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PetMeds vies to be the next pet health and wellness brand

Kimberly Chin
Apr 27, 2023
photograph of matt hulett surrounded by circles and a close up of a dogs nose

Photo illustration: Tiffany Herring/Axios; Photo: Courtesy of PetMed

Since joining PetMeds Express as CEO in 2021, Matt Hulett has orchestrated three strategic investments or partnerships.

Why it matters: Large consumer product goods companies, health care companies and private equity firms are all vying for a piece of the pet care market.

  • The largest online pet retailer Chewy is also entering the fray, recently launching CarePlus, a suite of pet wellness and insurance plans.

What they're saying: “What I want to start doing is provide premium food, prescription food, virtual vet services and insurance to create this kind of health and wellness brand,” Hulett tells Axios.

Catch up fast: Perhaps the biggest bet was PetMeds' acquisition of PetCareRx for $36 million in cash, which closed this month.

  • The deal helped push the company into areas beyond prescriptions, including premium pet food, supplements, treats and supplies.
  • In February, it partnered with pet insurance provider Pumpkin Pet Insurance.
  • Last April, PetMeds invested $5 million in pet telehealth startup Vetster’s $30 million Series B round and became its exclusive partner, launching Vetlive through PetMeds' website.

Zoom in: With more DTC players moving back to physical stores, Hulett says PetMeds had to be thoughtful about which digital commerce channels it chooses.

  • “That's why we've invested in all these things like telemedicine and solutions like that,” he says.
  • New entrants in the space aren’t a threat, he says, adding that it’s a broad market with room for everyone.
  • He likens it to the human world. “There's a bunch of human pharmacies. There's not a 90% market share leader in health for humans, nor do I see that happening in pet.”

The big picture: Total spending in the pet care industry is projected to increase to more than double from 2019 levels to $277 billion by 2030, according to a Morgan Stanley report.

By the numbers: PetMeds had just over $100 million in cash and cash equivalents for the nine months ended Dec. 31, 2022.

  • The company, which trades on the Nasdaq, has a market cap of $320 million as of today.
  • PetMeds posted $58.9 million in sales in the third quarter, a 3% decline from the previous year.
  • About 90% of its sales come from prescriptions, Hulett says, and it has now added more services and products to sell through its acquisition of PetCareRx.

What’s next: The company will slow down on the number of deals it will do to digest the three deals it just signed, Hulett says.

The intrigue: The next burgeoning area is in diagnostics, such as ancestry tests, and biometrics, to better personalize food and health for pets, he says.

  • “A lot of those things are going to be more driven by the consumerization of the health care of the pet, just like we saw in human health.”
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