SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549

                                FORM 10-Q

(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the quarterly period ended September 30, 1996

                                  OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                     COMMISSION FILE NUMBER: 1-10787

                     VETERINARY CENTERS OF AMERICA, INC.
          (Exact name of registrant as specified in its charter)

                DELAWARE                            95-4097995
     (State or other jurisdiction of             (I.R.S. Employer
     incorporation or organization)             Identification No.)

                     3420 OCEAN PARK BOULEVARD, SUITE 1000
                        SANTA MONICA, CALIFORNIA 90405
                    (Address of principal executive offices)

     REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 392-9599

                                     NONE
     Former name, address and fiscal year, if changed since last report

     Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past
90 days.
 
                 YES [X]                    NO [ ]

     State the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date:  Common Stock, $.001 Par
Value 18,391,955 shares as of November 15, 1996.

<PAGE>

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


              VETERINARY CENTERS OF AMERICA, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                                  (UNAUDITED)

                                    ASSETS

<TABLE>
<CAPTION>

                                                                                September 30,   December 31,
                                                                                    1996            1995
                                                                                -------------   ------------
<S>                                                                             <C>             <C>
Current assets:
 Cash and equivalents........................................................    $ 46,223,000   $ 47,551,000
 Marketable securities held to maturity......................................      66,534,000            --
 Accounts receivable, less allowance for uncollectible accounts..............      10,204,000      6,508,000
 Inventory, prepaid expenses and other.......................................       8,394,000      3,984,000
 Deferred income taxes.......................................................       3,098,000      1,175,000
 Prepaid income taxes........................................................             --         494,000
                                                                                 ------------   ------------
  Total current assets.......................................................     134,453,000     59,712,000

Property, plant and equipment, net...........................................      34,402,000     17,695,000

Other assets:
 Goodwill, net...............................................................     169,378,000     66,943,000
 Covenants not to compete, net...............................................       5,216,000      5,210,000
 Building purchase options...................................................         887,000      1,087,000
 Notes receivable............................................................       1,499,000        978,000
 Deferred costs and other....................................................       3,844,000      1,791,000
                                                                                 ------------   ------------
                                                                                 $349,679,000   $153,416,000
                                                                                 ============   ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
 Current portion of long-term obligations....................................    $ 12,729,000   $  7,421,000
 Accounts payable............................................................      11,079,000      5,930,000
 Accrued payroll and taxes...................................................       6,611,000      2,749,000
 Income taxes payable........................................................         280,000            --
 Accrued restructuring.......................................................       8,527,000        849,000
 Accrued interest............................................................       2,369,000        149,000
 Other accrued liabilities...................................................       7,323,000      3,165,000
                                                                                 ------------   ------------
  Total current liabilities..................................................      48,918,000     20,263,000

Long-term obligations, less current portion..................................     135,589,000     36,778,000

Deferred income taxes........................................................         176,000      1,301,000

Minority interest............................................................       6,527,000      4,856,000

Stockholders' equity:
 Preferred stock, par value $0.001...........................................           1,000          1,000
 Common stock, par value $0.001..............................................          18,000         13,000
 Additional paid-in capital..................................................     179,945,000     99,685,000
 Accumulated deficit.........................................................     (21,495,000)    (9,481,000)
                                                                                 ------------   ------------
  Total stockholders' equity.................................................     158,469,000     90,218,000
                                                                                 ------------   ------------
                                                                                 $349,679,000   $153,416,000
                                                                                 ============   ============

</TABLE>                                    

             The accompanying notes are an integral part of these
                         consolidated balance sheets.

PAGE 2
<PAGE>
 
              VETERINARY CENTERS OF AMERICA, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                      FOR THE THREE AND NINE MONTHS ENDED
                          SEPTEMBER 30, 1996 AND 1995
                                  (UNAUDITED)

<TABLE> 
<CAPTION> 
                                                                            Three Months Ended           Nine Months Ended
                                                                               September 30,               September 30,
                                                                           1996           1995           1996            1995
                                                                       ------------    -----------   -------------   ------------
<S>                                                                    <C>             <C>            <C>             <C>
Revenues............................................................   $ 52,399,000    $31,015,000    $129,839,000    $77,116,000
Direct costs........................................................     39,817,000     22,668,000      97,016,000     57,387,000
                                                                       ------------    -----------    ------------    -----------
Gross profit........................................................     12,582,000      8,347,000      32,823,000     19,729,000
Selling, general and administrative.................................      5,204,000      3,451,000      13,365,000      9,725,000
Depreciation and amortization.......................................      2,335,000      1,103,000       4,984,000      2,767,000
Merger costs........................................................             --             --       2,901,000             --
Restructuring and asset writedown...................................     12,362,000             --      12,362,000      1,086,000
                                                                       ------------    -----------    ------------    -----------
Operating (loss) income.............................................     (7,319,000)     3,793,000        (789,000)     6,151,000
Interest and other investment income................................      1,391,000        157,000       3,015,000        500,000
Interest expense....................................................      2,476,000        851,000       5,495,000      2,333,000
                                                                       ------------    -----------    ------------    -----------
(Loss) income before minority interest and provision for
 income taxes.......................................................     (8,404,000)     3,099,000      (3,269,000)     4,318,000
Minority interest in income of subsidiaries.........................      1,729,000        891,000       5,038,000      2,082,000
                                                                       ------------    -----------    ------------    -----------
(Loss) income before provision for income taxes.....................    (10,133,000)     2,208,000      (8,307,000)     2,236,000
Provision for income taxes..........................................      1,336,000      1,176,000       3,706,000      1,673,000
                                                                       ------------    -----------    ------------    -----------
Net (loss) income...................................................   $(11,469,000)   $ 1,032,000    $(12,013,000)   $   563,000
                                                                       ============    ===========    ============    ===========

(Loss) earnings per share...........................................         $(0.66)         $0.09          $(0.81)         $0.05
                                                                       ============    ===========    ============    ===========
Weighted average common equivalent shares used
  for computing (loss) earnings per share...........................     17,250,000     11,786,000      14,890,000     10,713,000
                                                                       ============    ===========    ============    ===========

</TABLE>

             The accompanying notes are an integral part of these 
                      consolidated financial statements.

PAGE 3
<PAGE>
 
             VETERINARY CENTERS OF AMERICA, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                           FOR THE NINE MONTHS ENDED
                          SEPTEMBER 30, 1996 AND 1995
                                  (UNAUDITED)
<TABLE>
<CAPTION>
 
                                                                               1996           1995
                                                                          -------------   ------------
<S>                                                                       <C>             <C>
Cash flows from operating activities:
 Net (loss) income.....................................................   $(12,013,000)   $    563,000
 Adjustments to reconcile net loss to net cash
  provided by operating activities:
    Depreciation and amortization......................................      4,984,000       2,767,000
    Gain on sale of land and building..................................             --         (19,000)
    Amortization of debt discount and deferred financing costs.........        316,000          12,000
    Restructuring and asset writedown..................................     12,362,000       1,086,000
    Minority interest in income of subsidiaries........................      5,038,000       2,082,000
    Issuance of common stock in settlement of employment obligations...      1,163,000              --
    Increase in other assets, net......................................       (138,000)       (310,000)
    (Increase) decrease in deferred income taxes.......................       (223,000)        217,000
    Increase in accounts receivable, net...............................     (1,557,000)     (2,207,000)
    Increase in inventory, prepaid expenses and other..................        (89,000)     (2,050,000)
    Decrease in prepaid income taxes...................................        494,000         142,000
    Increase in income taxes payable...................................        280,000         321,000
    Increase in accrued interest.......................................      1,952,000          13,000
    Increase in accounts payable and accrued liabilities...............      1,536,000       2,589,000
    Payments to minority interest partners.............................     (4,007,000)     (1,892,000)
                                                                          ------------    ------------
      Net cash provided by operating activities........................     10,098,000       3,314,000
                                                                          ------------    ------------
 
