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Business & Economics
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Rise of veterinary chain ownership begets Canadian group purchasing
4/10/2013
Uniform pricing tradition gives way
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Banfield expansion brings new stand-alone clinics
3/28/2013
Eight in Portland, Ore.; other cities possible
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Group purchasing activity on upswing in veterinary medicine
2/28/2013
Organizations proffer bulk discounts to independent practices
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Is the doctor in?
12/5/2012
Veterinarians grapple with demand for extended hours
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Ultrasound machine salesman pleads guilty to theft
11/8/2012
Plea follows indictment of Patrick Jackson
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Satellite practices: academic evolution or unfair competition?
10/26/2012
OSU to open emergency, specialty practice in Columbus suburb
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Veterinarians recount ordeals with major lender
9/6/2012
Wells Fargo strives to 'serve as a trusted advisor to veterinarians'
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Hospital chain headhunts for talent among veterinary practice staff
7/3/2012
Veterinarians debate ethics of Banfield's recruiting methods
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No simple answers on supply and demand in veterinary profession
5/29/2012
Workforce data outdated, conflicting
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Veterinarian opens up about going undercover
5/22/2012
Flea-product diversion adventure twisted, turned
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Veterinarian investigates illicit diversion of flea products
5/8/2012
Gray-market sales veiled by deception, intrigue
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‘Why are vets so expensive?’
4/13/2012
Practitioner tackles sensitive question
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Veterinary diagnostics giant sues multiple practitioners
3/9/2012
VCA Antech alleges breach of extended lab service contracts
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VCA Antech buys largest Canadian veterinary chain
1/26/2012
Associate Veterinary Clinics operates 44 clinics in three provinces
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Veterinarians confront Internet pharmacy PetMed Express
1/16/2012
Company acknowledges: ‘Some mistakes were made’
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Veterinary practices inch back to growth
1/1/2012
Surveys of third-quarter results show some improvement
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PetMed Express stumbles
12/8/2011
Competitive pressure up in veterinary-drug sales
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Credit card processors pass costs of IRS rule to merchants
12/2/2011
Negotiate to have fees waived, expert advises
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Loan broker accused of bilking veterinarians now sells wellness plans
11/10/2011
Ron Paterson draws more complaints
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Bid to bring veterinary education to Alaska stirs debate
11/9/2011
Fears of oversaturation weigh on need for more veterinarians
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Merial knows, diverting veterinarians assert
11/4/2011
Maker of Frontline denies the company condones, encourages diversion
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More veterinarians sue flea products broker WTF Wholesale
11/4/2011
Claims collectively top a half-million dollars
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Equipment dealer deludes some, aids others
11/2/2011
Ron Sassetti earns mixed reviews from veterinarians
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‘Free’ Hill’s cat food samples not exactly free
10/24/2011
Veterinary clinics report accepting samples triggers orders for more
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Subterfuge, confusion surround new credit, debit card rules
9/30/2011
Merchant savings on fees not automatic
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VCA's buy of Vetstreet raises worries about control of clinic data
9/1/2011
New owner says it will not inspect clinic information
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Complaints mount against gray-market broker WTF Wholesale
8/29/2011
Problems open view into world of flea product diversion
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Entest to use veterinary practices as revenue driver, research venue
8/23/2011
Concerns about setup point to potential conflicts of interest
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Amerisource Medical under investigation by police in two states
8/3/2011
Ultrasound-equipment vendor accused of cheating customers
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Out of the frying pan, veterinarians mix economic uptick with uncertainty
7/28/2011
Increased competition likely to blunt recovery for veterinary clinics
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New poll finds many clinics in flagging health
7/18/2011
Study: Advertising, communication, consistency key to boosting veterinary visits
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Pfizer seeks to unload animal health division
7/8/2011
Sale or spin-off expected
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Tight job market squeezes large-animal veterinarians
6/27/2011
Some say shortage of food-supply practitioners is over
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Gilded Lilly? Bayer challenges Elanco claims
6/24/2011
Bayer challenges Elanco claims about diversion, loyalty to veterinarians
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Veterinary technicians: Opportunities, but at what cost?
