Covetrus Inc. plans to sell off an animal diagnostics subsidiary and merge another business unit with a Spanish company to expand operations there.
The Portland-based veterinary technology and services company has signed an agreement to sell Scil Animal Care Co., a global health analytics producer it owns, to Heska Co., based in Loveland, Colorado, for $125 million, Covetrus said in a news release issued Wednesday.
The sale would be Covetrus’ first public step to shed some of the business units acquired when it was created by a merger between Portland’s Vets First Choice and New York-based Henry Schein Animal Health last year. Proceeds from the sale would be used to pay down debt and for other business needs, it said.
Covetrus had rougly $1.1 billion in long-term debt and other borrowing as of November, according to its 2019 third-quarter earnings report. The company reported $1 billion in revenue for the third quarter, but took a massive “goodwill” impairment charge of nearly $1 billion that led to an overall net loss of $906 million for the quarter.
The Scil sale would not affect Covetrus’ Maine workforce, a spokeswoman said. The company has about 300 employees at its Portland headquarters and 5,500 worldwide.
“While we are still in the early stages of executing on our strategy, this transaction is an important initial step in that process,” Covetrus’ acting president and CEO Ben Wolin said in a statement.Advertisement
In an interview with the Portland Press Herald in November, Wolin said Covetrus might shed a number of business units that are too far outside its focus of veterinary pharmacy- and practice-management software and prescription fulfillment services.
The portion of Covetrus that used to belong to Henry Schein is a diverse operation consisting of about 30 distinct businesses providing a wide variety of veterinary products and services.
Terms of the Scil agreement include Covetrus supplying ongoing logistics support for Heska’s diagnostic products, and connectivity between Covetrus’ global information management system and Heska’s imaging and laboratory solutions, the release said.
Heska, in its own news release said buying Scil would bring its global workforce to 500 and generate $200 million in revenue this year.
In a separate transaction, Covetrus signed a deal to acquire a controlling interest in Distrivet, a Spanish veterinary products and services company. Pending sales conditions, Covetrus will merge its own operations in Spain and Portugal with Distrivet and will own 50.01 percent of the combined company. Terms of the merger were not disclosed.
“This new joint venture brings together two highly competitive businesses in the attractive Spanish market,” Covetrus said in a statement.Advertisement
Covetrus has gone through a series of executive-level shakeups since October, following poor results in its first full quarter of operations, and allegations that the company misled investors about the strength of its business at launch.
Co-founder Benjamin Shaw stepped down as CEO in October, followed by the company’s executive vice president and chief financial officer, board chairman and global supply chain officer.