Animal Health News & Notes for February 10, 2023

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Brakke Consulting’s
Animal Health News & Notes for February 10, 2023
Copyright © Brakke Consulting
Editor: Lynn Fondon DVM MBA
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IN THE NEWS:

Brakke Consulting News
2023 Industry Overview at WVC – last week to register

Earnings News
Fressnapf
IDEXX
Krka
Orion
PetMed Express
Phibro
Tyson Foods

Other News
ADM
AskVet
Atomico
Digitail
Dog by Dr Lisa
Elanco
Energique
FarmHouse Consultants
Independent Pet Partners
The J.M. Smucker Co
Jaguar Health
LifeLearn
Nestlé Purina PetCare
Nutrition Partners
Pet Wellbeing
Post Holdings
SAGE Healthcare
Santgar
Select Sires
SignalPET
Voff
Walkin’ Pets
Zoetis (Mhp Guardian)
Zoetis (Select Sires)

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BRAKKE CONSULTING
Announcing the 2023 Brakke Industry Overview
Last week to register!

Presented at WVC: Monday, February 20^th, 2-4 pm, Four Seasons Hotel, Acacia 1

Come join us at Brakke Consulting’s annual Industry Overview presented at VMX and WVC next year.  Key topics and presenters include:

• Industry and top global company performance, presented by Bob Jones
• Continuing consolidation of and labor shortages in vet practices, including their response to inflation, presented by John Volk
• A closer look at pet pharmacy consumerization and how we can all thrive in this new era, presented by Candise Goodwin
• Trends, challenges, and opportunities facing animal health companies in finding talent in today’s business environment, presented by Jeff Santosuosso

Also, moderated by Paul Casady, a panel of industry leaders will discuss their views on the subject of “Managing Animal Health Companies in Times of Uncertainty”.  Panelists for WVC include:

• George Fennell, Senior VP and General Manager, Companion Animal Group Customer Facing Organization, IDEXX Laboratories
• Nicki Baty, President and General Manager, Hill’s Pet Nutrition US

To learn more about and sign up for the Industry Overview, click here.  You can also email Amanda McDavid or call us at 336-396-3916.

www.BrakkeConsulting.com

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EARNINGS NEWS RELEASES

• IDEXX Laboratories announced full year 2022 results. Revenue for the full year was $3,367 million, a year-over-year increase of 5% as reported and 7% on an organic basis. Net income was $679 million, a decline of 9%. Companion Animal Group revenue for the year was $3,059 million, an increase of 6%. (company press release)
• Phibro Animal Health Corporation announced financial results for its second quarter ended December 31, 2022. Animal Health net sales were $164 million, a year-over-year increase of 9%. Animal Health adjusted EBITDA was $37.1 million, a 10% increase. (company press release)
• Orion reported results for the full year 2022. Net sales of the Animal Health unit were EUR 99 million ($106 million), a year-over-year increase of 35% attributable to the June 2022 acquisition of VMD (Inovet). (company website)
• PetMed Express, Inc. announced its financial results for its third quarter ended December 31, 2022. Net sales were $58.9 million, a decrease of 3% compared to the prior-year quarter. Net loss was $(19,000) compared to net income of $4.3 million for the prior year quarter. New customers increased 9% year over year, representing the first customer increase in 2½ years. (seekingalpha)
• Krka reported preliminary unaudited results for the full year 2022. Animal Health Products sales were EUR 93 million ($100 million), a year-over-year increase of 15%. (company website)
• Fressnapf reported results for the full year 2022. Sales were EUR 3.5 billion ($3.76 billion), a year-over-year increase of 11%. (Globalpets)
• Tyson Foods reported results for its fiscal first quarter 2023. Sales were $13.3 billion, a year-over-year increase of 3%. Net income attributable to Tyson was $316 million, compared to net income of $1,121 million in the prior-year period. (Globenewswire)

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KC ANIMAL HEALTH CORRIDOR
ANIMAL HEALTH SUMMIT
NOW ACCEPTING 2023 EMERGING COMPANY APPLICATIONS

The KC Animal Health Corridor is now accepting applications from early-stage companies to present at the 15^th annual Animal Health Summit, held in Kansas City on August 28-29, 2023.

The 15^th annual Summit is one of the only opportunities in the world for early-stage companies in the animal health and nutrition sectors to present their vision, business plan and technology to potential investors.

The selection committee will consider companies that meet the following criteria:
– Seeking $500,000 – $20 million in funding, or strategic partnerships to advance a company’s technology
– Revenue projections of $20 million within 5-7 years

Applications are due by April 3. To apply to present as an emerging company, visit the Animal Health Summit application page .

