Seres has 12 hospitals and 126 veterinary centers
This Saturday, September 11th, Petz completes one year of its IPO at B3, an offer in which it raised R$ 3 billion. And the pet store chain has, in fact, what to celebrate. In 12 months, its shares appreciated 96.2% and its market value jumped from R$ 5.1 billion to R$ 10.6 billion.
Advances in digitization and the multichannel footprint help to explain, to a large extent, performance in the recent past. But, apart from retail, another front in the making is emerging as one of the businesses that can unlock much more value for the operation: the animal health arm Seres.
Quietly, Petz is creating an ecosystem along the lines of giants like Rede D’Or and Dasa, but in the pet world. Since the IPO, Seres has gone from 7 to 12 hospitals and from 99 to 126 veterinary centers. And, continuing this path, prepares entry into laboratories and health plans.
“We are the first consolidators of a national veterinary hospital strategy and we are already thinking about this vertical integration”, says Sergio Zimerman, founder and CEO of Petz, to NeoFeed. “We are building this business quietly, but at the same time, quite intense.”
Two numbers give a thermometer of what is at stake in this strategy in the short term. According to a projection by the Instituto Pet Brasil, in 2021, veterinary services will move R$ 4.6 billion in the Brazilian market, an increase of 18% over last year.
“There is a consistent movement towards the humanization of pets and, naturally, health care and prevention follow this evolution”, says Zimerman. “And the pandemic reinforced this trend, as tutors, at home, started to pay even more attention to the pets.”
In line with this context, the brand’s units have separate facilities for the care of dogs and cats in areas such as oncology, cardiology, dermatology, orthopedics and dentistry.
The portfolio ranges from vaccination, check-up and nutritional guidance to more complex procedures, with structures such as surgical centers, rehabilitation wards and rooms for chemotherapy and tomography. Part of the units is open 24 hours a day and also offers home care.
More than building a network with a national presence, something unprecedented in an extremely fragmented segment, both in retail and in healthcare, one of Petz’ bets to gain ground and differentiate Seres is the veterinary hospitals, which concentrate this offer in its entirety.
Within this strategy, the most recent steps were taken in July, with hospitals in Fortaleza (CE) and in the neighborhood of Santa Cecília, in the central region of São Paulo. Today, the units are distributed in 9 states, in cities like Salvador, Goiânia, Porto Alegre, Rio de Janeiro, Natal and Vitória.
In the medium term, the idea is to have at least one hospital in each capital. Brasília (DF) and Belo Horizonte (MG) are some of the next points on the map under evaluation. To consolidate this expansion with greater speed, the biggest obstacle, according to Zimerman, is the lack of specialized labor.
Whether in hospitals or veterinary centers, the Seres expansion will always be associated with a Petz store. “This opens up the possibility of cross-selling,” he says. “We have the entire customer and the profitability is much higher.”
Currently, Petz has 143 stores in the country, of which 18 were opened in 2021. The two most recent, in Manaus (AM) and Palmas (TO), marked the company’s entry into the North region. The plan is to close the year with more than 30 openings in total.
Once Seres’ capillarity is consolidated, the next step will be to enter laboratories. And then launch the health plan. The group is closing a contract with a consulting firm, unnamed, to identify the best way to carry out these moves.
“We are starting to develop this new stage,” says Zimerman. “We still haven’t defined how we are going to do it. What we do know is that we want and need to move forward to make this ecosystem complete”
Petz already has, however, some parameters and hypotheses as a starting point. In the case of health plans, the orientation is to offer an alternative capable of democratizing access to the services offered, with monthly payments.
With regard to laboratories, one possibility is to accelerate the debut in the segment through acquisitions. “Our impression is that there is a lot of room to professionalize this market”, he says. “But this is one of the answers that we are going to seek in partnership with the consultancy.”
While Petz is studying how to take its next steps in animal health, there are those who see good prospects in the path already taken by Seres. This pillar was one of the points highlighted in a recent Bank of America report.
“We continue to see considerable opportunity in building a larger network of hospitals and veterinary clinics and adding telemedicine elements or exploring other health topics,” wrote analysts Robert Aguilar, Melissa Byun and Guilherme Vilela.
Based on the company’s results in the second quarter, the bank reiterated its buy recommendation and the target share price at R$31. The paper closed Thursday’s trading session at R$26.98.
Between April and June, Petz’s net revenue grew 58.7%, to R$505.7 million. The group did not release the number referring to Seres, but highlighted that the unit’s revenue advanced 50% in the annual comparison.
“Seres’ advance makes perfect sense in Petz’s one stop shop concept,” says Eduardo Yamashita, COO of the Gouvêa Ecosystem consultancy. “The animal health segment has enormous potential, but it is still unexplored in the country, and they have the capital and capacity to integrate and consolidate this chain.”
Yamashita does, however, make a caveat. “This is a regulated market, with a different dynamic from retail”, he observes. “Large retail chains, from other segments, have made similar moves in addition to their color. And many of them failed.”
Despite the risks, Petz is not the only one in the industry to follow this journey, but the fact is that the company started ahead of its biggest competitor, Cobasi. With the cash reinforced by a contribution of R$ 300 million from the Kinea private equity fund, in April, the company is preparing its entry into animal health.
Petz, in turn, is also moving in its traditional business. In this space, one of the recent highlights was the kick in the inorganic strategy of the group. The first acquisition came in June, with Cansei de Ser Gato, a digital platform for content and products for cats.
Between April and June, Petz’s net revenue grew 58.7%, to R$505.7 million
Back in August, the company announced the purchase of Zee.Dog, for R$715 million. Known as “the Nike of the pet market”, the Brazilian startup has a global presence as one of its strengths, with its products and accessories distributed in nearly 50 countries.
Awaiting approval of this acquisition by the Administrative Council for Economic Defense (Cade), Petz already sees opportunities in the integration of Cansei de Ser Gato to Zee.Dog’s international operations and channels.
With the long-awaited green light from Cade, in the short term, one of the first initiatives will be the incorporation of Zee.Now, the express delivery arm of Zee.Dog. From this operation, Petz projects good gains in terms of delivery of orders placed on its digital channels.
The brand’s e-commerce and application were one of the highlights in the second quarter. These channels accounted for 29.7% of Petz’s total revenue in the period. Sales under the multichannel concept represented 86% of the gross revenue of R$181.2 million from digital between April and June.
“At the IPO roadshow, we already had a lot of good digital and omnichannel stories to tell, so much so that we said Seres didn’t need to be priced at that time,” says Zimerman. “But now that we’re comfortable on those two fronts, it’s time for Seres to step into the spotlight.”