We are investigating Covetrus, Inc. (CVET) (“Covetrus” or the “Company”) for potential violations of the federal securities laws.
Covetrus was formed through a spin-off and merger of the Animal Health Business of Henry Schein with Vets First Choice, a privately-held company. On August 13, 2019, before the market opened, Covetrus shocked investors by reporting a net loss of $0.09 per share for the second quarter of 2019, compared to market expectations of net income of $0.17 per share. Covetrus also disclosed EBITDA guidance of to just $200 million, reduced by as much as $250 million from its estimates announced in February and May. In doing so, Covetrus admitted that the Company would have to spend tens of millions of dollars more in infrastructure spending and redundant costs. Covetrus also admitted previously undisclosed difficulties integrating platforms and disclosed increased spending to eliminate obligations to Henry Schein as part of the spin-off. Covetrus acknowledged that the Company was finally “at a point where we have detailed plans and understanding of the level of infrastructure investment we need to make and how these costs break out.” Finally, Covetrus also disclosed the “loss of a customer weighed heavily on organic growth in Q2 by 3%.” On this news, Covetrus’s stock price fell $9.30 per share, or 40.1%, to close at $13.89 per share on August 13, 2019.