Animal Health News & Notes for May 8, 2020
Copyright © Brakke Consulting
Editor: Lynn Fondon DVM MBA
IN THE NEWS:
Brakke Consulting News
COVID-19: Impact on Pet Care reports
Central Garden & Pet
Spectrum Brands Holdings
Animal Health International
COVID-19: IMPACT ON PET CARE
A 2020 STUDY IN 3 WAVES
The pandemic that struck the US and the rest of the world in early 2020 is an event that has altered personal lives and business operations unlike any other event.
To help you make prudent decisions during this disruptive period, Brakke Consulting is launching a new 3-wave tracking study, COVID 19: Impact on Pet Care. The study is based on an online pulse survey of a nationally representative sample of 1,000 pet owners conducted every few weeks starting in May 2020.
The study will deliver 3 reports, roughly 4 – 6 weeks apart, beginning in late May. The cost of the study is $17,500. For more information, contact John Volk at firstname.lastname@example.org .
COMPANY EARNINGS RELEASE
- Zoetis reported its financial results for the first quarter of 2020. Revenue was $1,534 million, an increase of 5% compared with the first quarter of 2019. On an operational basis, revenue increased 7% excluding the impact of foreign currency. Net income was $423 million, an increase of 36%. Revenue in the US segment was $786 million, an increase of 9% compared with the first quarter of 2019. The International segment grew 1% on a reported basis and +4% operationally. (company press release)
- Elanco Animal Health reported its financial results for the first quarter of 2020. Total revenue was $658 million, a decrease of 10% (-9% percent currency adjusted) due to a reduction of approximately $60 million in channel inventory driven by factors resulting from the COVID-19 pandemic. Net loss was $(49.1) million compared with net income of $31.5 million for the same period in 2019. (company press release)
- Phibro Animal Health Corporation announced its financial results for its third quarter ended March 31, 2020. Net sales were $211 million, an increase of 2% compared to the prior-year quarter. Animal Health sales were $139 million, an increase of 8%. Net income was $13.5 million compared to net income of $14.8 million for the three months ended March 31, 2019. (company press release)
- Nippon Zenyaku Kogyo (Zenoaq) reported results for the fiscal year ended March 31, 2020. The company reported turnover of JPY 39.1 billion ($366 million), representing year-on-year growth of 7%. Zenoaq’s companion animal business continued to drive the firm’s performance, with a 9% increase in sales to JPY 21.7 billion ($203 million). (Animal Pharm)
- Heska Corporation reported financial results for its first quarter ended March 31, 2020. Revenue was $30.7 million, a 4% increase from the first quarter of 2019. Core Companion Animal segment revenue increased 11% to $27.3 million. Net loss attributable to Heska was $(5.3) million, compared to net income attributable to Heska of $0.8 million in the prior year period. (GJSentinel.com)
- Colgate-Palmolive Company reported results for first quarter 2020. Hill’s Pet Nutrition sales were $719 million, an increase of 20% over the prior-year quarter. Operating profit for the segment was $203 million, an increase of 24%. (company press release)
- PetIQ, Inc. reported financial results for the first quarter of 2020. Net sales were $187 million, an increase of 26% from from the prior-year quarter. Product segment sales were $166 million and Services segment revenues were $21 million. The increase in consolidated net sales primarily reflects growth in existing retail partners and sales contribution from the recent Perrigo Animal Health acquisition. Net loss was $(2.6) million, compared to net income of $2.3 million in the first quarter of 2019. (company press release)
- PetMed Express, Inc. announced its financial results for its fiscal year ended March 31, 2020. Net sales for the full year were $284 million, flat compared to the prior fiscal year. Net income was $25.9 million compared to net income of $27.7 million in the prior fiscal year. Net sales for the quarter ended March 31, 2020 were $74 million, an increase of 15% compared to the quarter ended March 31, 2019. (company website)
- Spectrum Brands Holdings, Inc. reported results for the second quarter of fiscal 2020 ended March 29, 2020. Global Pet Care sales were $237 million, an increase of 10% compared to the prior-year quarter. Excluding unfavorable foreign exchange impacts and acquisition sales, organic net sales grew 10.6%. (company website)
