Covetrus CEO Benjamin Shaw resigns

File Photo / Tim Greenway Benjamin Shaw, president and CEO of Covetrus Inc., has stepped down and will serve as an advisor to the company.

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By Staff

Less than a month after he and the animal-health products company he led were sued over securities fraud allegations, the president and CEO of Portland-based Covetrus Inc. (Nasdaq: CVET) has resigned.

Benjamin Shaw, who co-founded its predecessor company, Vets First Choice, and became the top executive of Covetrus when it launched in February, will instead serve as a strategic advisor to its board, according to a news release Tuesday.

Benjamin Wolin, who chairs the board, will assume the role of acting CEO and president. Philip A. Laskawy, the board’s lead independent director, will take over as chairman.

The company gave no specific reasons for Shaw's resignation. But in the release, Laskawy said, “Benjamin Wolin, with his deep expertise in public company management in the digital health care, pharmacy and technology space, is the right leader to help the company successfully focus and execute on its strategy.

“We also want to take this opportunity to thank Benjamin Shaw for his contribution as a founder of Vets First Choice and Covetrus. His entrepreneurial spirit and vision helped guide the company to this moment and we look forward to working with him as a strategic advisor.”

Turnover and turmoil

Wolin is a newcomer to Covetrus, named chairman Sept. 4 after Shaw’s father and fellow Vets First Choice co-founder, David Shaw, also resigned. David Shaw remains a member of the board.

Wolin co-founded Everyday Health Inc., a New York-based provider of online health information and marketing services, in 2002. He also serves on the board of Diplomat Pharmacy Inc. (NYSE: DPLO), the country’s largest independent specialty pharmacy company, and is chairman of Rockwell Medical Inc. (Nasdaq: RMTI), a $63 million pharmaceutical maker based in Michigan.

On Sept. 30, Covetrus was sued in a New York federal court by investors who claimed the company made false and misleading statements about its capabilities before going public. The class-action suit was filed by the City of Hollywood (Fla.) Police Officers’ Retirement System, which alleged Covetrus overstated its ability to manage inventory and supply chain services, while understating a variety of costs and business threats.

They included the impact of online competitors, the loss of a large North American customer, and the expense of forming the company from the merger of Vets First Choice and the animal-health division of Henry Schein Inc. (Nasdaq: HSIC).

The merged company, whose businesses together had revenues of $4 billion in 2018, debuted Feb. 8 on Nasdaq. The stock initially traded at over $40.

But on Aug. 13, after its first full quarter of operations, Covetrus reported a $10 million loss and slashed its annual earnings forecast from $250 million to $200 million. Overnight, the price of Covetrus shares plummeted 40%.

The suit seeks unspecified damages. Covetrus and Henry Schein Inc. are named as defendants, as well as Benjamin Shaw and Chief Financial Officer Christine Komola.

On Tuesday morning, the price of Covetrus stock opened at $10.02, but had fallen to $8.26 within an hour.

The company provides technology, services and supplies to over 100,000 veterinary practices around the world, and has 5,500 employees. Covetrus is building a new headquarters in Portland's East End, designed to accommodate about 1,200 employees.

Editor's Note: This story was revised to clarify the explanation of Benjamin Shaw's resignation.