Cash flows from investing activities:
 Property and equipment additions, net.................................     (4,660,000)     (1,600,000)
 Business acquisitions, net of cash acquired...........................    (24,606,000)     (8,022,000)
 Investments in marketable securities, held to maturity................    (66,534,000)             --
 Proceeds from the sale of businesses..................................        273,000              --
 Proceeds from sale of land and building...............................             --         600,000
                                                                          ------------    ------------
      Net cash used in investing activities............................    (95,527,000)     (9,022,000)
                                                                          ------------    ------------
 
Cash flows from financing activities:
 Net proceeds from issuance of subordinated debentures.................     82,086,000              --
 Reduction of long-term obligations....................................     (8,363,000)     (4,157,000)
 Repayment of line of credit...........................................             --      (1,100,000)
 Payments received on notes receivable.................................         71,000         263,000
 Payments on guaranteed purchase price contingently payable in cash
   or common stock.....................................................             --         (19,000)
 Net proceeds from exercise of redeemable warrants.....................      7,110,000       8,377,000
 Proceeds from warrants issued in connection with
   the Vet Research joint venture......................................      1,474,000              --
 Proceeds from sale of warrants........................................             --          62,000
 Proceeds from issuance of common stock under stock option plans.......        526,000         123,000
 Proceeds from issuance of common stock................................        207,000      10,130,000
 Capital contribution of minority interest partner.....................        990,000       1,000,000
                                                                          ------------    ------------
      Net cash provided by financing activities........................     84,101,000      14,679,000
                                                                          ------------    ------------
 (Decrease) increase in cash and equivalents...........................     (1,328,000)      8,971,000
 Cash and equivalents at beginning of period...........................     47,551,000       7,807,000
                                                                          ------------    ------------
 Cash and equivalents at end of period.................................   $ 46,223,000    $ 16,778,000
                                                                          ============    ============
</TABLE>
             The accompanying notes are an integral part of these 
                      consolidated financial statements.

PAGE 4
<PAGE>
 
             VETERINARY CENTERS OF AMERICA, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                           FOR THE NINE MONTHS ENDED
                          SEPTEMBER 30, 1996 AND 1995
                                  (UNAUDITED)
                                  (continued)

<TABLE>
<CAPTION>

                                                                                    1996          1995
                                                                                ------------   -----------
<S>                                                                             <C>            <C>
Supplemental disclosures of cash flow information
  Interest paid...............................................................  $  3,275,000     2,209,000
  Taxes paid..................................................................     3,337,000       993,000

Supplemental schedule of non-cash investing and financing activities:
  In connection with acquisitions, assets acquired
    and liabilities assumed were as follows:
    Fair value of assets acquired.............................................  $134,056,000   $39,070,000
    Less:  Consideration given
      Cash paid to sellers, net of cash acquired..............................    18,416,000     8,022,000
      Cash paid in settlement of assumed liabilities..........................     6,190,000            --
      Common stock issued.....................................................    69,851,000    11,655,000
                                                                                ------------   -----------
    Liabilities assumed including notes payable issued, net of payments.......  $ 39,599,000   $19,393,000
                                                                                ============   ===========

    In connection with the formation of the joint venture and partnerships,
     assets and liabilities contributed by the partners were as follows:
       Assets.................................................................  $    295,000   $ 3,306,000
       Liabilities............................................................            --     1,063,000
                                                                                ------------   -----------

       Non-cash capital contribution of minority interest partners............  $    295,000   $ 2,243,000
                                                                                ============   ===========


  Non-cash increase in long-term obligations due to purchase of property......  $    120,000   $   163,000
                                                                                ============   ===========

  Issuance of common stock in exchange for convertible debt...................  $     29,000   $   254,000
                                                                                ============   ===========

  Conversion of accounts payable to notes payable.............................  $         --   $   381,000
                                                                                ============   ===========

</TABLE>

             The accompanying notes are an integral part of these 
                      consolidated financial statements.

PAGE 5
<PAGE>

                VETERINARY CENTERS OF AMERICA, INC. AND SUBSIDIARIES

                          NOTES TO FINANCIAL STATEMENTS
                                SEPTEMBER 30, 1996
                                   (UNAUDITED)

(1)  GENERAL

     The accompanying unaudited consolidated financial statements of
Veterinary Centers of America, Inc. and subsidiaries (the "Company" or
"VCA") have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-Q.  Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.  In the opinion of management, all adjustments
considered necessary for a fair presentation have been included.  The
results of operations for the three months and nine months ended September
30,1996 and 1995 are not necessarily indicative of the results to be
expected for the full year.  For further information, refer to the
financial statements and footnotes thereto for the year ended December 31,
1995 included in the Company's Annual Report on Form 10-K as filed with the
Securities and Exchange Commission on March 25, 1996.

     In June 1996, the Company acquired all of the outstanding shares of
Pets' Rx, Inc. ("Pets' Rx").  The business combination was treated for
accounting purposes as a pooling of interests, and accordingly, the
accompanying financial statements reflect the combined results of the
pooled businesses for the respective periods presented.  The financial data
presented below reflects the historical results of VCA and the historical
results of Pets' Rx adjusted to conform to VCA's methods of accounting.

(In thousands)


<TABLE>
<CAPTION>

                                     For the Nine Months                       For the Nine Months
                                  Ended September 30, 1996                   Ended September 30, 1995
                                  VCA     PETS' RX (1)  COMBINED            VCA     PETS' RX    COMBINED
                                --------  ------------  --------          --------  ----------  --------
     <S>                        <C>       <C>           <C>               <C>       <C>         <C>
     Revenue                    $121,990     $7,849     $129,839           $65,426     $11,690    $77,116 
     Restructuring and asset
        writedown                 12,362        --        12,362             1,086         --       1,086 
     Merger costs                  2,901        --         2,901               --          --         --  
     Operating (loss) income        (608)      (181)        (789)            6,501        (350)     6,151 
     Net (loss) income           (11,037)      (976)     (12,013)            1,629      (1,066)       563 

     <FN>
     (1)  Reflects the historical results of Pets' Rx for the period 
          indicated through June 19, 1996, the merger date.
     </FN>

</TABLE>

(2) RECLASSIFICATIONS

    Certain 1995 balances have been reclassified to conform with the 1996
financial statement presentation. 

(3) ACQUISITIONS

    On July 19, 1996, the Company completed the acquisition of The Pet
Practice, Inc. ("Pet Practice") for a total consideration (including
acquisition costs) of  $97,442,000 consisting of 3,519,101 shares of VCA
common stock, with a value at the date of acquisition of $65,983,000, and
the assumption of liabilities totaling $31,459,000.  In addition,
outstanding employee stock options were converted into options to purchase
an additional 41,280 shares of VCA common stock.  On the acquisition date,
Pet Practice was the operator of 84 veterinary clinics located in 11
states.  The acquisition of Pet Practice was accounted for as a purchase. 
Through November 15, 1996, the Company has sold, closed or merged 11 of the
Pet Practice hospitals with annual revenues of approximately $4.0 million. 
The Company is continuing to evaluate the financial performance of the
remaining Pet Practice animal hospitals and may close or sell additional
facilities as the evaluation is completed.  Any 

PAGE 6
<PAGE>

such closures effected through July 1997 will be reflected in the
allocation of the Pet Practice purchase price and not as a charge against
earnings. 