- Central Garden & Pet Company announced financial results for its fiscal 2020 second quarter ended March 28, 2020. Net sales for the Pet segment rose 7% to $361 million compared to the same period a year ago, aided by the Company’s C&S acquisition; organic Pet sales increased by 4%. The Pet segment’s operating income increased 25% to $33.6 million. (company press release)
- Freshpet, Inc. reported financial results for its first quarter of 2020. Net sales were $70 million, an increase of 28%. Net loss was $(3.6) million, compared with prior-year net loss of $(3.4) million. Adjusted EBITDA was $5.7 million, compared to $2.8 million in the prior-year period. (company website)
- Trupanion, Inc. announced financial results for the first quarter of 2020. Total revenue was $111 million, an increase of 28% compared to the first quarter of 2019. Net loss was $(1.1) million compared to a net loss of $(1.3) million in the first quarter of 2019. Total enrolled pets (including pets from the company’s other business segment) was 687,435 at March 31, 2020, an increase of 25% over the first quarter of 2019. (company press release)
COMPANY NEWS RELEASES
- Zoetis announced the release of INHERIT Select, a suite of new genetic testing and decision-making tools designed specifically for commercial cow/calf operations. INHERIT Select offers genomic expected progeny differences (GEPDs) providing commercial cow/calf producers with genetic insights to make critical replacement female selection and breeding decisions. (Feedstuffs)
- Virbac announced the launch of Easotic (hydrocortisone aceponate, miconazole nitrate, gentamicin sulfate) Otic Suspension for Dogs in a pump applicator. One squeeze of the prescription medication releases 1 milliliter of medication, which is administered once a day for five days to treat otitis externa. Each bottle contains 10 doses. (Todays Veterinary Business)
- The FDA announced it has approved Aurora Pharmaceutical’s Revolt (generic selamectin) topical solution for the prevention of heartworms and treatment of fleas, mites, and other parasites in dogs and cats. (FDA)
- Bimeda announced the launch of BimaGard 12.5% (tiamulin hydrogen fumarate) Liquid Concentrate for use in swine. (company press release)
- The FDA announced that Animal Health International , was sentenced this week after previously pleading guilty in February 2020 to introducing misbranded drugs into interstate commerce. AHI was ordered to pay a forfeiture money judgment of over $46 million, $1 million to the Virginia Department of Health Professionals, and a $5 million fine. In addition, AHI was placed on probation for a period of one year. All of those amounts have been paid in full pursuant to the plea agreement. At the time of the guilty plea, Patterson Companies, Inc., AHI’s corporate parent, entered into a non-prosecution agreement in which it committed to enhance its compliance program and fully comply with the law. (FDA)
- OPTI Medical Systems, Inc., a subsidiary of IDEXX Laboratories specializing in the design and manufacturing of point-of-care and laboratory diagnostics for human medicine, announced that the FDA has granted Emergency Use Authorization (EUA) for the OPTI SARS-CoV-2 RT-PCR laboratory test kit for the detection of SARS-CoV-2, the virus that causes COVID-19. This announcement follows earlier validation of the test by the Institut Pasteur of France. (company press release)
- Vetsource announced it has acquired a majority position in Vet2Pet, a client engagement platform for veterinary practices. The Vet2Pet platform includes a practice-branded mobile app with a telemedicine solution. Financial terms were not disclosed. (company press release)
- ezyVet announced its new integration with Zoom, bringing virtual appointments and telemedicine capabilities to veterinary practices within its Practice Management Software. (company press release)
- EpiVax and Pacific GeneTech announced a collaboration to develop a vaccine for African swine fever (ASF). (Animal Pharm)
- EU Merck Animal Health announced the European launch of Nobivac Myxo-RHD Plus rabbit vaccine. The live recombinant vaccine is the first single-injection vaccine to reduce mortality and clinical signs of myxomatosis and rabbit hemorrhagic disease (RHD) strains RHDV1 and RHDV2. (Animal Pharm)
- CANADA Neogen Corporation announced that Health Canada has granted temporary approval for Neogen to supply Neogen Viroxide Super disinfectant to aid in the country’s fight against COVID-19. Simultaneous to receiving this temporary approval, Neogen is also working with Health Canada to receive a Drug Identification Number (DIN) registration for Neogen Viroxide Super, which will allow approval for the disinfectant in Canada subsequent to the outbreak. (company press release)