6/9/2011
Support staff cite low wages, spotty professional respect
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Tough job market compels dogged hunt by new veterinarians
5/19/2011
Fewer grads enjoy luxury of multiple offers
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Proposal for new Banfield hospital prevails over objections
5/6/2011
Veterinarians in California city seek to resist ‘Wal-Martization’
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ISU wins first round in litigation against veterinarians
5/3/2011
Specialists barred from competing with ISU hospitals fight back
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PLIT rolls back workers' comp advice for relief veterinarians
3/29/2011
Broker Hub International issues clarification
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Thrift commerce meets veterinary medicine in GroupDVM
2/10/2011
Company uses 'power in numbers' to leverage deals for veterinarians
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Study: Veterinarians can reverse decline in visits
1/27/2011
Report identifies contributing factors and ways to counter the trend
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Price soars on popular antibiotic metronidazole
1/13/2011
Limited competition among manufacturers behind increase
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Target tests market for pet medications
12/22/2010
Trend in retail sales of veterinary drugs accelerating
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Veterinarian struggles to protect her online reputation
12/8/2010
Practitioner suspects Internet extortion is at play
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Canine Health Institute closing its doors
11/18/2010
Veterinary center for pain, rehab, imaging, neurosurgery was unique
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Clinic owner struggles with ultrasound-equipment vendor
11/17/2010
Amerisource Medical blames veterinarian’s location for shipment delay
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Veterinary Medicine Loan Repayment Program gets off ground
11/9/2010
First USDA awards go to 62 recipients
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Frontline, ProMeris not going OTC, manufacturers say
11/8/2010
Veterinary market research survey gives confusing message
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NAS veterinary workforce study nears release
10/28/2010
Stakeholders expect report to shed light on supply and demand in America
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Navigating credit card security requirements
10/21/2010
Compliance isn't cheap or easy
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PetMed Express reports slip in sales
10/19/2010
Ad costs rise as consumer spending falls with the online pharmacy
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Lawsuit raises questions about sale of drugs to non-veterinarian
10/13/2010
Case brought by Bayer against shelter rescheduled for Dec. 2 hearing
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Health credit programs: safety net or predatory lending?
10/4/2010
NY state investigation puts veterinarians on the defensive
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CEVA buys Summit VetPharm
9/2/2010
Plans to market Vectra parasiticides globally
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Just say 'no' to telephone solicitors
8/23/2010
Clinic owners describe latest scheme involving Discover, Legal Club of America
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PVP, subsidiaries seek bankruptcy protection
8/23/2010
Veterinarians dismayed by state of company
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PVP faces bankruptcy; veterinarian investors stand to lose
8/12/2010
SEC filings reveal distributor entered into forbearance with lender
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Economic recovery still bumpy for veterinarians
6/8/2010
After first-quarter gains, California veterinary practice revenues slip in April
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Bayer wins some, loses some
4/28/2010
New sales policy continues to reverberate
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Veterinary publishers mixed on future of print journals
4/23/2010
Amid advertising decline, MediMedia bets on online services; others say print runs far from over
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Veterinarians bear brunt of software shortfalls, vendor growing pains
4/12/2010
VIA asks for patience as company updates practice management software
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Businesses join veterinarian in Yelp class action lawsuit
4/1/2010
DVMs need guidance for dealing with online reviews
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PetSmart first retailer to carry Advantage under new Bayer policy
3/17/2010
Banfield and other clinics turn away
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Merial details company stance on product diversion
2/26/2010
Executives speak out after veterinarians question company loyalty
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Bayer opens flea product sales to retail outlets
2/10/2010
Citing diversion, company ends policy of selling only through veterinarians
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PM software maker ImproMed buys VETECH
1/16/2010
Second acquisition for ImproMed within six months
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2009 brought huge consolidations in animal health industry
12/21/2009
Butler and Schein merger latest in a series
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Assets of a slow economy
12/7/2009
Putting life back into the work-life balance equation
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Merial reports Immiticide, Heartgard shortages
12/5/2009
Rationing of Immiticide leaves some veterinarians in a lurch
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Regulatory fee increases raise veterinarians' hackles
10/29/2009
California board readies to impose stiff price increases
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Sidewiki hijacks sites, puts reputations at risk, critics say
10/2/2009
Dangers of Google review tool spark concerns from veterinarians
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Online directory earns mixed reviews from veterinarians
9/16/2009
VINners air grievances about LocalVets.com, now known as YextVets
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Survey suggests recession spares many veterinary practices
9/3/2009
Reports show specialty, emergency practices bear brunt of downturn
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Activists go after stores selling dogs from puppy mills
7/27/2009
Movement to stamp out large commercial breeders gains traction
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California tax officials target breeders via Internet
6/29/2009
Officials search for those who skirt tax obligations
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Funding woes kill Fresno lab, haunt DVM program
6/26/2009
Calif. budget crisis wreaks havoc on veterinary medical education
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Advanta Bank to close all credit accounts this week
5/27/2009
Card issuer catered to small businesses
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Veterinarians must comply with Red Flags Rule by May 1
4/22/2009
Most practice owners already meet requirements, AVMA official says
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Veterinary charity highlighted by economic woes
3/30/2009
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Economic downturn hits veterinary practices
3/11/2009
New VIN survey results anticipated
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COBRA subsidy puts more onus on employers
3/3/2009
New rules likely burdensome, experts say
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Calif. veterinary service tax proposal dies
2/25/2009
Issue could re-emerge in future budgets
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Off the table?
