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PetMeds® Expands Its Reach With Acquisition Of PetCareRx
Online pet medications and wellness company PetMed Express Inc. (PetMeds® ) has reached an agreement to acquire pet prescription and supplies company PetCareRx.
The deal, which is expected to close in the first quarter of this year, is an all-cash transaction valued at $36 million.
The acquisition, PetMeds® CEO Matt Hulett said, "expands the addressable market for PetMeds® , and really gives us immediate, year-over-year growth of the business."
It will enable PetMeds® to quickly expand beyond its core offering of pet prescriptions, and move into areas like premium food, supplements, treats, and other pet supplies.
"This gives us immediate access to a bigger catalog," Hulett said. PetCareRx's 10,000- item catalog is triple the size of PetMeds® current 3,000 SKU catalog. About 90% of PetMeds® current revenue comes from sales of prescription medicines.
"In particular, what we haven't done previously is food," Hulett said. "This gets us into premium and prescription food," he said.
"We'll be able to interact more times over the course of the year, which increases our lifetime value with our customers and creates more stickiness," he said.
PetCareRX brings 200,000 customers and $42 million in annual revenue to PetMeds® . PetMeds® intends to continue to operate the consumer-facing PetCareRx ecommerce brand as a separate entity.
Jeanette Loeb, CEO of PetCareRx, said in a statement released by PetMeds® that "joining forces with PetMeds® will enable a more holistic pet wellness experience with greater resources and scale."
PetMeds® plans to discuss the transaction at an analyst day webcast and conference call January 19.
PetMeds® expects the acquisition will accelerate its revenue growth above the industry average. which is forecast to be 15% annually.
The acquisition comes nine months after PetMeds® announced a partnership with pet telehealth company Vetster. PetMeds® acquired a minority stake in Vetster in that deal, which gives Vetster access to the 2 million pet owners and 70,000 vets who use PetMeds® .
When that partnership was announced in April, 2022, Hulett said it was part of his strategy to unlock growth and position PetMeds® as a pet health expert beyond filling prescriptions.
PetMeds® is a 26-year-old publicly traded company based in Delray Beach, FL.
For most of its life it has been a low-growth, but high-dividend yield company, with stable revenue and loyal returning customers.
Hulett came onboard as CEO in 2021 with a goal of turning PetMeds® into a growth company.
"We're a small cap, profitable ecommerce company. There's not many of those in the world," Hulett said.
PetMeds® has been able to maintain its place in pet prescriptions, he said because "the prescription pet medicine space has a little bit of a strategic moat around it."
"There's a lot of logistics," Hulett said. "You have to be regulated in all 50 states. We get physical vet authorizations for every order that's prescription-based. So we're in the harder part of ecommerce retail."
"We're the largest pure play online pharmacy out there," he said. While pet e-tailer Chewy has a large pharmacy operation, "the big retailers like Target and Walmart outsource that," he said.
"I think its going to be a big opportunity for PetMeds® in the future because as we start addressing other things for our customers - care, wellness, medication, and diet - it's going to enable us to grow the business," Hulett said.
"The Rx pet medication space isn't something that a lot of online retailers that are really big really want to take on," he said.
The big pet retailers, however - Chewy, Petco, and PetSmart - all are vying to be the leading one-stop shop for pet owners, including for pet medicines and prescriptions.
PetSmart in 2021 launched its online pharmacy, Petco is expanding its network of in-store vet clinics, and Chewy is offering incentives to vets to funnel prescriptions through Chewy.