    Also during the third quarter the Company completed the acquisition of
a veterinary diagnostic laboratory and  two animal hospitals for a total
consideration (including acquisition costs) of $5,494,000 consisting of
$5,299,000 in cash, $175,000 in debt and the assumption of liabilities
totaling $20,000.

    On June 19, 1996, the Company completed the merger with Pets' Rx for
801,081 shares of  VCA common stock.  In addition, outstanding Pets' Rx
warrants, options and convertible securities were converted into the right
to purchase an additional 111,607 shares of VCA common stock.  Pets' Rx
owned 16 veterinary hospitals in the San Jose and Sacramento, California
and the Las Vegas, Nevada markets.  The Pets' Rx acquisition was accounted
for as a pooling of interests.

    Also during the second quarter of 1996 the Company completed the
acquisition of six veterinary hospitals and two veterinary diagnostic
laboratories.  In connection with the acquisitions which were accounted for
as a purchase, VCA paid an aggregate consideration of $7,816,000 consisting
of $4,644,000 in cash, $2,365,000 in debt and the assumption of liabilities
totaling $807,000, including acquisition costs.  In connection with the two
hospital acquisitions which were treated as a pooling of interests, VCA
issued 151,010 shares of VCA common stock.

    During the first quarter of 1996, the Company purchased seven
veterinary hospitals and a veterinary diagnostic laboratory in separate
transactions for a total consideration (including acquisition costs) of
$23,304,000 consisting of $9,875,000 in cash, $6,551,000 in long-term
obligations, 242,926 shares of VCA common stock, with a value of
$3,868,000, and the assumption of liabilities totaling $3,010,000.

(4) MERGER COSTS
    
    During the quarter ended June 30, 1996, the Company recorded the costs
to complete the merger between VCA and Pets' Rx.  The costs incurred
include the following:

    Termination of employment agreements and severance          $1,555,000
    Transaction costs including accounting, legal and 
       investment advisor fees                                   1,346,000
                                                                ----------
                                                                $2,901,000
                                                                ==========

(5) RESTRUCTURING AND ASSET WRITEDOWN

    As a result of the acquisition of Pets' Rx, Pet Practice and Southwest
Veterinary Diagnostic Laboratory, Inc., the Company conducted a complete
review of its animal hospital and veterinary diagnostic laboratory
operations during the third quarter ended September 30, 1996.  As a result
of this review, the Company determined to restructure its laboratory
operations and close, merge or sell certain of its hospitals which do not
meet new standards for performance adopted in light of the increase in the
size of the Company's animal hospital operations.  Accordingly, the Company
adopted a restructuring plan and recorded a restructuring and asset
writedown charge of approximately $12.4 million.

    The major components of the restructuring plan include (1) the
termination of leases, the writedown of intangibles, property and
equipment, and employee terminations in connection with the closure, sale
or consolidation of five VCA animal hospitals, (2) the termination of
contracts and leases, the writedown of certain real and personal property
and equipment and the termination of employees in connection with the
restructuring of the Company's laboratory operations, (3) contract
terminations and writedown of assets in connection with the move to common
communications and computer systems, and (4) the closure, sale or
consolidation of certain Pet Practice hospitals (which are reflected in
goodwill and not as part of the restructuring and asset writedown charge). 

    The restructuring plan is expected to be executed over the period from
July 1996 through March 1997.  As part of the restructuring, VCA has or
will close, merge or sell five VCA animal hospitals and 11 Pet
Practice hospitals, with aggregate annual revenues of approximately $7.6
million.  The Company is continuing to evaluate the financial performance
of the Pet 

PAGE 7
<PAGE>

Practice animal hospitals and may sell, close or merge additional
facilities once this evaluation is complete.  In connection with the
closure of the five VCA animal hospitals, the Company has recognized
writedowns of intangibles and property and equipment of $3.0 million,
charges associated with the termination of leases in the amount of $1.4
million and severance costs of $307,000.    As indicated above, the
closures of the Pet Practice animal hospitals are reflected in the
allocation of goodwill and do not result in a charge against earnings.  The
intended restructuring of the Company's laboratory operations has resulted
in accruals of approximately $490,000 for contract and lease terminations,
$265,000 in severance and other employee related costs and a writedown of
fixed assets in the amount of $665,000.  The charge to move the Company's
communications and computer systems to common systems includes an accrual
for contract terminations of $2.3 million and asset writedowns of $1.0
million.

    In addition to the foregoing, as part of the review of its animal
hospital operations in light of the recent acquisition of Pets' Rx and Pet
Practice, the Company has determined that goodwill and other intangible
assets associated with three of its animal hospitals is impaired as the
Company refocuses its efforts on more profitable operations.  Accordingly,
the Company has recorded a writedown of $2.9 million principally of
goodwill and other intangible assets associated with these animal
hospitals.

    Of the $12.4 million in restructuring and asset writedown charges
incurred in the third quarter, $5.0 million represents cash charges and the
remainder represents non-cash charges.  Of the cash charges, an immaterial
amount has been paid at September 30, 1996 and the remainder is expected to
be paid over the next 60 months.

    The operations of Cenvet (acquired January 1, 1995) were merged into
Vet Research Inc.'s operations to form Vet Research Laboratory, LLC.  The
combined operations were restructured to eliminate duplicate operating and
overhead costs.  In connection with the restructuring, the Company recorded
a charge of $1,086,000 in the first quarter of 1995 to accrue the estimated
costs associated with the restructuring, consisting primarily of lease
termination and severance costs.

(6) INCOME TAXES

    The provision for income taxes is greater than the amount computed
using the statutory rate due primarily to nondeductible amortization of
intangible assets and to the nondeductibility of a significant portion of
the merger costs and restructuring and asset writedown.

(7) LONG-TERM OBLIGATIONS

    On April 17, 1996, the Company received net proceeds of $82,086,000
from an offshore offering and concurrent private placement in the United
States, of $84,385,000 of 5.25% convertible subordinated debentures due in
2006.  The debentures, non-callable for three years, will be convertible
into approximately 2.5 million shares of the Company's common stock at a
rate of $34.35 per share.  Under the terms of the agreement, the debentures
and common stock issuable upon conversion have been registered under the
United States Securities Act of 1933.

(8) GOODWILL AND OTHER INTANGIBLE ASSETS
    
    The Company adopted Statement of Financial Accounting Standards No.
121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" on January 1, 1996.  The Statement requires that
long-lived assets and certain identifiable intangibles held and used by an
entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable.


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
         RESULTS OF OPERATIONS

    The Company is a leading animal health care company with operations in
three business lines: the Company owns, operates and manages animal
hospitals; the Company owns and operates veterinary diagnostic
laboratories; and the 

PAGE 8
<PAGE>

Company, through a joint venture with Heinz Pet Products, markets and
distributes premium pet foods.  Over the past several years, the Company
has issued common stock or notes or paid cash to acquire animal hospitals
and veterinary diagnostic laboratories.  The acquisition of individual
animal hospitals is an integral part of the Company's business plan.  In
addition, the Company has recently completed two significant acquisitions
which have more than doubled the Company's animal hospital operations.  The
Company has undertaken these transactions in order to promote the growth of
the Company's hospital network, broaden the geographic scope of the
Company's operations, and to take advantage of synergies that the Company
believes exist between its business lines. 

