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July 27, 2017

Vets First Choice CEO talks about global expansion, acquisitions

Photo / Lori Valigra
Photo / Lori Valigra
Vets First Choice CEO Benjamin Shaw, in his Portland office sitting by two turtle statues, recently raised $223 million for the veterinary online services firm to double its workforce and revenue this year, expand internationally and possibly acquire smaller companies.

Direct Vet Marketing shook the local venture capital scene last week when it raised $223 million, a record amount for a Maine-based company in at least two decades, and he has big plans for the infusion, including expanding into Europe and Asia by year's end and actively seeking smaller companies to acquire.

The seven-year-old Portland company, doing business as Vets First Choice, raised 2015's largest amount in Maine, $52.3 million.

This time around, it has a group of public investors including a new co-lead investor, Hillhouse Capital Group, which has extensive experience in China, Japan, Hong Kong and Taiwan. They were visiting Vets First Choice the entire week of July 24 to plan the Asian strategy. Hillhouse, founded by Chinese billionaire Zhang Lei, manages more than $20 billion.

"This kind and level of investors demonstrate our company is doing well as an independent company," Benjamin Shaw, CEO and founder of Vets First Choice, told Mainebiz, when asked if his company was setting up for an initial public offering or to acquire related companies. "These are public investors who have expectations for professional management so this looks like an IPO in a private company." He said that even with the large infusions, the investors still hold a minority position in the company.

While he wouldn't confirm the public market is the direction he's headed, he said the company is looking at all options. Shaw is a Mainebiz Next 2015 award winner.

"This capital is not a reflection of the company's profitability, but it's spending," he said. "The company already has the ability to be profitable and viable even with the significant spending. But our own in-house profitability wouldn't support the kind of expansion we're taking on right now."

Vets First Choice is interested in acquisitions in Europe, Asia and the United States. "There are a lot of interesting smaller organizations with interesting products and services that aren't in the position to be a great independent company. We are a logical home for a lot of younger companies that aren't trying to replicate what we've built," he said. "We are continuing to be aggressive in business opportunities."

The company plans to operate in all 21 major European Union markets, which he said are more mature veterinary care markets than the United States.

"As we launch in Europe, we'll leverage some of the same ecosystem partners we have here in the United States, like Boehringer Ingelheim in Germany and Merial in France." Before entering the European and Asian markets, the company first has to meet local regulations for the products it sells. The company may enter Canada in the future, but Shaw said it is a challenging market due to consumer expectations.

Staffing up

That aggressiveness translates into the company's growth as well. It had 400 employees at the end of 2016, and aims to have 800 by the end of this year. There are 50 positions still open, and Shaw has hired a new human resources director and a new recruiter to attract talent.

Revenue was $60.9 million in 2015, the last time the privately held company released numbers. He said revenue grew substantially from 2015 to 2016, but would not reveal the exact number. He expects to double revenue from 2016 to 2017.

"Our biggest challenge is getting out ahead of all this activity. We won't have revenue from Europe and Asia until later this year," he said, adding that the company also is launching new enterprise software and services.

Finding people has been a challenge, Shaw said. He hired three people from out of state in the past week.

Shaw also has tapped staff with international experience from local giants IDEXX Laboratories and WEX Inc., Maine's two largest publicly traded companies. Chief technology officer Gary Watson had global experience at IDEXX, while chief information officer Stephen Crowley had global experience at WEX. James Carroll, vice president and general manager for information services, was at LifeLearn Inc. in Canada before joining Vets First Choice in October 2016, while Patricia Panaia, vice president of B2B sales and marketing sales, spent five years in Europe for IDEXX.

Three-year plan

The company is setting the foundation for the next three years with major initiatives in the United States with services and solutions based around analytics and insight using big data.

"We're creating enormous insights for practitioners in terms of what's going on in their businesses, gaps in patient care and identifying at-risk populations in terms of breeds or conditions," he said. "More than half of our dispensed medicines business is continuous auto-ship subscriptions. Customers can control the frequency, and they get free shipping and 1-2 day delivery anywhere in the United States." The company has 16 distribution centers nationwide.

Shaw said the company's software can help identify whether or not owners are giving their pets the special prescription diets or medications they need, because even if the owner buys medication at a different vendor, the prescription still has to be approved by the veterinarian, so the purchase will show up in Vets First Choice's system. The company services 14,000 veterinary practices for prescription management and 6,000 others who want its information software and data services.

"By identifying the gaps in patient care and patients at high risk we can be more proactive and predictive," he said. "Only 20% of dog owners are compliant on parasite control, yet one in four dogs in New England has Lyme disease. So there are big gaps in care."

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