In what Stanley M. Bergman, chairman and CEO of Henry Schein Inc., called “a prime opportunity to better serve veterinarians and to improve their business,” the global distributor in April announced plans to merge its animal health business with Vets First Choice to form an independent public company.
The new company, Vets First Corp., would provide veterinary prescription management services in combination with Henry Schein’s existing animal health products and services.
“We are early in the life cycle of rapid technological change in the animal health market,” said Ben Shaw, founder and CEO of Vets First Choice, who would become CEO of the new company. “This merger creates an enhanced-value chain that connects the veterinarian, the manufacturer and the pet owner through insights and analytics that will support better clinical and financial outcomes. ”
The deal, which is expected to close by late 2018, would leave Henry Schein Inc. with its human medicine and dental businesses. The Melville, New York, company expects to net $1 billion to $1.25 billion in tax-free cash from a transaction called a Reverse Morris Trust.
Henry Schein Animal Health, based in Dublin, Ohio, employs 4,300 people and does business worldwide. Half of U.S. veterinary clinics use Henry Schein practice management software, the company stated.
Vets First Choice, founded in 2010, has 750 employees and enrolls 5,100 veterinary practices in its prescription management program.
The merged company would be headquartered in Portland, Maine, the home of Vets First Choice.
A Today’s Veterinary Business sister publication, Veterinary Advantage, posed questions to Henry Schein and Vets First Choice. The following are responses from Bergman and Shaw.
The combined company should enable Vets First Corp. to drive up compliance numbers on a much larger scale, benefiting pets and creating more volume for Vets First and its manufacturing partners. Can you give us a sense of what kind of influence you hope to have with compliance in some of the core categories?
Shaw: Through the combined capabilities of Henry Schein Animal Health and Vets First Choice, Vets First Corp. will enable unique insight, analytics and services that will help veterinarians provide more effective care to their patients by identifying, managing and closing gaps in care. An integrated end-to-end platform offers veterinarians the ability to leverage insight, engagement and outcomes both online and in-clinic. Improvements in compliance for medications, diagnostics, nutrition, vaccinations, dental programs and more unlocks new significant category growth for veterinary partners and manufacturers and fundamentally strengthens the importance of the vet-client-patient relationships.
The deal references the end-to-end technology that can be brought to the market on a larger scale, given Henry Schein Animal Health’s reach. Pet owners, who have been challenging and expensive to reach, are an integral piece of this end-to-end story. What are the expectations around pet owner behavior and opportunities beyond compliance?
Bergman: One of the largest motivating factors behind this merger was both companies’ desire to better serve pets and their owners, and we believe that bringing together the power of data analytics, digital communications, practice management software, and supply chain expertise into one combined company, Vets First Corp., is better positioned to help improve health outcomes for the benefit of pets and pet parents while also helping veterinarians build more efficient and successful practices.
Henry Schein Animal Health brings more than three times the number of U.S. veterinary practices to the newly formed company. Tell us about the expectations of the Henry Schein inside and outside sales reps with these new potential customers. Are the expectations to bring many of the practices onto the Vets First platform?
Bergman: By combining two best-in-class providers of animal health services and solutions, Vets First Corp. will be able to offer veterinarians new ways of generating growth for the benefit of their practice and, ultimately, for the pet owner and the patient. Henry Schein Animal Health’s sales force will be an integral part of that.
While it is premature to go into specifics, there is tremendous opportunity for our sales representatives to harness Vets First Choice’s data analytics and other technologies to gain more business, and we look forward to working with our sales leaders and sales representatives to help them make the most of those opportunities.
Do you have a sense of how the logistics will be handled?
Bergman: This merger is motivated by growth for all the companies involved, and Henry Schein Animal Health’s existing distribution network is a key reason why our customers rely on us for the products and services they need to provide quality care to their patients while operating efficient and successful practices. We will work with Vets First Choice to assess both companies’ logistical operations to ensure that we maximize our collective strengths for the benefit of our customers and improved health outcomes for pets everywhere.
Where are the current Vets First Choice warehouses, and can they accommodate the greater needs of veterinary practices, or are they just set up for delivering pharmaceutical products to pet owners on behalf of the practice?
Shaw: Vets First Choice is headquartered in Portland, Maine, with pharmacy and service operations in five other U.S. locations. Our largest facility is a specialty pharmacy facility dedicated to serving the ever-growing specialty needs of veterinarians. As part of the expansion of our facilities network, we announced earlier this year a new facility to be built in Portland that will also include a specialty pharmacy as well as a technical high-speed pharmacy.