Vets First Choice of Portland is poised to become Maine’s newest publicly traded company.
The veterinary technology provider plans to merge with the animal health division of an existing public company called Henry Schein Inc., which would be spun off as its own entity, according to a company statement issued Monday.
The new company would be called Vets First Corp. and would be based in Portland, company officials said. The transaction, which is subject to approval by securities regulators, is expected to happen by the end of this year.
Based in Melville, New York, Henry Schein is a global distributor of health care products and services with a presence in over 30 countries. As part of the transaction, Henry Schein will spin off its animal health business and merge it with Vets First Choice, according to the statement.
Upon completion of the transaction, Henry Schein shareholders would own roughly 63 percent of the new company, and Vets First Choice shareholders would own about 37 percent, according to the statement. Henry Schein expects to receive between $1 billion and $1.25 billion in cash from the transaction.
Once the transaction is complete, Vets First Corp. would become Maine’s fourth non-bank publicly traded company, joining Idexx Laboratories Inc. of Westbrook, Wex Inc. of South Portland and ImmuCell Corp. of Portland.
Vets First Choice founder and CEO Benjamin Shaw would become CEO of Vets First Corp., and his father, Idexx founder David Shaw, would become chairman of its board of directors, Benjamin Shaw said in an interview Monday.
“This is a good outcome for Maine,” he said about the company going public. “We are hiring and we have been expanding aggressively in Portland.”
In 2016, U.S. pet owners spent $17 billion on veterinary services and $15 billion on supplies and over-the-counter medications for their pets, according to the American Pet Products Association. However, local veterinary clinics have seen their share of that revenue shrink as more customers have turned to online retailers such as PetMeds and Amazon for medications and other supplies.
Vets First Choice seeks to solve that problem by offering outsourced online pharmacy services to veterinarians, allowing the vet to retain local customers while competing on price with online suppliers. From pet owners’ point of view, the online store appears to be operated by their local vet, but it’s actually Vets First Choice that is filling and shipping the orders from its massive pharmacy in Omaha, Nebraska.
That business model has allowed Vets First Choice to grow quickly – the company provides technology and support services to more than 20,000 veterinary practices. The company has about 800 employees and continues to expand rapidly, Benjamin Shaw said.
In July 2017, Vets First Choice received a $223 million venture capital investment to accelerate the company’s growth and hiring, launch new services and begin a global expansion effort into Europe and Asia.
Shaw said Vets First Choice and Henry Schein offer complementary services to veterinary clinics that, when combined, will represent a comprehensive suite of technology solutions to their daily business challenges.
“Henry Schein is one of the pre-eminent providers of technology services to veterinary practices around the world, and so really, it’s a very complementary set of capabilities and tools to what we at Vets First Choice have been developing,” he said. “An opportunity afforded itself where we could bring these two companies together, spin off Henry Schein animal health and merge them into Vets First Choice in a way that would really electrify our platform and expand our capabilities, and give us an opportunity to extend our platform globally.”
Henry Schein Chairman and CEO Stanley Bergman said the spinoff and merger is a strategic decision that makes sense for his company, which also provides products and services to the human medical and dental industries.
“Over the years we have observed the impressive success of Vets First Choice and believe the combined management team is well-positioned to capitalize on the significant opportunities created by the merger,” Bergman said. “We are similarly excited about the significant growth opportunities for Henry Schein’s dental and medical businesses as we implement our 2018-2020 strategic plan. Building upon our long history of reinvention, the company will continue to expand our offering of innovative solutions for our dental and medical customers. We see significant growth opportunities in both the dental and medical markets.”
Shaw said Vets First Corp. would immediately have a combined market share that comprises about 80,000 veterinary practices worldwide to which it would be providing products and services.
Shaw said it is yet to be determined on which exchange Vets First Corp. shares would be traded, what the company’s stock symbol would be, or at what price each share would be valued initially.
Henry Schein shares trade on the Nasdaq exchange under the symbol HSIC. The value of its shares rose by 1.4 percent in pre-market trading Monday to $72.02 following news of the Vets First Corp. spinoff and merger. The total value of the company’s shares exceeded $11.4 billion as of Monday.
J. Craig Anderson can be contacted at 791-6390 or at:
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