    On July 19, 1996, the Company completed the acquisition of The Pet
Practice, Inc. ("Pet Practice") for a total consideration (including
acquisition costs) of  $97,442,000 consisting of 3,519,101 shares of VCA
common stock, with a value at the date of acquisition of $65,983,000, and
the assumption of liabilities totaling $31,459,000.  In addition,
outstanding employee stock options were converted into options to purchase
an additional 41,280 shares of VCA common stock.  On the acquisition date,
Pet Practice was the operator of 84 veterinary clinics located in 11
states.  The acquisition of Pet Practice was accounted for as a purchase.

    On June 19, 1996, the Company completed the merger with Pets' Rx for
801,081 shares of  VCA common stock.  In addition, outstanding Pets' Rx
warrants, options and convertible securities were converted into the right
to purchase an additional 111,607 shares of VCA common stock.  Pets' Rx
owned 16 veterinary hospitals in the San Jose and Sacramento, California
and the Las Vegas, Nevada markets.  The acquisition of Pets' Rx was
accounted for as a pooling of interests and therefore the accompanying
financial information for all periods presented herein has been restated to
reflect the combination of VCA and Pets' Rx.

    On March 6, 1996, VCA completed the acquisition of Southwest
Veterinary Diagnostics Laboratory, Inc., a veterinary laboratory which
services veterinary hospitals in the states of Arizona, California, New
Mexico, Texas, Kansas, Nebraska and Missouri, and other portions of the
Midwest.  The acquisition was accounted for as a purchase.

    In addition, from January 1, 1996 through September 30, 1996, VCA has
acquired 14 animal hospitals in the states of Illinois, Virginia, Nevada,
Maryland, Massachusetts, Pennsylvania, Florida, Hawaii and California, and
three veterinary laboratories.  Subsequent to the end of the quarter, the
Company acquired two additional animal hospitals and entered into
management service agreements and acquired the non-medical assets of four
animal hospitals in Texas.

    The Company will continue to look for acquisitions or strategic
alliances which it believes complement its overall business strategy.

PAGE 9
<PAGE>

RESULTS OF OPERATIONS

    REVENUES

    The following table summarizes the Company's revenues for each of the
three and nine month periods ended September 30:

<TABLE>
<CAPTION>

                                Three Months Ended                 Nine Months Ended
                                   September 30,                     September 30,
                               1996            1995              1996            1995     
                          -------------   -------------     -------------   -------------
     <S>                  <C>             <C>               <C>             <C>
     Animal Hospital        $36,733,000     $19,294,000      $ 84,247,000     $47,657,000 
     Laboratory              14,775,000      10,720,000        42,263,000      27,485,000 
     Premium Pet Food         2,151,000       1,476,000         6,121,000       3,107,000 
     Intercompany Sales      (1,260,000)       (475,000)       (2,792,000)     (1,133,000)
                          -------------   -------------     -------------   -------------
                            $52,399,000     $31,015,000      $129,839,000     $77,116,000 
                          =============   =============     =============   =============

</TABLE>

     Revenues for the Animal Hospital operations increased 76.8% for the
nine months ended September 30, 1996 compared to the nine months ended
September 30, 1995.   The increase in the three-month period ended
September 30, 1996 compared to the three-month period ended September 30,
1995 was 90.4%.  This growth was primarily the result of growth in the
number of facilities owned and operated by the Company.  The results for
1996 include the results of  over 100 veterinary hospitals acquired
subsequent to September 30, 1995.  The increase in revenues resulting from
changes in volume or prices at facilities existing at September 30, 1995
was approximately 5.4% and 1.0% in the nine months and the three months
ended September 30, 1996, respectively.

     Revenues for the Laboratory operations increased 53.8% for the nine
months ended September 30, 1996 compared to the nine months ended September
30, 1995.  The increase in the three months ended September 30, 1996
compared to September 30, 1995 was 37.8%.  This increase was primarily due
to the acquisition of four veterinary diagnostic laboratories since
September 30, 1995, and in the nine-month period, the inclusion of a full
nine months of Vet Research operations which was acquired in March 1995. 

     Vet's Choice began generating revenues in March 1994 when it commenced
commercial distribution of Select Balance through VCA's network of owned
animal hospitals.  Distribution was expanded nationally to independent
veterinary hospitals in selected regional markets beginning in the second
quarter of 1994.  In April 1995, Vet's Choice commenced distributing its
second product line, Select Care, a complete line of therapeutic diets. 
Distribution through premium pet food stores is planned for the future.

GROSS PROFIT

     Gross profit for each of the three and nine month periods ended
September 30, is comprised of the following:

<TABLE>
<CAPTION>

                                Three Months Ended              Nine Months Ended
                                   September 30,                   September 30,
                               1996            1995              1996            1995     
                          -------------   -------------     -------------   -------------
     <S>                  <C>             <C>               <C>             <C>
     Animal Hospital        $ 6,737,000      $3,885,000       $14,387,000    $  8,767,000
     Laboratory               4,934,000       3,968,000        16,033,000       9,908,000
     Premium Pet Food           911,000         494,000         2,403,000       1,054,000
                          -------------   -------------     -------------   -------------
                            $12,582,000      $8,347,000       $32,823,000     $19,729,000
                          =============   =============     =============   =============

</TABLE>

     Gross profit for the Animal Hospital operations represents the
contribution from the hospital operations and is comprised of revenues less
all costs of services and products at the hospitals, including salaries of
veterinarians, technicians and all other hospital-based personnel,
facilities rent and occupancy costs and medical supply costs and costs of
goods sold associated with the retail sales of pet food and pet supplies. 
Animal Hospital gross profit increased 64.1% in the 1996 nine-month period
when compared to the 1995 nine-month period, representing 17.1% and 18.4%
of Animal Hospital revenues in 1996 and 1995, 

PAGE 10
<PAGE>

respectively.  Animal Hospital gross profit increased 73.4% in the 1996
three-month period when compared to the 1995 three-month period,
representing 18.3% and 20.1% of Animal Hospital revenues in 1996 and 1995,
respectively.  The decrease in gross profit as a percentage of revenues
from 1995 to 1996, in the three-month and the nine-month periods, was
attributable to a decrease in gross profit margins at the Company's
existing hospitals and to lower gross profit margins at the newly acquired
hospitals.  For the nine-month period ended September 30, hospital gross
profit margins at existing hospitals decreased to 18.3% in 1996 from 19.0%
in 1995 due to a 5.4% increase in revenues and a 6.3% increase in expenses
(including a 7.2% increase in labor costs and an 8.8% increase in supply
costs).  Gross profit margins at newly acquired hospitals were 16.5%.  For
the quarter ended September 30, gross profit margins decreased to 19.1% in
1996 from 20.3% in 1995 due to a 1.0% increase in revenues and a 2.6%
increase in expenses (including a 3.4% increase in labor costs).  Gross
profit margins at newly acquired hospitals were 17.9% for the quarter.

     The Company continues to take actions designed to improve gross
margins at the newly acquired hospitals.  However, there can be no
assurance that the Company will be successful in its efforts to improve
gross profit margins at these facilities.  

