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  Introduction                           19

  Executive Overview                     19

  Critical Accounting Policies           22

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 May 10, 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 May 10, 2012 at our website at http://investor.vcaantech.com or at the SEC's website at www.sec.gov. We are a leading international 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 March 31, 2012, our animal hospital network
             consisted of 589 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
             March 31, 2012, our laboratory network consisted of 53 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. Slow economic recovery and continued competition continues to impact our revenue. We are unable to forecast the timing or degree of any 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 months ended March 31, 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, adjusted for one additional business day, increased 2.2% for the three months ended March 31, 2012. Our Laboratory internal revenue increased 5.1% for the three months ended March 31, 2012. Improved operating results in our Animal Hospital and Laboratory business segments was largely offset by increased selling, general and

administrative expenses resulting in essentially flat operating income in comparison to the prior year quarter.

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 Associate Veterinary Clinics
(1981) LTD ("AVC"), detailed below. Acquisitions
Our growth strategy includes the acquisition of independent animal hospitals. We currently anticipate that we will acquire $75 million to $115 million of annualized Animal Hospital revenue in 2012. We also 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 segment during the three months ended March 31, 2012. There were no laboratories acquisitions during the three months ended March 31, 2012:

Animal Hospitals:
Beginning of period         541
Acquisitions, excluding AVC   9
Acquisitions, merged         (2 )
AVC                          44
Sold, closed or merged       (3 )
End of period               589

The following table summarizes the aggregate consideration for the nine independent animal hospitals acquired during the three months ended March 31, 2012 , and the allocation of the acquisition price (in thousands):
Consideration:

 Cash                                            $ 8,988
 Holdback                                            225
   Fair value of total consideration transferred $ 9,213

Allocation of the Purchase Price:
 Tangible assets                                 $   308
 Identifiable intangible assets                    1,616
 Goodwill (1)                                      7,289
   Total                                         $ 9,213


____________________________

(1) We expect that $3.4 million of the goodwill recorded for these acquisitions as of March 31, 2012, will be deductible for income tax purposes. Associate Veterinary Clinics (1981) LTD Investment On January 31, 2012, we increased our investment in AVC by approximately CDN $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. 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                                            $ 48,817
 Cash paid to debt holders                         25,915
   Fair value of total consideration transferred $ 74,732

Allocation of the Purchase Price:
 Tangible assets                                 $ 11,670
 Identifiable intangible assets                    14,124
 Goodwill (1)                                      84,983
 Other liabilities assumed                        (18,124 )
                                                   92,653
 Noncontrolling interest                           (6,071 )
 Fair value of pre-existing investment in AVC     (11,850 )
   Total                                         $ 74,732


____________________________

 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                                 $  3,067
 Identifiable intangible assets                     7,350
 Goodwill (1)                                      10,075
 Other liabilities assumed                         (1,474 )
   Total                                         $ 19,018


____________________________

(1) As of March 31, 2012, we have not finalized the determination of the amount of goodwill that will be deductible for income tax purposes.

The allocation of the purchase price is preliminary because certain events have not occurred or have not been completed or finalized, including but not limited to, the valuation of assets, including intangible assets, and liabilities. The pro forma impacts 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, valuation of goodwill and 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 March 31, 2012. Consolidated Results of Operations
The following table sets forth components of our condensed, consolidated income statements expressed as a percentage of revenue: