VIN News Service photo
If Petco's bid to buy Thrive Pet Healthcare out of a joint venture goes through, this hospital in Rocky River, Ohio, will be operating under the Vetco Total Care brand in the near future.
Petco Health and Wellness Co. Inc. will significantly expand its reach into veterinary medicine by taking control of all the in-store veterinary clinics currently operated by Thrive Pet Healthcare.
The pet store chain announced this month that it will buy out Thrive's 50% stake in nearly 100 hospitals. The deal is expected to close by June, after which Petco will run the practices itself under its Vetco Total Care brand. The financial terms were not disclosed.
Petco operates more than 1,500 stores in the United States, Mexico and Puerto Rico. More than 1,100 of those stores receive mobile clinic services. In-house clinics are located in nearly 200 stores.
Thrive and Petco formed a joint venture in 2017 to open some of the retailer's first in-store hospitals. At the time, Thrive operated seven standalone clinics in Texas under the brand name Thrive Affordable Pet Care. The business was part of a larger veterinary management company, then called Pathway Vet Alliance, which, at the time, owned more than 100 clinics under multiple brand names.
Pathway changed its name to Thrive Pet Healthcare in November. After the sale to Petco, it will own 340 primary, acute and specialty care practices across the country.
The pet store and the clinic operator provided only general responses to the VIN News Service questions about why they are going separate ways.
"With the continued growth and the demand for high-quality pet care at an all-time high," Thrive Chief Operating Officer Odis Pirtle said via email, "we decided that the time is right to meet the evolving needs of pets and pet parents independently. This means that we will continue operating standalone Thrive Pet Healthcare locations outside of Petco store locations and expanding our network by opening new Thrive Pet Healthcare hospitals across the country."
Petco responded in equally broad terms. "This transition will help us empower our veterinary staff, as well as the team of passionate Petco partners they work hand-in-hand with, to deliver complete pet care," the company said in an email.
Thrive is not the first clinic-operator partnership with Petco to end.
In October 2019, as its foray into the business of veterinary care gained speed, Petco had five partners: Global Veterinary Partners, Thrive, The Pet Vet, VetnCare and VitalPet. After the Thrive buyout is completed, only Global Veterinary Partners will remain.
The Pet Vet owner Dr. Danny Cox told VIN News that he had opened 12 Petco-based hospitals in Texas, Oklahoma, Arkansas and Kansas, and struggled to staff them. He said he approached Petco in 2019 about buying him out, and the deal was complete before the end of the year. Cox described the transition as a "very positive move," adding that every one of his employees who wanted to stay on was able to keep their job at Petco.
VetnCare CEO Dr. Andrew Moffatt declined to comment on his company's separation from Petco. According to the pet store chain, VetnCare was operating three locations when the partnership ended.
Petco said both VetnCare and The Pet Vet "made the decision to refocus their efforts on their own independent hospital strategies," adding that "all VetnCare and The Pet Vet locations in Petco pet care centers transitioned to Vetco Total Care hospital operations."
Petco said customers were notified of the change and that "100% of the veterinary teams" stayed with Petco.
Another company that Petco identified as a partner in a 2019 announcement was VitalPet, a Texas-based business with 24 freestanding hospitals in seven states. But that same year, VitalPet was forced into bankruptcy when three veterinarian partners called in more than a million dollars in promissory notes. Petco said its deal with VitalPet did not go forward. (In March 2020, VitalPet was purchased out of bankruptcy by Destination Pet, another veterinary clinic consolidator.)
That leaves only Global Veterinary Partners as an outside company running clinics in Petco stores. It operates 12 in Florida, all under the name Vetco Total Care, and has no plans to end the relationship, according to CEO Chris Viotti.
"Petco is happy with us," Viotti said, adding that his company is scheduled to open seven more in-store hospitals this year. "They have been nothing but a good teammate. I'm not just saying it. This is real."
Viotti has sold four of his five standalone clinics to focus more on the pet store-based hospitals. "I haven't gotten any indication from Petco that they intend to buy me out," he said.
Petco's push to open in-store veterinary clinics has drawn comparisons to PetSmart, a rival pet store chain that has housed Banfield Pet Hospital clinics since 1994. In 2018, Dr. Whitney Miller, then director of veterinary medicine for Petco, told VIN News that customer demand, not competition with PetSmart, was motivating the move into veterinary care.
PetSmart began recruiting clinic operators other than Banfield in 2018. It has more than 900 hospitals, according to PetSmart's website.
In the Thrive-Petco separation, more than 800 Thrive employees will be affected, according to the companies.
Asked if clinic staff might be given the chance to move to another Thrive practice instead of working for Petco, Thrive's Pirtle echoed the press release, saying that the affected employees would be offered the opportunity to join the more than 27,000 Petco employees.
"We believe that Petco will continue creating a great experience for all team members who choose to join the organization and we are actively partnering with Petco to make the transition as seamless as possible," Pirtle said.
Petco was bought in 2016 by CVC Capital Partners, a private equity firm based in Luxembourg, and the Canada Pension Plan Investment Board, and went public in January 2021.
TSG Consumer Partners, a private equity company based in California, owns a majority stake in Thrive.