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What's Behind PetMed Express' Disappointing Q4 Results

By Keith Speights - May 3, 2021 at 11:27AM

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The reopening of veterinary clinics and pet retailers caused lower sales for the online pet pharmacy.

PetMed Express (PETS -3.07%) delivered a 36% return in 2020. So far, though, this year hasn't been so great for the online pet pharmacy company's shareholders. 

Investors were hoping that might change with PetMed announcing its fiscal 2021 fourth-quarter results before the market opened on Monday. Those hopes were dashed, however, with the pet-focused healthcare stock slipping 2% in early trading. Here are the highlights from PetMed's Q4 update.

Hand giving a pill to a dog

Image source: Getty Images.

By the numbers

PetMed reported revenue in the fourth quarter of $71.7 million. This reflected a 4% decrease from the prior-year period revenue total of $74.3 million. The consensus Wall Street estimate was for Q4 revenue of $74.03 million.

The company announced Q4 net income of $6.8 million, or $0.34 per share, based on generally accepted accounting principles (GAAP). In the prior-year period, PetMed posted GAAP earnings of $7 million, or $0.35 per share. The average analysts' estimate was for earnings of $0.40 per share.

PetMed ended the first quarter with cash and cash equivalents of $118.7 million. This was an increase from the $103.8 million on hand as of March 31, 2020.

Behind the numbers

PetMed's fiscal 2021 started out with higher demand due to the COVID-19 pandemic. More customers ordered medications for their pets online. However, that dynamic changed by the company's fiscal Q4, which ended on March 31, 2021, as veterinary clinics and pet retail stores reopened.

This shift caused PetMed's year-over-year comparisons to suffer. Reorder sales fell 1.4% to $64.2 million. New order sales sank 18% to $7.5 million. The company also experienced a decline in new customers -- 88,000 in the recent quarter compared to 107,000 in the prior-year period.

Colder weather during the fiscal 2021 fourth quarter also didn't help. This could have delayed the beginning of flea and tick season. 

Looking ahead

PetMed Express CEO Menderes Akdag stated in the company's Q4 conference call that the company is "still in process of exploring for our new revenue sources and new opportunities within pet health and wellness." He said that the company should provide more information on these efforts later in 2021.

In the meantime, shareholders will see higher dividend payments. PetMed's board of directors declared a dividend hike from $0.28 to $0.30 per share. This dividend will be payable on May 21, 2021, to all shareholders of record as of the close of business on May 14, 2021.

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