An Eagle company laid off 100s of workers the night before announcing its $1.5B sale

PetIQ laid off hundreds of employees less than a day before announcing it would be acquired by a private equity firm, according to a veterinarian at the company.

Dr. Elizabeth Dudas told the Idaho Statesman that the Eagle-based veterinary supply company notified affected employees at a 3-minute Microsoft Teams call the evening of Aug. 6. The meeting was followed by an email a few hours later, delivered at 10:47 p.m. by the company’s legal department.

“Despite our best efforts, the ongoing challenges within the labor market and the increasing operating costs have made it clear that the wellness center model is no longer sustainable,” said the email, which Dudas shared with the Statesman. “So, we’ve made the difficult decision to exit the wellness center model, which means closing our remaining wellness center locations.”

Dudas estimated that roughly 250 to 300 employees were laid off. Most are veterinarians and support staff, she said.

The next day, at 8 a.m., the company announced that it planned to leave the stock market and sell to Bansk Group, a New York City-based investor in consumer health and wellness businesses, in a $1.5 billion cash deal to close later this year.

Kara Schafer, vice president of communications at PetIQ, had told the Statesman by email Aug. 8 that the company would remain headquartered in Eagle. And, in response to a question, Schafer said then that “there will not be any job cuts as a result of our definitive agreement with Bansk.”

In a phone call Tuesday, she maintained that the two circumstances are unrelated. “It was a business decision that was not related to the agreement,” Schafer said.

She did not immediately respond Tuesday to further questions by email.

Dudas is the staff veterinarian at PetIQ’s Midland, Michigan, wellness center. Her last day is Aug. 23, when the wellness center is slated to closed for good. She said by phone that she has “a hard time” believing that the layoffs and acquisition are unrelated. In a companywide town hall about the acquisition Thursday, which lasted about 90 minutes, the layoffs were barely mentioned, she said.

130+ PetIQ centers to close, veterinarian says

PetIQ has other wellness centers in 39 states around the country, according to its website. Those wellness centers, more than 130 of them, will also close or convert to other clinics, Dudas said.

The company employed 1,933 full-time and part-time workers as of Dec. 31, of which 1,890 were in the U.S. and 1,330 in wellness centers and community clinics, according to its latest annual report. Among the wellness centers to close is one in Meridian inside the Walmart store at 4051 E. Fairview Ave. An employee told the Statesman by phone Tuesday that it would indeed close Aug. 23.

PetIQ has nine veterinary clinics in the Treasure valley, according to the company’s store locator, but only one — the Meridian location — is a wellness center affected by the layoffs.

The wellness centers are permanent locations that offer veterinary care, including appointments for sick animals and preventative medicine, according to Dudas. She said PetIQ plans to continue its “pop-up” community clinics.

The company said in a U.S. Securities and Exchange Commission filing that as of Dec. 31 it operated over 2,600 community clinics.

Dudas was offered a severance package that she has until Saturday to sign. The company offered full-time employees two weeks of pay for every year of employment, with a minimum of four weeks and a maximum of 26, according to a copy of the severance agreement Dudas shared with the Statesman.

Go-away pay deal tries to bar workers from defaming PetIQ

The package includes a nondisparagement clause that requires employees to agree not to make any defamatory statements about the company now or in the future. The National Labor Relations Board ruled in 2023 that such stipulations are illegal.

The company was founded in 2010 by CEO and Chairman Cord Christensen, who was born and raised in Idaho. The company quickly grew from a single office room in Eagle to a company with net sales over $1 billion and employees across the nation in various office locations and manufacturing plants.

In its acquisition, PetIQ would sell all outstanding common stock to Bansk Group for $31 a share. After the deal is completed, the company would be privately held. Shares are now traded on the Nasdaq Stock Market under the symbol PETQ.

PetIQ said it expects the sale to close in the fourth quarter of 2024.

Wellness center jobs were cut in 2023 too

The latest layoffs are the second round of job cuts at PetIQ’s wellness centers in the past two years.

In 2023, PetIQ assessed the financial performance of its wellness centers and decided to close 149 wellness centers. It continued operating 133 others, which are now on the chopping block.

The company’s latest quarterly report, filed with the SEC on Aug. 8, said that it had initiated a plan two days earlier, the day it informed Dudas and other employees of the layoffs, to close 46 wellness centers in the third quarter of 2024 and convert the remaining 87 centers to community clinics in the fourth quarter of 2024 to “improve services segment profitability.”

PetIQ expects to incur an estimated $10 million in restructuring charges related to the closures, including $2.3 million to $2.7 million in employee severance payments, $3.6 million to $4.6 million in lease and contract termination costs, and $2.5 million to $3.5 million in accelerated depreciation, according to the filing.

It also said that the pet medication, food and health industry is highly competitive and that from time to time it experiences shortages of skilled veterinarians in locations where it operates mobile clinics and wellness centers.

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