     Gross profit of the Laboratory operations is comprised of revenues
less all direct costs of services at the laboratory, including salaries of
veterinarians, technicians and other non-administrative laboratory-based
personnel, facilities rent and occupancy costs and supply costs. 
Laboratory gross profit increased 61.8% for the 1996 nine-month period
compared to the 1995 nine-month period, representing  37.9% and 36.0% of
laboratory revenues in 1996 and 1995, respectively.  For the quarter ended
September 30, 1996 laboratory gross profit increased 24.3% for the 1996
three-month period compared to the 1995 three month period, representing
33.4% and 37.0% of laboratory revenues in 1996 and 1995, respectively.  The
decrease in gross profit as a percentage of revenue for the three months
ended September 30, 1996 from the comparable 1995 period, was attributable
to difficulties with the assimilation of the 1996 laboratory acquisitions
primarily on the West Coast, an increase in printing costs associated with
the Laboratory's change of name, the effect of promotional pricing programs
and the addition of operating personnel.

     Gross profit of Premium Pet Food is comprised of revenues less cost of
goods sold, including warehousing, freight and distribution costs. Gross
profit as a percentage of revenues for the nine months ended September 30,
1996 and 1995 was 39.3% and 33.9%, respectively.  As a percentage of
revenue, Premium Pet Food gross profit was  42.4% and 33.5% for the three
months ended September 30, 1996 and 1995, respectively.
  
     The Laboratory and Premium Pet Food operations are expected to
continue to carry gross profit margins that are higher than the Animal
Hospital operations.  Consequently, historical gross profit margins for the
Company as a whole may not be indicative of those to be expected in the
future.  

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     VCA Corporate selling, general and administrative expenses consists of
administrative expense at the Company's headquarters, including the
salaries of corporate officers and other personnel, accounting, legal and
other professional expense and rent and occupancy costs.

     Selling, general and administrative expense for each of the three and
nine month periods ended September 30, is comprised of the following:

<TABLE>
<CAPTION>

                                Three Months Ended                 Nine Months Ended
                                   September 30,                      September 30,
                               1996            1995              1996            1995     
                          -------------   -------------     -------------   -------------
     <S>                  <C>             <C>               <C>             <C>
     VCA Corporate           $2,918,000      $1,622,000       $ 6,866,000      $4,456,000 
     Laboratory               1,121,000         792,000         3,016,000       2,157,000
     Premium Pet Food         1,165,000       1,037,000         3,483,000       3,112,000
                          -------------   -------------     -------------   -------------
                             $5,204,000      $3,451,000       $13,365,000      $9,725,000
                          =============   =============     =============   =============

</TABLE>

     VCA Corporate and Laboratory selling, general and administrative
expense, as a percentage of Animal Hospital and Laboratory revenues, was
7.8% and 8.8% for the nine months ended September 30, 1996 and 1995,
respectively.  For the three 

PAGE 11
<PAGE>

months ended September 30, 1996 and 1995, VCA Corporate and Laboratory,
selling, general and administrative expense as a percentage of Animal
Hospital and Laboratory revenues was 7.8% and 8.0%, respectively.  The
decrease from 1995 to 1996 was primarily attributable to spreading the
expenses over a larger revenue base.

     Premium Pet Food selling, general and administrative expense as a
percentage of Premium Pet Food revenues was 56.9% and 100.2% for the nine
months ended September 30, 1996 and 1995, respectively.  The decrease as a
percentage of revenue was primarily attributable to spreading the expenses
over a larger revenue base.

DEPRECIATION AND AMORTIZATION

     Depreciation and amortization expense primarily relates to the
depreciation of capital assets and the amortization of excess cost over the
fair value of net assets acquired (goodwill) and certain other intangibles. 
Depreciation and amortization expense increased to $4,984,000 for the nine
months ended September 30, 1996 from $2,767,000 for the nine months ended
September 30, 1995.  For the three-month period, depreciation and
amortization expense increased to $2,335,000 for the 1996 period from
$1,103,000 for the 1995 period.  The increase in depreciation and
amortization expense is due to the acquisition of hospitals and
laboratories.  Because of the timing of the Company's acquisitions in 1996,
neither the nine-month nor the three-month 1996 periods reflect the full
impact of the Company's 1996 acquisition activity.  Consequently,
depreciation and amortization expense during future periods is expected to
be significantly higher than that reported in the nine and three months
ended September 30, 1996.  The Company's policy is to amortize goodwill 
over the expected period to be benefited, not exceeding forty years.
     
RESTRUCTURING AND ASSET WRITEDOWN

     As a result of the acquisition of Pets' Rx, Pet Practice and Southwest
Veterinary Diagnostic Laboratory, Inc., the Company conducted a complete
review of its animal hospital and veterinary diagnostic laboratory
operations during the third quarter ended September 30, 1996.  As a result
of this review, the Company determined to restructure its laboratory
operations and close, merge or sell certain of its hospitals which do not
meet new standards for performance adopted in light of the increase in the
size of the Company's animal hospital operations.  Accordingly, the Company
adopted a restructuring plan and recorded a restructuring and asset
writedown charge of approximately $12.4 million.

     The major components of the restructuring plan include (1) the
termination of leases, the writedown of intangibles, property and
equipment, and employee terminations in connection with the closure, sale
or consolidation of five VCA animal hospitals, (2) the termination of
contracts and leases, the writedown of certain real and personal property
and equipment and the termination of employees in connection with the
restructuring of the Company's laboratory operations, (3) contract
terminations and writedown of assets in connection with the move to common
communications and computer systems, and (4) the closure, sale or
consolidation of certain Pet Practice hospitals (which are reflected in
goodwill and not as part of the restructuring and asset writedown charge). 

     The restructuring plan is expected to be executed over the period from
July 1996 through March 1997.  As part of the restructuring, VCA has or
will close, merge or sell five VCA animal hospitals and 11 Pet
Practice hospitals, with aggregate annual revenues of approximately $7.6
million.  The Company is continuing to evaluate the financial performance
of the Pet Practice animal hospitals and may sell, close or merge
additional facilities once this evaluation is complete.  In connection with
the closure of the five VCA animal hospitals, the Company has recognized
writedowns of intangibles and property and equipment of $3.0 million,
charges associated with the termination of leases in the amount of $1.4
million and severance costs of $307,000.  As indicated above, the closures
of the Pet Practice animal hospitals are reflected in the allocation of
goodwill and do not result in a charge against earnings.  The intended
restructuring of the Company's laboratory operations has resulted in
accruals of approximately $490,000 for contract and lease terminations,
$265,000 in severance and other employee related costs and a writedown of
fixed assets in the amount of $665,000.  The charge to move the Company's
communications and computer systems to common systems includes an accrual
for contract terminations of $2.3 million and asset writedowns of $1.0
million.

     In addition to the foregoing, as part of the review of its animal
hospital operations in light of the recent acquisition of Pets' Rx and Pet
Practice, the Company has determined that goodwill and other intangible
assets associated with three of its 

PAGE 12
<PAGE>

animal hospitals is impaired as the Company refocuses its efforts on more
profitable operations.  Accordingly, the Company has recorded a writedown
of $2.9 million principally of goodwill and other intangible assets
associated with these animal hospitals.

     Of the $12.4 million in restructuring and asset writedown charges
incurred in the third quarter, $5.0 million represents cash charges and the
remainder represents non-cash charges.  Of the cash charges, an immaterial
amount had been paid at September 30, 1996 and the remainder is expected to
be paid over the next 60 months.

     The operations of Cenvet (acquired January 1, 1995) were merged into
Vet Research Inc.'s operations to form Vet Research Laboratory, LLC.  The
combined operations were restructured to eliminate duplicate operating and
overhead costs.  In connection with the restructuring, the Company recorded
a charge of $1,086,000 in the first quarter of 1995 to accrue the estimated
costs associated with the restructuring, consisting primarily of lease
termination and severance costs.

