by $81,875 or 7% to $1,088,268 for the three months ended June 30, 2025, compared to $1,170,143 for the same period in 2024 [215]. - Total revenue decreased by $106,847 or 2% to $4,283,534 for the three months ended June 30, 2025, compared to $4,390,381 for the same period in 2024 [215]. - Cost of service revenue decreased by $6,578 or 0.3% to $2,435,318 for the three months ended June 30, 2025, compared to $2,428,740 for the same period in 2024 [214]. - General and administrative expenses increased by $431,627 or 19% to $2,650,361 for the three months ended June 30, 2025, compared to $2,218,734 for the same period in 2024 [214]. - Net loss decreased by $351,853 or 10% to $3,034,568 for the three months ended June 30, 2025, compared to $3,386,421 for the same period in 2024 [214]. - The company had a total accumulated deficit of $41,799,885 as of June 30, 2025 [227]. Cash Flow and Financing - Cash used in operations during the six months ended June 30, 2025, was $2,272,581 [227]. - The company expects to incur additional costs and require additional capital as it continues to acquire veterinary hospitals and clinics [228]. - The company plans to raise additional capital through a combination of private or public equity offerings, debt financings, and strategic alliances [232]. - The Company entered into three commercial loans with First Southern National Bank (FSB) as part of the KVC acquisition, totaling $3,833,400 with interest rates ranging from 4.35% to 5.05% [241][242][243]. - A Forbearance Agreement extended the maturity dates of the first two loans to August 31, 2024, increasing their interest rates to 8.15% and monthly payments to $9,016 and $14,898 respectively [241][242]. - The Company secured three additional loans with FSB for the Pony Express Practice acquisition, totaling $3,186,921 with fixed interest rates of 5.97% and 6.75% [244][245][246]. - The Company also entered into two loans with FSB for the Old 41 Practice acquisition, totaling $1,208,000 at a fixed interest rate of 6.50% [247][248]. - A new commercial loan of $375,000 was secured from FSB for the Valley Vet acquisition, with a fixed interest rate of 8.5% and a maturity date of January 29, 2026 [250]. - As of June 30, 2025, total notes payable to FSB amounted to $3,021,096, with a total of $7,623,235 in commercial loans outstanding [251]. - The Company issued $2,102,500 in Convertible Debentures at a 6.00% interest rate, with an additional $1,612,000 issued in 2022 and $650,000 in March 2023 [255]. - Upon the IPO closing on August 31, 2023, $4,014,500 of Convertible Debentures were converted into 14,953 shares of Class A common stock at a conversion price of $30.00 per share [256]. - The Company entered into a Merchant Cash Advance Agreement for $1,050,000 with an effective interest rate of 49%, which was later amended to increase the borrowing amount and adjust repayment terms [257][258]. - The total notes payable as of June 30, 2025, amounted to $12,031,491, with a long-term portion of $8,455,473 [253]. - The Company amended its financing arrangement on December 24, 2024, borrowing an additional $513,650, increasing weekly payments to $71,995 over 41 weeks, with an effective interest rate of 43% [262]. - On May 20, 2025, the Company borrowed an additional $550,000, increasing weekly payments to $78,500 over 47 weeks, with an effective interest rate of 42% [263]. - As of June 30, 2025, the outstanding balance of the loan payable was $2,738,871, compared to $2,340,020 as of December 31, 2024 [265]. Intangible Assets and Client Retention - As of June 30, 2025, the client list intangible asset increased to $2,016,444 from $1,916,444 as of December 31, 2024, reflecting a growth of approximately 5.2% [291]. - The company acquired one animal clinic, resulting in a $100,000 increase in the client list intangible asset [292]. - The company uses a 74% annual sales retention rate for the customer base, which is based on the Veterinary Services industry rate [294]. - A discount rate of 19.6% was selected to calculate the present value of prospective after-tax cash flows associated with the customer base [294]. - An increase in the retention rate by 6% to 80% would result in an increase of approximately $1.2 million to the client list and a decrease of approximately $1.2 million to goodwill [291]. - The accumulated amortization for intangible assets increased from $1,774,445 to $2,081,926 between December 31, 2024, and June 30, 2025 [290]. Risk Factors and Economic Conditions - The company faces risks such as national staffing shortages and challenges in achieving post-acquisition growth targets [175]. - The company has not used any financial instruments to hedge potential fluctuations in interest rates [297]. - The company does not believe inflation has had a material effect on its business or financial condition [299]. - The company does not have any off-balance sheet arrangements [295].