2/12/2009
Calif. sales tax on veterinary services loses steam
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Tax experts stress the economy this year
2/3/2009
Pay attention to practice management, they say
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New center aspires to help dogs that might otherwise be euthanized
2/2/2009
Rehab, pain management and imaging under one roof in Houston
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Reports show veterinary practices hurting
12/24/2008
Veterinarians feeling nation's longest recession in a quarter century
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Fed adopts consumer credit-card protections
12/19/2008
VIN members wary of other finance deals
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Fuel prices drop, yet surcharges remain for diagnostic services
12/18/2008
DVMs push back; Antech drafts letter to explain fees
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Survey Finds Economy Eroding Revenues
12/5/2008
The present depression in the economy is starting to be felt now, according to a survey of Veterinary Information Network members.
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Dr. Tice's interest rates reversed and refunded
11/26/2008
In a classic case of oil going to the squeaky wheel, a veterinarian whose soaring credit card interest fees roused indignation has gotten a refund on excessive interest charges.
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Henry Schein Executive Says Privacy Rules Impede Inquiry Into Credit Card Rate Hikes
11/20/2008
Company says most cardholders are unaffected
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Soaring credit card rates raise eyebrows, hackles
11/14/2008
Dr. Tice warns colleagues to watch their credit card interest rate; Henry Schein offers to advocate on behalf of customers using their affinity card.
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Sales Tax on Veterinary Services
11/11/2008
California may impose a sales tax of as much as 10.25 percent on veterinary services if a proposed economic plan from Gov. Arnold Schwarzenegger is passed.
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Brokers say Economy Not Hindering Capital
10/28/2008
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Pet food prices squeeze owners, veterinarians
10/27/2008
Prescription diets costs skyrocket, setting off consumers
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Brakke to release economic downturn report
10/10/2008
Study to publish in mid-December
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AVMA to release economic data
9/9/2008
Biennial economic survey, starting salaries report set for publication
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Handshakes are history; read the fine print, consultant says
8/26/2008
Product purchase gone wrong burns veterinarian
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CPA accused of stealing $2.7 million from VPI
7/23/2008
Stephen Anthony Friekin faces 103 felony counts of money laundering
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Feeling the economic pinch? Stop giving away services, consultant says
7/22/2008
Dr. Thomas Catanzaro suggests ways to earn more income
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Landscape for business refinancing wide open, bankers say
Go local for low rates, veterinarian suggests
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On the record
The VIN News Service recently conducted a Q&A session with the American Veterinary Medical Association and its indemnity arm, the Group Health and Life Insurance Trust (AVMA-GHLIT). The discussion explores the controversial partnership that’s emerged between GHLIT and Pets Best Insurance, a private entity.
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December 8, 2011
By: Jim Downing
For The VIN News Service
 Click here for larger view
Losing sales to new competition from retailers as diverse as Target, Amazon and PetSmart, the corporate parent of 1-800-PetMeds has reported shrinking profits for six quarters in a row and is on its way to a second straight year of declining revenue. The company’s stock price has dropped 45 percent since the beginning of the year.
While PetMed Express has substantial cash reserves and is still quite profitable — as of Sept. 30 it had $57 million in the bank and reported profits of $17.44 million for the previous 12 months — it has lost the momentum that placed it among the hottest publicly traded small companies just a few years ago.
But PetMed Express's declining fortunes don’t necessarily mean good news for veterinary practice owners, many of whom have chafed at the Miami-area company’s television commercials encouraging pet owners to “skip a visit to the veterinarian” and buy medications online. That’s because the same retailers that are grabbing sales from PetMed Express are also looking to eat into veterinarians’ still-dominant position in the pet medication market.
According to market research data in a PetMed Express investor presentation, veterinary clinics control roughly 67 percent of the $3.8 billion pet medication market. PetMed Express Chief Financial Officer Bruce Rosenbloom said the $3.8 billion figure includes only over-the-counter and prescription pet medications that are sold to consumers; it does not include products that would be used only in an animal hospital, such as surgical anesthetics.
Brick-and-mortar retailers including Target, Wal-Mart, Walgreens, PetSmart and their respective websites account for 22 percent of the market. PetMed Express has slightly more than 6 percent of the market, while all other online and mail-order retailers, including Amazon, account for 5 percent.
Thus, there is still money to be made taking business away from veterinarians, and retailers are upping their efforts. During the past year, Target has dramatically expanded its veterinary pharmacy program from a pilot effort in four states launched in fall 2010 to 670 stores in 25 states. Kroger, the nation’s largest grocery chain, now is carrying prescription and over-the-counter pet medications in its pharmacies. Amazon.com frequently sells a six-dose package of the popular flea and tick treatment Frontline Plus for at least $10 less than 1-800-PetMeds, a discount of 13 percent or more.