MERGER COSTS

     In connection with the Pets' Rx merger, the Company recorded the
estimated costs to complete the transaction.  The costs, amounting to
$2,901,000 primarily include legal, accounting, investment advisor,
termination of employment agreements and severance costs.

NET (LOSS) INCOME

     Net (loss) income for the three and nine month periods ended September
30, is comprised of the following:

<TABLE>
<CAPTION>

                                Three Months Ended                 Nine Months Ended
                                   September 30,                      September 30,
                               1996            1995              1996            1995     
                          -------------   -------------     -------------   -------------
     <S>                  <C>             <C>               <C>             <C>
     VCA                   $  3,688,000      $1,345,000      $  4,120,000      $2,715,000 
     Pets' Rx (1)               --             (313,000)         (976,000)     (1,066,000)
     Merger costs            (2,795,000)         --            (2,795,000)           --   
     Restructuring costs    (12,362,000)         --           (12,362,000)     (1,086,000)
                          -------------   -------------     -------------   -------------
                           $(11,469,000)     $1,032,000      $(12,013,000)     $  563,000 
                          =============   =============     =============   =============

     (1) Reflects the historical results of Pets' Rx for the period 
         indicated through June 19, 1996, the merger date.

</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

     Cash provided by operations during the nine months ended September 30,
1996 was $10,098,000.  The Company's operating cash flow was adversely
impacted by Vet's Choice, which had a net outflow from operations during
the nine months of $1,647,000.  Excluding Vet's Choice, cash provided by
operations was $11,745,000.  The Company used cash, net of cash acquired,
of $24,606,000, to purchase fourteen individual veterinary hospitals, Pet
Practice and four veterinary diagnostic laboratories.  The Company used
cash of $8,363,000 to retire long-term obligations.

     Of its cash and equivalents on hand at September 30, 1996, $2,121,000
was restricted for use by Vet's Choice.  During the nine months ended
September 30, 1996, Vet's Choice used $1,786,000 of cash, primarily for
operating expenses and increases in inventory.

     The Company and Heinz Pet Products contributed $1,010,000 and
$990,000, respectively to Vet's Choice during May 1996.  As sales of
Premium Pet Food grow, Vet's Choice will require additional cash to fund
its working capital requirements (primarily inventory and accounts
receivable).  Heinz Pet Products has agreed to lend Vet's Choice up to $1.0
million at its bank prime rate plus one-half percent to assist in meeting
these working capital needs.  Vet's Choice, however, may require additional
equity or debt financing.  If Vet's Choice is unable to obtain debt
financing on favorable terms, it may be necessary for the Company to make
additional capital contributions to the venture.

PAGE 13
<PAGE>

     During the second quarter of 1996, the Company received net proceeds
of $82,086,000 related to the sale, in an offshore offering and concurrent
private placement in the United States, of $84,385,000 of 5.25% convertible
subordinated debentures due in 2006.  The debentures, non-callable for
three years, will be convertible into approximately 2.5 million shares of
the Company's common stock at a rate of $34.35 per share.

     The Company used $66,534,000 to purchase marketable securities to be
held to maturity.

     The Company has achieved its growth in the past, and anticipates it
will continue its growth in the future, through the acquisition of
veterinary hospitals and veterinary diagnostic laboratories for cash, stock
and notes payable.

     Subsequent to September 30, 1996 the Company received net proceeds of
$6,668,000 in connection with the exercise of its redeemable warrants.  All
remaining warrants expired on October 10, 1996.

     On November 15, 1996, the Board of Directors authorized the Company to
repurchase $10 million of shares of the Company's common stock.  The
Company intends to use approximately $19 million of cash for the acquisition
of the minority interest in Vet Research in the first fiscal quarter of
1997.

     The Company intends to fund its future cash requirements primarily
from cash on hand and internally generated funds.  The Company believes
these sources of funds will be sufficient to continue the Company's
operations and planned capital expenditures for at least the next 12
months.  

RISK FACTORS

ANTICIPATED EFFECTS OF ACQUISITIONS

     VCA has acquired Pets' Rx and Pet Practice with the expectation that
the transactions will result in beneficial synergies for the combined
business.  These synergies include the potential to realize improved
operating margins at animal hospitals through a strategy of centralizing
various corporate and administrative functions and leveraging fixed costs
while providing customers with improved services.

     Achieving these anticipated business benefits will depend in part on
whether the operations of Pets' Rx and Pet Practice can be integrated with
the operations of VCA in an efficient, effective and timely manner.  There
can be no assurance that this will occur.  The combination of the companies
will require, among other things, integration of the companies' management
staffs, coordination of the companies' sales and marketing efforts,
integration and coordination of the companies' development teams and the
identification and elimination of redundant overhead and poor-performing
hospitals.  The success of this process will be significantly influenced by
the ability of the combined business to retain key management and marketing
and development personnel.  There is no assurance that this integration
will be accomplished smoothly or successfully or that VCA will be
successful in retaining key members of management.  The difficulties of
such integration may be increased by the necessity of coordinating
geographically separated organizations with distinct cultures.  The
integration of operations of the companies following the mergers will
require the dedication of management resources, which may temporarily
distract attention from the day-to-day business of the combined business. 
The inability of management to integrate successfully the operations of the
companies could have an adverse effect on the business and results of the
combined business.  In addition, even if the operations of the three
companies are ultimately successfully integrated, it is anticipated that
the integration will be accomplished over time and, in the interim, the
combination may have an adverse effect on the business, results of
operations and financial condition of VCA.  The Company believes that the
foregoing factors adversely impacted results of operations for the three
and nine months ended September 30, 1996.  There can be no assurance that a
similar or greater impact will not be felt by the Company during the fourth
quarter ended December 31, 1996 or in future periods.

RAPID EXPANSION AND MANAGEMENT OF GROWTH

     Due to the number and size of acquisitions completed since January 1,
1994, the Company has experienced rapid growth.  In 1994, the Company
completed six acquisitions (five animal hospitals and one veterinary
diagnostic laboratory) and in 1995, the Company completed 32 acquisitions
(25 animal hospitals, six veterinary diagnostic laboratories and the
remaining 30 percent 

PAGE 14
<PAGE>

interest in Professional Animal Laboratory).  In 1996 through November 15,
the Company completed the acquisition of Pet Practice, Pets' Rx, 16 animal
hospitals and four veterinary diagnostic laboratories.  As a result of
these acquisitions, the Company's revenues have grown from $25.3 million in
1993 to $42.2 million in 1994, to $92.1 million in 1995 and to unaudited
proforma 1995 revenue of over $220 million.  In addition, during this
period, the Company entered two new lines of business, veterinary
diagnostic laboratories and premium pet food.

     The Company's growth and pace of acquisitions have placed, and will
continue to place, a substantial strain on its management, operational,
financial and accounting resources.  The successful management of this
growth will require the Company to continue to implement and improve its
financial and management information systems and to train, motivate and
manage its employees.  There can be no assurance that the combined business
will be able to identify, consummate or integrate acquisitions without
substantial delays, costs or other problems.  Once integrated, acquisitions
may not achieve sales, profitability and asset productivity commensurate
with the combined business' other operations.  In addition, acquisitions
involve several other risks, including adverse short-term effects on the
combined business' reported operating results, impairments of goodwill and
other intangible assets, the diversion of management's attention, the
dependence on retention, hiring and training of key personnel, the
amortization of intangible assets and risks associated with unanticipated
problems or legal liabilities.  The combined business' failure to manage
growth effectively would have a material adverse effect on the combined
business' results of operations and its ability to execute its business
strategy.

