DELRAY BEACH, Fla. - PetMed Express , Inc. (NASDAQ: NASDAQ:PETS), also known as PetMeds, announced today that its Board of Directors has put in place a limited duration shareholder rights plan. This move aims to guard the interests of all shareholders, ensuring they can realize the long-term value of their investment. With a current market capitalization of $94.3 million, PetMeds has seen its stock decline nearly 40% year-to-date, according to InvestingPro data.
The rights plan comes at a time when the company's stock is viewed by the board as undervalued, not reflecting the true worth of the business or its future growth prospects. This assessment aligns with InvestingPro's Fair Value analysis, which indicates the stock is currently undervalued. Despite challenging market conditions, PetMeds maintains a solid financial foundation with a healthy current ratio of 1.45 and an Altman Z-Score of 4.76, suggesting low bankruptcy risk. There have also been notable accumulations of PetMeds common stock by certain shareholders, which the plan seeks to address.
Under the new rights plan, PetMeds will distribute one right for each outstanding share of common stock to shareholders on record as of the close of business on December 16, 2024. These rights will initially be non-exercisable and will accompany the shares of PetMeds common stock.
The rights will generally become exercisable only if an entity, person, or group acquires a beneficial ownership of 12.5% or more of PetMeds common stock without board approval. In such an event, each right holder, except the acquiring entity, will be entitled to purchase additional shares at a 50% discount to the market price.
Furthermore, in the event of a takeover following an unapproved acquisition of a significant stock percentage, right holders could buy shares of the acquiring company at half the market price. The board retains the option to exchange each right for PetMeds common stock, subject to certain conditions, or redeem the rights at a nominal value.
The plan is effective immediately and is set to expire on December 2, 2025, unless terminated earlier. It is designed to not interfere with any board-approved sale, merger, or business combination, and does not hinder the board from considering offers that fully value PetMeds and serve the shareholders’ interests.
This rights plan is comparable to those adopted by other publicly-held companies and is a strategic measure to prevent any entity from gaining a disproportionate amount of control without offering a fair premium to all shareholders.
PetMeds, a leading online pet healthcare retailer established in 1996, operates nationally, providing a range of pharmaceuticals, vitamins, and supplements for pets. The company emphasizes convenience and value through its websites and partnerships in telehealth and insurance, generating annual revenues of $259.3 million. For deeper insights into PetMeds' financial health, growth prospects, and exclusive ProTips, investors can access the comprehensive Pro Research Report available on InvestingPro.
The details of the rights plan will be disclosed in a Current Report on Form 8-K to be filed with the U.S. Securities and Exchange Commission. This article is based on a press release statement.
In other recent news, PetMed Express reported a mixed bag of results in its Q2 2025 earnings call. Despite a 16% drop in sales to $60 million, the pet pharmacy company demonstrated resilience with a net income increase to $2.3 million, or $0.11 per diluted share. The firm also noted the acquisition of approximately 77,000 new customers, attributed to operational improvements that have enhanced the customer service experience.
The company's strategic focus includes a significant marketing push planned for the holiday season, aimed at further boosting customer acquisition. Additionally, PetMed Express is preparing to launch a new content site, as part of its efforts to become a leader in consumer pet healthcare.
While sales have seen a decline due to consumer pressure, the company has also managed to improve gross profit margin to 29.1%. However, Q3 is expected to see lower margins due to increased promotional activities. Despite these challenges, the firm's focus on customer acquisition and operational efficiency indicates a commitment to navigating the current market landscape.
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