For more information, contact Kimberly Young at young@thinkkc.com

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COMPANY NEWS RELEASES

• Zoetis introduced Mhp Guardian, the first comprehensive Mycoplasma hyopneumoniae (Mhp) management program that moves Mhp-positive herds into a negative or more stable status and keeps them there. It offers pork producers (in collaboration with their veterinarians) a step-by-step approach that helps guide their operation through a herd status identification process and delivers a customized road map for either a control or elimination program, depending on their specific goals or objectives. (ThePigSite)
• Zoetis announced a partnership with Select Sires to provide a grid marketing service, GeneNet, which will provide Performance Livestock Analytics customers a designated marketing platform to communicate and promote the value of their cattle. Select Sires’ farmer-owners will gain value with access to the Precision Animal Health portfolio from Zoetis, including beef genetic testing and Performance Livestock Analytics software. (Feedstuffs – subscription)
• Elanco Animal Health announced the addition of PenPoint Sort, a bolt-on chute technology system that helps simplify the task of objectively measuring and sorting cattle, to help cattle feeders maximize profitability. PenPoint Sort adds to the existing Elanco Knowledge Solutions portfolio of services. (Drovers)
• Post Holdings, Inc. announced it has signed a definitive agreement to acquire select pet food brands from The J.M. Smucker Co. for $1.2 billion. Post will pay $700M in cash and issue to Smucker approximately 5.39M common shares. The transaction includes leading dog and cat food brands such as Rachael Ray Nutrish, Nature’s Recipe, 9Lives, Kibbles ‘n Bits and Gravy Train, which together generated net sales of $1.4 billion in the year ended April 30, 2022. Post also is acquiring manufacturing and distribution facilities in Bloomsburg, Pennsylvania and manufacturing facilities in Meadville, Pennsylvania and Lawrence, Kansas. The acquisition will provide Post with a compelling entry point into the attractive and growing pet food category. (seekingalpha)
• Nestlé Purina PetCare Company announced it is voluntarily recalling select lots of Purina Pro Plan Veterinary Diets EL Elemental (PPVD EL) prescription dry dog food due to potentially elevated levels of vitamin D. Purina is taking this action after receiving two contacts about two separate confirmed cases of a dog exhibiting signs of vitamin D toxicity after consuming the diet, to date. (PRnewswire)
• Jaguar Health, announced that the Company received formal notice from The Nasdaq Stock Market LLC that Jaguar has regained compliance with Nasdaq’s minimum bid price requirement. (accesswire)
• Nutrition Partners and FarmHouse Consultants have launched Ignite, a functional fatty acid and enhanced yeast supplement designed to deliver next-level results for swine production across Canada and key regions of the U.S. (Feedstuffs – subscription)
• SignalPET announced it is expanding into Hong Kong and South Korea through an agreement with hospital owner SAGE Healthcare. In addition, SignalPET announced it will build a research and development center in Israel. (Todays Veterinary Business)
• Walkin’ Pets announced the launch of the Buddy Up Harness. The Buddy Up Harness allows pet parents to lift, carry, and support senior pets struggling with their mobility. (company press release)
• LifeLearn Animal Health has released its 2023 State of Veterinary Marketing Report, providing insights into the current state of veterinary marketing and where veterinary practices are headed in 2023. (Yahoo)
• AskVet announced the launch of its new natural language answer engine for animal health, VERA (Virtual Engagement & Relationship Agent). In addition to providing consumers with access to VERA, AskVet offers pet brands the opportunity to have their own version of the AskVet answer engine, trained by each brand’s individual information and data sets. (globenewswire)
• Vet software startup Digitail announced it has raised $11 million in a funding round. The firm will use the funds to expand its reach to the US and Canada. The Series A round was led by Atomico, who joins previous investors byFounders, Gradient, and Partec. (Globalpets)
• Independent Pet Partners announced it has filed for Chapter 11 bankruptcy protection while it restructures. The company plans to reduce IPPs store footprint to 66 stores in 5 midwest states under the Chuck & Don’s and Kriser’s banners. (Pet business)
• Pet Wellbeing announced the launch of their first four Chewies products, adding to their existing line of liquid tinctures and powdered herbal supplements. The new products are Epic Mushroom Chewies help dogs bolster their immune system, relax stress & anxiety, and support their cognition; Age Right Chewies to support aging and senior dogs; Kidney Support Chewies; and Itch & Scratch Chewies to support skin allergies and itch discomfort. (Globenewswire)
• Australian pet skincare brand Dog by Dr Lisa announced it is expanding to the US market. The company’s products will be available for purchase on its website, Amazon and slightly over a dozen small retailers. (modernretail)
• SPAIN ADM announced that it has opened a new $30 million production facility in Valencia, Spain. The production facility increases ADM’s production capacity to 50 metric tons per year, and will allow ADM to supply growing markets for probiotics and postbiotics in the US, Asia-Pacific and Europe. The company claims it is the world’s first to produce both probiotics and postbiotics at the same site. (Feedstuffs – subscription)
• NETHERLANDS Voff announced it has acquired Dutch raw pet food producer Energique. Financial terms were not disclosed. (Globalpets)
• MEXICO Santgar, a leading veterinary pharmaceutical company in Mexico, announced the upcoming availability of Excentera LS, a patented delivery system designed to treat immune-mediated eye disease in dogs. Excentera LS is a once-per-month ophthalmic solution that reduces inflammation and improves tear production in dogs with KCS (dry eye). (investorsobserver)