     In addition, the growth experienced by the Company, and the
corresponding increased need for timely information, have placed
significant demands on the Company's existing accounting and management
information systems.  As a result, the Company is in the process of
upgrading these systems.  No assurance can be given that these upgrades
will be completed successfully or that the new systems can be successfully
integrated or that the new systems will effectively serve the combined
business' future information requirements.

DEPENDENCE ON ACQUISITIONS FOR FUTURE GROWTH

     The Company's growth strategy is dependent principally on its ability
to acquire existing animal hospitals.  Successful acquisitions involve a
number of factors which are difficult to control, including the
identification of potential acquisition candidates, the willingness of the
owners to sell on reasonable terms and the satisfactory completion of
negotiations.  In addition, acquisitions may be subject to pre-merger or
post-merger review by governmental authorities for antitrust and other
legal compliance.  Adverse regulatory action could negatively affect the
Company's operations through the assessment of fines or penalties against
the Company or the possible requirement of divestiture of one or more of
the Company's operations.

     There can be no assurance that the Company will be able to identify
and acquire acceptable acquisition candidates on terms favorable to the
Company in a timely manner in the future.  Assuming the availability of
capital, the Company's plans include an aggressive acquisition program
involving the acquisition of at least 15 to 25 facilities per year. The
Company continues to evaluate acquisitions and negotiate with several
potential acquisition candidates.  The failure to complete acquisitions and
continue expansion could have a material adverse effect on the Company's
financial performance.  As the combined business proceeds with its
acquisition strategy, it will continue to encounter the risks associated
with the integration of acquisitions described above.

LEVERAGE

     The Company has incurred substantial indebtedness to finance the
acquisition of its animal hospitals and veterinary diagnostic laboratories. 
The Company had at September 30, 1996, consolidated long-term obligations
(including current portion) of $148.3 million.  At December 31, 1995 and
September 30, 1996, the Company's ratio of long-term debt to total
stockholders' equity was 49.0% and  93.6%, respectively.

RISKS ASSOCIATED WITH INTANGIBLE ASSETS

     A substantial portion of the assets of the Company consists of
intangible assets, including goodwill and covenants not to compete relating
to the acquisition of animal hospitals and veterinary diagnostic
laboratories. At September 30, 1996, the Company's balance sheet reflected
$174.6 million of intangible assets of these types, a substantial portion
of the Company's 

PAGE 15
<PAGE>

$349.7 million in total assets at such date. The Company expects the
aggregate amounts of goodwill and other intangible assets on its balance
sheet to increase in the future in connection with additional acquisitions.
This increase will have an adverse impact on earnings as goodwill and other
intangible assets will be amortized against earnings. In the event of any
sale or liquidation of the Company, there can be no assurance that the
value of these intangible assets will be realized. 

     In addition, the Company continually evaluates whether events and
circumstances have occurred that indicate the remaining balance of
intangible assets may not be recoverable. When factors indicate that these
intangible assets should be evaluated for possible impairment, they may be
required to reduce the carrying value of intangible assets, which could
have a material adverse effect on results of operations during the periods
in which such reduction is recognized.  In accordance with this policy, the
Company recognized a write down of goodwill and related assets in the
amount of $2.3 million in 1993 in connection with three of the Company's
facilities which were not performing. Further, the Company has recognized a
write down of goodwill and related assets in the amount of $7.5 million as
part of its restructuring plan adopted during the third quarter of 1996. 
There can be no assurance that the Company will not be required to write
down assets further in future periods.

GUARANTEED PAYMENTS

     In connection with acquisitions in which the purchase price consists,
in part, of the Company's common stock (the "Guarantee Shares"), the
Company often guarantees (the "Guarantee Right") that the value of such
stock (the "Measurement Price") two to three years following the date of
the acquisition (the "Guarantee Period") will equal or exceed the value of
the stock on the date of acquisition (the "Issue Price").  In the event the
Measurement Price does not equal or exceed the Issue Price, the Company
typically is obligated either to (i) pay to the seller in cash, notes
payable or additional shares of the Company's common stock the difference
between the Issue Price and the Measurement Price multiplied by the number
of Guarantee Shares then held by the seller, or (ii) purchase the Guarantee
Shares then held by the seller.  Once the Guarantee Shares are delivered
and registered for resale under the Securities Act, which registration the
Company covenants to effect generally within nine months of issuance of the
Guarantee Shares, the seller's Guarantee Right typically terminates if the
Company's common stock trades at 110% to 120% of the Issue Price (the
"Release Price") for five to 15 consecutive days, depending on the terms of
the specific acquisition at issue. There are 185,185 Guarantee Shares
outstanding at November 30, 1996 with Issue Prices ranging from $11.70 to
$18.25 that have not met their respective Release Prices for the specified
period or have not been delivered due to escrow arrangements.  If the value
of the Company's common stock decreases and is less than an Issue Price at
the end of the respective Guarantee Period for these shares, the Company
may be obligated to compensate these sellers. 

     In connection with the Pet Practice acquisition, VCA will assume the
Guarantee Rights issued by Pet Practice (which generally operate similarly
to the Guarantee Rights issued by VCA, except that there is no provision
for a release of the Guarantee Right).  In connection with the Pet Practice
Guarantee Rights, 26,636 shares of VCA common stock have a guarantee value
of $24.53 per share.

SEASONALITY AND FLUCTUATING QUARTERLY RESULTS

     A large portion of the business of the Company is seasonal, with
operating results varying substantially from quarter to quarter. 
Historically, the Company's revenues have been greater in the second and
third quarters than in the first and fourth quarters.  The demand for the
Company's veterinary services are significantly higher during 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
infestation of fleas, heartworms and ticks, and the number of daylight
hours, as well as general economic conditions.  A substantial portion of
the Company's costs are fixed and do not vary with the level of demand. 
Consequently, net income for the second and third quarters at individual
animal hospitals generally has been higher than that experienced in the
first and fourth quarters.

DEPENDENCE ON KEY MANAGEMENT
     
     The Company's success will continue to depend to a significant extent
on the Company's executive officers and other key management, particularly
its Chief Executive Officer, Robert L. Antin.  VCA has an employment
contract with Mr. Robert Antin, Mr. Arthur Antin, Chief Operating Officer
of VCA, and Mr. Neil Tauber, Senior Vice President of VCA, each of which
expires in December 1998.  VCA has no other written employment agreements
with its executive officers.  None of VCA's 

PAGE 16
<PAGE>

officers are parties to noncompetition covenants which extend beyond the
term of their employment with VCA.  VCA maintains "key man" life insurance
on Mr. Robert Antin in the amount of $3.0 million, of which VCA is the sole
beneficiary.  VCA does not maintain any insurance on the lives of its other
senior management.  As VCA continues to grow, it will continue to hire,
appoint or otherwise change senior managers and other key executives. 
There can be no assurance that VCA will be able to retain its executive
officers and key personnel or attract additional qualified members to
management in the future.  In addition, the success of certain of VCA's
acquisitions may depend on VCA's ability to retain selling veterinarians of
the acquired companies.  The loss of services of any key manager or selling
veterinarian could have a material adverse effect upon VCA's business.  

