In a ploy to further popularize its Webster Veterinary Supply unit, Patterson Companies Inc. (PDCO - Analyst Report) announced that the former will be known as Patterson Veterinary Supply from January 1, 2013. It is a value-added, full-service distributor of a complete range of consumable supplies, diagnostic supplies, equipments, biologicals (vaccines) and pharmaceuticals to companion-pet veterinarians in the U.S.
Patterson had historically reported in one operating segment viz. dental supply. In July 2001, the company acquired the veterinary supply assets of J.A. Webster, Inc., which subsequently became a reportable business segment. Then, in September 2003, it purchased AbilityOne Products Corp., which serves the rehabilitation supply market, creating a third business unit.
Following the acquisitions, the company’s business expanded in the veterinary and rehabilitation supply markets, based on which the corporate name of the company was changed to Patterson Companies Inc. from Patterson Dental Company in 2004. Currently, Patterson’s operating segments include Patterson Dental, Webster Veterinary and Patterson Medical.
Webster Veterinary is the leading distributor of veterinary supplies to companion-animal veterinary clinics in the eastern United States and is also the leading national equine distributor in the country. Companion-animals include dogs, cats and other common household pets.
Since 2001, Webster has been expanding its base consistently utilizing Patterson’s financial resources and technologies, as evidenced by its increased annual sales from $150 million to $735 million in fiscal 2012. The company now holds roughly 21% of the estimated $3.2 billion U.S. companion-pet veterinary market.
Based on the benefits that Webster received from Patterson, management has taken the decision to formally include the Patterson brand name in the Webster business. Given Patterson’s renowned brand recognition in North America, we believe that this marketing initiative will allow the company to expand further into the fast-growing U.S. companion-pet veterinary market.
Additionally, as a part of the marketing initiative, the business unit will launch a new website in January 2013 with advanced features and an upgraded online ordering provision.
However, of late, the veterinary services market has slowed down due to a decline in consumer spending. Webster competes head-to-head with MWI Veterinary Supply, Inc. in the veterinary market. We currently have a ‘Neutral’ recommendation on the stock, which carries a short-term Zacks #4 Rank (Sell).