PetMeds’ CEO: PetcareRx acquisition put the business back in the game

Back in 2021, Florida-based online pet pharmacy PetMeds was struggling to thrive in a saturated market. Then Matthew Hulett was appointed CEO, with a history of redirecting companies from a downward spiral to positive results.

2 years after his appointment, Hulett chats with GlobalPETS about the current state and future of the company after reaching an 11.5% revenue increase for the first time since he started working at PetMeds.

How is PetMeds capitalizing amid economically challenging times?

Medication and the overall core consumables are more resilient in tougher times. Within the medication sector, you do not see many people cutting back. Therefore, we are in more robust categories than some of the other peers that are maybe experiencing trading down in brands or the type of food.

PetMeds has been running for 27 years, and earlier this year, it completed its first acquisition of pet prescription and supplies company PetcareRx. How has this acquisition changed your business?

The investment in PetcareRx was and is to get into the pet food business because PetMeds is largely a prescription pet company. We are excited about expanding our product catalog, and this takeover gives us more distribution capabilities.

Which type of pet food are you focusing on?

Our goal is not to be the lowest cost nor the most premium. For instance, we took on the Purina line and the Purina Pro Plan with prescription food products. By definition, most of our business is based on customers who take their pets to the vet, so they tend to be more focused on health and wellness. Our customers typically want and can afford to spend more on their pets.

What are the synergies between PetcareRx and PetMeds?

There has been some great synergy upside in combining our agreements with our suppliers for PetcareRx, which has been a net benefit. We have been making the business more profitable, which it was not when we bought it. When I took the business on about 2 years ago, the company was declining in a very competitive space. So, we are excited about the future potential of what both companies can do to really grow PetMeds.

PetcareRx is operating as a standalone company. Why?

Our plan is to keep the brand PetcareRx as a standalone brand and not merge the site experience and brand into PetMeds, primarily because the customers that love the PetcareRx product really see a distinctiveness in the market. One of the things that we really love about PetcareRx is they have kind of a wholesale club model. So, you pay a one-time upfront fee, and then you get discounts on products and shipping. We think that is a really interesting model.

How much of your growth is attributed to the acquisition?

The majority of that growth was due to the acquisition. Buying that business, taking their catalog and expanding sales to our customers is the plan moving forward.

In addition to PetcareRx, you partnered with Pumpkin Pet Insurance earlier this year and vet telemedicine and care platform Vetster back in 2022. Are there more acquisitions or partnerships on the horizon? 

From a deal perspective, we have been pretty active for a company that has been operational for 27 years and never really did a deal. So, now it is time to focus on the execution of our recent deals. My message externally to investors is to digest and execute. We are a small enough business with a lot of room to grow. For us, the biggest opportunity is to expand the wallet share of our current customer base.

You increased your customer base by 25% in the last quarter. What are your thoughts on this?

We had organic growth in PetMeds, and I still think we have work to do on our returning base, which has been an area that has been declining. As a company, we want to learn how to make sure that the returning base is stabilized, and part of that is achieved by selling more products—this is why we acquired PetcareRx.

On the other hand, getting those customers onto the recurrent purchase program is also important. In the last quarter, 50% of our sales were from AutoShip, and there is potential for this growth with food in particular. This is why, at some point, we may test some new things related to what PetcareRx does.

Do you have any international expansion plans?

We plan to stay within the US primarily because we operate in such a large market. There is just a lot of opportunity for us to expand our market share.