JOINT VENTURES

     The Company conducts a portion of its veterinary diagnostic laboratory
business through a joint venture with Vet Research, Inc. ("VRI"), and
conducts its pet food business through a joint venture with Heinz Pet
Products, an affiliate of H.J. Heinz Company.  The Company has an option in
January 1997 to acquire VRI's remaining 49 percent interest in the
laboratory joint venture for $18.6 million in cash plus an additional
amount based upon the earnings of the joint venture to be paid over six
years.  Based on current information available to it, the Company expects
to exercise its purchase option in January 1997.  If for any reason the
Company does not exercise the option, VRI has the option to purchase from
the Company its entire 51 percent interest for $3.5 million.  On the
earlier of a change in control of the Company or January 1, 2000, Heinz Pet
Products has the option to purchase all of the Company's interest in the
Vet's Choice joint venture at a purchase price equal to the fair market
value of such interest.  The acquisition of Pet Practice does not result in
a change in control for purposes of the Vet's Choice joint venture.  There
can be no assurance that the Company will not have to sell these joint
venture interests.

COMPETITION

     The companion animal health care industry is highly competitive and
subject to continual change in the manner in which services are delivered
and providers are selected. The Company believes that the primary
competitive factors in connection with animal hospitals are convenient
location, recommendation of friends, reasonable fees, quality of care and
convenient hours. The Company's primary competitors for its animal
hospitals in most markets are individual practitioners or small, regional
multi-clinic practices. In addition, certain national companies in the pet
care industry, including the operators of super-stores, are developing
multi-regional networks of animal hospitals in markets which include the
Company's animal hospitals. Among veterinary diagnostic laboratories, the
Company believes that quality, price and the time required to report
results are the major competitive factors. There are many clinical
laboratory companies which provide a broad range of laboratory testing
services in the same markets serviced by the Company. In addition, several
national companies provide on-site diagnostic equipment that allows
veterinarians to perform their own laboratory tests. The Company's major
competitors in the premium pet food industry are Hill's and Iams, both of
which have extensive experience in the manufacture of premium pet food and
possess research and development, marketing and financial resources far
greater than that of Vet's Choice.

GOVERNMENT REGULATION

     The laws of some states prohibit veterinarians from splitting fees
with non-veterinarians and prohibit business corporations from providing
veterinary services through the direct employment of veterinarians.  These
laws and their interpretations vary from state to state and are enforced by
the courts and by regulatory authorities with broad discretion.  Although
the Company believes that its operations as currently conducted are in
material compliance with existing applicable laws, there can be no
assurance that the Company's existing operational structure will not be
successfully challenged in one or more states as constituting the
unlicensed practice of veterinary medicine.  Such a determination in a
state could adversely affect the operations of the Company and the combined
business through the assessment of fines or  penalties against the Company
or the combined business or the possible requirement of  divestiture of the
Company's operations in the state.  In addition, there can be no assurance
that state legislation or regulations will not change so as to restrict the
Company's or, in the future, the combined business' existing operations or
the expansion of such operations.

ANTI-TAKEOVER EFFECT

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     A number of provisions of the Company's Certificate of Incorporation
and bylaws and certain Delaware laws and regulations relating to matters of
corporate governance, certain rights of directors and the issuance of
preferred stock without stockholder approval, may be deemed to have and may
have the effect of making more difficult, and thereby discouraging, a
merger, tender offer, proxy contest or assumption of control and change of
incumbent management, even when stockholders other than the Company's
principal stockholders consider such a transaction to be in their best
interest.  In addition, H.J. Heinz Company has an option to purchase the
Company's interest in the Vet's Choice joint venture upon the occurrence of
a change in control (as defined in the joint venture agreement), which may
have the same effect.  Accordingly, stockholders may be deprived of an
opportunity to sell their shares at a substantial premium over the market
price of the shares.

IMPACT OF SHARES ELIGIBLE FOR FUTURE SALE

     Future sales by existing stockholders could adversely affect the
prevailing market price of the Company's common stock.  As of November 15,
1996, the Company had 18,391,955 shares of common stock outstanding, most
of which are either freely tradeable in the public market without
restriction or tradeable in accordance with Rule 144 under the Act.  There
are also 789,105 shares which the Company is obligated to issue in
connection with the Pets' Rx and Pet Practice mergers and certain
acquisitions; 583,333 shares issuable upon conversion of outstanding
preferred stock; 1,743,054 shares of the Company's common stock issuable
upon exercise of outstanding stock options; 143,075 shares of the Company's
common stock issuable upon exercise of outstanding warrants; and 51,256
shares issuable upon conversion of convertible notes; and 2,456,623 shares
issuable upon conversion of convertible debentures.  Shares may also be
issued under price guarantees delivered in connection with acquisitions. 
These shares will be eligible for immediate sale upon issuance.  

POSSIBLE VOLATILITY OF STOCK PRICE

     The market price of the Company's common stock could be subject to
significant fluctuations caused by variations in quarterly operating
results, litigation involving the Company, announcements by the Company or
its competitors, general conditions in the companion animal health care
industry and other factors.  The stock market in recent years has
experienced extreme price and volume fluctuations that have often been
unrelated or disproportionate to the operating performance of publicly
traded companies.  The broad fluctuations may adversely affect the market
price of the Company's common stock.

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PART II.    OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS
            None

ITEM 2.     CHANGES IN SECURITIES
            None

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES
            None

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

            At the annual meeting of the shareholders held on July 19,
            1996, Neil Tauber and John Chickering were elected to serve as
            directors of the Company until the 1999 annual meeting of the
            shareholders.  The other directors are:  Robert L. Antin,
            Arthur J. Antin, John Heil and Richard Gillespie, M.D.

            At the annual meeting of the shareholders held on July 19,
            1996, the shareholders also approved the issuance of 3,519,101
            shares of VCA Common Stock in exchange for Pet Practice Common
            Stock pursuant to the Merger Agreement.

            At the annual meeting of the shareholders held on July 19,
            1996, the shareholders also approved the amendment of the
            certificate of incorporation of the Company to increase the
            authorized shares of common stock to 60,000,000.

            At the annual meeting of the shareholders held on July 19,
            1996, the shareholders also approved the adoption of the
            Veterinary Centers of America, Inc. 1996 Stock Incentive Plan
            and authorized the reservation of 1,500,000 shares of common
            stock for issuance under the Plan.

            At the annual meeting of the shareholders held on July 19,
            1996, the shareholders also approved the adoption of the
            Veterinary Centers of America, Inc. 1996 Employee Stock
            Purchase Plan and authorized the reservation of 250,000 shares
            of common stock for issuance under the Plan.

ITEM 5.     OTHER INFORMATION
            None

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

    (A)     EXHIBITS.  
            --------

            Exhibit 11.1  Computations of Per Share (Loss) Earnings 

            Exhibit 27.1  Financial Data Schedule

    (b)     FORM 8-K.
            --------

            Report on Form 8-K dated July 5, 1996 (as amended July 17,
1996)
    
            Report on Form 8-K dated August 1, 1996

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                               SIGNATURE



    Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.


                                          VETERINARY CENTERS OF AMERICA, INC.




Date:  November 19, 1996                  \s\ Tomas W. Fuller                
                                          -----------------------------------
                                          Tomas W. Fuller
                                          Chief Financial Officer

PAGE 20
<PAGE>

                                EXHIBIT INDEX


ITEM      EXHIBIT                                                      PAGE
----      -------                                                      ----

11.1       Computations of Per Share (Loss) Earnings 

27.1       Financial Data Schedule

PAGE 1