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ANIMAL HEALTH STOCK PRICE TRACKER

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ANIMAL HEALTH NEWS

• NETHERLANDS – BSE An 8-year-old cow that died recently on a Dutch farm tested positive for bovine spongiform encephalopathy, the country’s first case since 2011. The farm where the cow died has been sealed off, and the infected animal did not get into the food chain and does not constitute a risk to food safety. (AVMA SmartBrief – AP)
• US – BEEF HERD The US beef cow herd dropped to its lowest level since 1962, totaling 28.9 million as of January 1, down 3.6% from a year earlier, USDA data showed. This came after severe drought raised costs for livestock feed. (Vet Advantage)
• US – CANINE HEALTH SCREENING The University of Cambridge and the UK-based Kennel Club have developed a Respiratory Function Grading Scheme to measure the severity of brachycephalic obstructive airway syndrome and help make a clinical diagnosis. The US-based Orthopedic Foundation for Animals has licensed the tool for use in the United States and Canada. (AVMA)
• US – PET INSURANCE REGULATION A proposed bill in the Nebraska legislature would establish a legal framework for pet insurance policies and consumer protections in the state, the Nebraska Examiner reports. According to the Nebraska Examiner, the bill’s consumer protections mirror those for health insurance policies, including necessary disclosures on whether certain services are excluded from coverage, whether there are waiting periods, what the policy’s benefit schedule is and how a pet’s preexisting conditions could affect its insurance. It would also set training requirements for insurance providers. (Vet Advantage – Nebraska Examiner)
• US – VETERINARY REGULATION The California Veterinary Medical Board recently began considering a proposal by the state’s Veterinary Medical Association to expand the role of registered veterinary technicians. The proposed rule would allow technicians “to act as agents of the veterinarian to establish a veterinary-client-patient relationship (VCPR) for the purposes of vaccines and parasite preventives. (Vet Advantage – AAHA)
• US – DRUG REGULATION US policymakers are discussing making xylazine a controlled substance as illicit xylazine is increasingly showing up in street drugs that pose grave risks to human users. In addition, the U.S. Drug Enforcement Administration (DEA) has begun its internal process to schedule the drug. The AVMA is closely engaged with the relevant congressional offices and committees, working to maintain veterinary access to this important drug. (AVMA)
• US – REGULATION The FDA’s proposal for redesigning its human food safety program includes establishing the Office of Animal Biotechnology Innovation within the Center for Veterinary Medicine charged with advancing the agency’s regulation of animal biotechnology. The CVM director would also serve as chief veterinary officer unless the director is not a veterinarian, in which case a senior veterinarian within the CVM would serve as CVO. (Pet Products Smartbrief)

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BRAKKE CONSULTING VIEWPOINT
The FTC recently proposed banning non-compete clauses in employment agreements to increase competition and provide career fluidity. The rule would end the practice, retract existing non-competes, and prohibit indicating that anyone is or may be subject to one. Stay clauses for a business sale are exempted. The federal rule would supersede all local rules.

Is this an issue in our industry?  CNBC reports that about 30M Americans are bound by non-competes, including 15% without a college degree and 14% earning less than $40k/yr.

Along with increased autonomy, proponents cite that executives have greater flexibility in circumventing non-competes. Employers will undoubtedly point to resultant cost increases.  Some estimate that salaries will rise by $300B. The Bureau of Economic Analysis recorded nearly $10T in 2020 salaries, making this a 3% impact. CNBC suggests that if confirmed, the ruling will be trimmed.

The legal profession has historically crafted employment terms to protect the hiring company.  The American Veterinary Law Association suggests that veterinarians’ best approach is to stipulate non-solicitation. Dr. Lance M. Roasa, a director at AVMLA, points to geographic and chronological constraints as the most reasonable, practical, and enforceable. Still, for the entire industry from those in the clinic to those serving and supplying them, the current tapestry of local rules draws intensive attention to this issue.  Given the corporatization and shortage of veterinarians and the relatively small animal health industry, this FTC proposal will impact our industry.

Jeff Santosuosso

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YOUR VIEW

Last week, we asked your feelings about virtual-only prescribing for veterinary patients.  The response to last week’s poll was mixed. 25% were in favor; 41% think it may be useful in limited situations; and 35% are against it.

This week
Today’s question: Have you ever been subject to a non-compete?