- CANADA Aliments Mackenzie announced it has acquired the raw pet food brand Karnivor. Financial terms were not disclosed. (Petfood Industry)
- NETHERLANDS United Petfood announced it has signed a letter of intent to acquire Netherlands-based Jonker Petfood. Financial terms were not disclosed. (Petfood Industry)
ANIMAL HEALTH STOCK PRICE TRACKER
ANIMAL HEALTH NEWS
- INDIA – ASF Authorities in India have confirmed the country’s first ever cases of African swine fever (ASF). Producers in the state of Assam were alerted to a possible outbreak in late April after more than 2,000 pigs died after showing symptoms of the virus. Assam is India’s largest pig-producing state, with a herd of about 2.1 million animals in 2019. (Animal Pharm)
- US – VETERINARY CONFERENCES For only the third time in history, the American Veterinary Medical Association has canceled its annual convention, this time because of the COVID-19 pandemic. The event had been scheduled for July 31 to Aug. 4 in San Diego. All attendee registration fees will be refunded. For more information click here. (Todays Veterinary Business)
- US – DRUG SHORTAGES FDA is publishing a guidance for animal drug sponsors to ascertain as early as possible, any shortage or potential shortage that is likely to lead to a disruption in the availability of animal drugs or their components in the US. The guidance aligns with similar FDA recommendations released in March for sponsors of human drugs and biologics and is intended to remain in effect only for the duration of the public health emergency related to COVID-19. For more information click here. (FDA)
BRAKKE CONSULTING VIEWPOINT
We are knee deep in earnings season for 1Q20. Some of the largest companies have reported 1Q results: revenue growth was +7% for Zoetis, +21% for Merck Animal Health, +17% for Bayer, +9% for IDEXX and -9% for Elanco. The results for the most part showed were for both companion animal and livestock and in the case of Merck and Bayer, were driven by continued market growth combined with inventory builds given the mounting challenges due to COVID-19. Elanco’s decline was attributed to a decision to reduce companion animal inventory levels at the distributors and to consolidate their distributor partners from eight to four.
The 2Q and 3Q results are likely to be very different. Vet clinic visit data presented in the IDEXX earnings release showed clinic visits increased +4% YTD through mid-March and then posted strong declines of -25% in late March before moderating to -15% declines by the end of April. In addition, disruption in the cattle and swine processing combined with weakening profitability are driving uncertainty.
We’ve noted that online retailers seem to be the beneficiaries of the stay-at-home orders as evidenced by Chewy’s stock price growth of more than 40% YTD. Have we seen the new normal in terms of customer purchasing behaviors?
Through all of this, let’s not forget America’s other unsung heroes, the farmers, ranchers, food producers and food suppliers who have also been hit hard by COVID-19 both medically and financially. To these heroes I say…THANK YOU for all of your efforts to help feed the U.S. and the world!!!
Last week we asked you, “When you’re safely allowed back in your office and you are asked by your boss what you did to improve yourself during the lock down?”. A whopping 41% said “they will get back to us later as they are headed onto a Zoom call”, 21% said they had “stopped watching the news on TV”, 15% said that you had “put on weight in case of a food shortage”, 13% said you had “learned that school teachers are not nearly paid enough and 4% became an epidemiologist. Finally, I am in the camp of 6% of the respondents, learning to cut my own hair. I have been watching You Tube Videos as my new hair clippers just arrived. Wish me luck!!
This week we would like to get a bit more serious. We are all hearing about interruptions in our food supply chain due to plant closures resulting from COVID-19.
Trouble viewing this newsletter? You can view it online at www.BrakkeConsulting.com
This electronic newsletter is the sole property of Brakke Consulting.
Any use of the contents herein should be approved by and appropriately attributed to Brakke Consulting.
For more information about Brakke Consulting’s services and syndicated studies, visit our website at www.brakkeconsulting.com.
806 Green Valley Rd
Greensboro, NC 27408