Inspire Veterinary Partners(IVP) - 2025 Q3 - Quarterly Report

Company Operations and Growth Strategy - Inspire Veterinary Partners, Inc. operates 14 clinics across 9 states, focusing on small animal general practice and expanding into equine care and emergency services[201][206] - The company has acquired multiple veterinary practices, with transaction values ranging from $500,000 to $3,108,652, totaling significant investments in growth[213] - Future growth strategies include entering emergency care and mixed animal services, with a focus on acquiring multi-unit practices to enhance market presence[207][211] - The company plans to continue acquiring existing general practice and specialty hospitals, aiming for a mix of 2 to 6 hospitals in clusters to accelerate growth[211] - The company has developed metrics for assessing and integrating new hospitals, focusing on markets with large pet populations[206] Financial Performance - The Company reported total revenue of $12,238,875 for the nine months ended September 30, 2025, a decrease of 8% from $13,270,973 in 2024[230] - Service revenue decreased by 7% to $9,074,965, while product revenue fell by 11% to $3,163,910[231] - The net loss attributable to Class A and B common stockholders was $7,975,878 for the nine months ended September 30, 2025, compared to a loss of $10,518,389 in 2024[230] - Average Daily Service Revenue decreased to $31,979, down from $35,531 in the previous year, reflecting a decline of $3,552[231] - Net loss decreased by $2,321,661 or 23%, to $7,975,878 for the nine months ended September 30, 2025, compared to $10,297,539 for the same period in 2024[246] Acquisitions and Financing - The acquisition of Kauai Veterinary Clinic resulted in a gain of $467,049 in fiscal year 2024, recorded as "Gain on sale of business" in the Statements of Operations[215] - The total transaction value for the acquisition of Kauai Veterinary Clinic and its real estate was $2,805,000, financed through loans[214] - The Company acquired Dietz Family Pet Hospital for $500,000, financed by a loan of $382,500 from WealthSouth[222] - The acquisition of Aberdeen Veterinary Clinic was completed for $574,683, with financing of $445,981 from WealthSouth[223] - 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[225] Risks and Challenges - Staffing shortages and rising acquisition costs pose risks to the company's ability to integrate new hospitals effectively[208][209] - The company expects to incur additional costs and require additional capital as it continues to acquire veterinary hospitals, clinics, and practices[261] - The company has experienced recurring losses and had negative working capital of $5,894,301 as of September 30, 2025[264] Debt and Capital Structure - The company entered into a master line of credit loan agreement providing for a $2,000,000 revolving secured credit facility and an $8,000,000 closed-end line of credit[268] - A total of $7,623,235 in commercial loans was reported, with $2,961,673 due by September 30, 2025, and $3,361,618 due by December 31, 2024[283] - The company recorded a beneficial conversion feature of $1,569,395 based on the IPO price of $40 per share for the Convertible Debentures converted into common stock[288] - The company has a long-term portion of notes payable amounting to $8,254,408 as of September 30, 2025[286] - The Company reported total notes payable of $11,760,153 as of September 30, 2025, with unamortized debt issuance costs of $81,146[286] Cash Flow and Operating Activities - Cash used in operations was $3,598,738 during the nine months ended September 30, 2025[260] - For the nine months ended September 30, 2025, net cash used in operating activities was $3,555,276, a significant improvement from $9,328,339 in the same period of 2024[314] - The Company provided $5,334,147 in net cash from financing activities for the nine months ended September 30, 2025, compared to $10,036,732 in 2024[314] Customer Retention and Valuation - The annual sales retention rate for the customer base was reported at 74.0%, which is consistent with the Veterinary Services industry rate[329] - 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[330] - The company utilized a discount rate of 19.6% to calculate the present value of prospective after-tax cash flows associated with the customer base[329] Economic Factors - The company does not believe inflation has had a material effect on its business, financial condition, or results of operations[336] - The company has not used any financial instruments to hedge potential fluctuations in interest rates, which could impact the valuation and profitability of acquired hospitals[335]