“They all see this as an opportunity to increase sales and do cross-marketing," said Donald Plumb, a retired pharmacist, author of Plumb’s Veterinary Drug Handbook and former director of the University of Minnesota’s veterinary teaching hospital.
One factor driving the push by retailers is the relatively recent easing of constraints on the supply chain for over-the-counter pet medications — especially big-selling flea and tick treatments — that most manufacturers ostensibly distribute only through veterinary clinics, said Dr. Race Foster, a veterinarian who has run mail-order pharmacy Drs. Foster & Smith since 1983.
Through a practice known as diversion, veterinarians sell these medications to brokers, who then supply retailers. Diversion of non-prescription drugs generally is not illegal, though some states require resellers to have a license to distribute.
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“Until (two years ago), it was pretty much cash on delivery, and it was difficult to get. Now there's no difficulty in obtaining any product,” Foster said. “The cost has come down on the diverted product, and you don't have to pay cash. It's everywhere out there.”
Consequently, treatments like Merial’s Frontline Plus, which the company insists it distributes only to veterinary clinics, are available widely on the websites of major retailers at prices that are similar to or lower than what’s available at 1800PetMeds.com.
Edward Woo, a research analyst with Wedbush Securities, a financial services and investment firm, noted that an estimated 65 percent of PetMed Express sales are over-the-counter items (mainly flea and tick products), meaning that the company is heavily exposed to competition from bigger retailers. Woo said there’s somewhat less competition in the prescription veterinary drug niche, in part because of licensing requirements. He anticipates that PetMed Express’ sales will continue to fall next year as customers buy over-the-counter products elsewhere. But he also predicts the company will maintain its strong position in the prescription-medication niche and anticipates revenues to rebound somewhat in 2013.
Prices as of Dec. 8 on Frontline Plus, 6 doses, for 45-88 lb. dogs:
In the company’s most recent quarterly earnings conference call, in October, CEO Menderes Akdag said the company plans to increase advertising spending in the coming year in hopes of boosting sales. He attributed the falling revenue to increased competition as well as to the company’s decision to delay carrying the generic versions of Frontline and Frontline Plus due to pending legal action by Merial against the makers of the generics. Other retailers have been carrying the generics, which are highly profitable, Akdag said.
Beyond plans to increase advertising and carry generic Frontline, Akdag gave no indication of changes the company would make to reverse the decline in revenue and profits — a position that some analysts see as complacent.
“They have no irons in the fire to make them compete against PetSmart or Target or Wal-Mart,” said one analyst, who is precluded by her employer’s policy from being identified by name. “Personally, I think PetMed Express is going to go the way of the Yellow Pages,” she said.
Rather than investing in major new initiatives or acquiring other companies, PetMed Express has been returning cash to shareholders in the form of dividends and share buybacks. It pays a large dividend (over 5 percent of share value annually at the stock’s current price, compared with an average of 1.44 percent for stocks in the Russell 2000 small-cap stock index, of which PetMed Express is a part) and has spent roughly $70 million since 2008 — with plans to spend an additional $10 million — repurchasing company stock to help support the price.
In an interview, CFO Rosenbloom said that the company has been — and remains — quite profitable, and that the company has little short-term need for its accumulated cash.
"We really have set ourselves up for the long term. Going forward on a cash-requirement basis, we're really in a maintenance mode. Our capital expenses should be $500,000 to $1 million" per year, he said.
Founded in 1996, PetMed Express enjoyed several periods of rapid growth during the 2000s. In 2006, BusinessWeek featured the company at number 27 in its issue on “Hot Growth Companies.” From 2006 to 2008, PetMed Express ranked in the top six on the Forbes list of the nation’s best small companies. Company founder Marc Puleo, MD, an anesthesiologist, threw big parties at his Miami Beach home, purchased in 2004 from pop singer Enrique Iglesias for a reported $7.8 million.
As the company grew, it alienated the veterinary community. In the early years, PetMed Express employed veterinarians who would prescribe medications over the telephone without ever seeing a patient, a practice that led regulators in several states to take disciplinary action. Advertising campaigns have stressed the notion that medications sold through veterinary clinics are overpriced.
Many in the profession continue to feel animosity toward PetMed Express. News that the company was scheduled to have a booth at the upcoming North American Veterinary Conference (NAVC) sparked substantial protest on the NAVC Facebook page and a petition drive urging the conference to turn PetMed Express away. By Dec. 6, the controversy had grown to the point that PetMed Express withdrew from the conference.
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