Between March 12 and March 18 – the epic week that ended with most of America’s non-essential businesses shutting down and the Dow plunging more than 17 percent – Americans began stockpiling grocery store staples such as toilet paper and laundry detergent. Another staple quickly went out of stock: pet food. According to Retail Dive, “sales at Chewy — which PetSmart acquired in 2017 — were up 42.5%. Petco sales soared 41.8%, and PetSmart’s jumped 36%…”
“There weren’t a lot of pet owners going to the veterinarian for wellness visits [in March and April, during the shutdown]”
America’s $29.3 billion veterinary industry, however, did not enjoy the same surging demand; at least not at the beginning of the pandemic. “There weren’t a lot of pet owners going to the veterinarian for wellness visits [in March and April, during the shutdown]” a spokesperson for Trupanion noted in a telephone interview with TCR about the insurance company’s impressive second quarter earnings, which were announced last week. “Wellness visits, which represent an opportunity for veterinarians to address the concept of pet medical insurance, strengthened [up 8%] through May and June and into July after being down sharply [down 20%] in the mid-March and early-April timeframe,” she explained.
In late spring, veterinary practice finances seemed as bleak as most other sectors of the economy. According to VetSuccess, a company that tracks financial data about veterinary practices, including how practices are performing during the pandemic, daily revenue among the approximately 2,500 practices from which data was collected dropped about 8 percent between March 15 and April 30, during the height of the pandemic. The volume of daily invoices in the same period also fell by 12 percent. However, during July 2020, those numbers made a staggering comeback. Based on financial data for 2,882 veterinary hospitals and primary practices, overall revenue last month increased by 18 percent compared to July 2019.
Pet Insurance Prospers
Americans may have less money to spend, but what they have, they appear to be spending on their dogs and more notably, on pet health insurance, a relatively small but exponentially growing market as Americans discover that their dog’s health insurance policy can be better than any policy the human members of their families have access to, depending on how wisely they navigate the pitfalls.
In an earnings call last week, Trupanion — the pet health insurer TCR singled out earlier this year for its customer service, reliability, and straightforwardness (it’s expensive, but you get what you pay for) – reported that total revenue was up by a whopping 28 percent for the second quarter of 2020 from the same period last year: 529,000 new enrollees to date; 15% increase in enrollment. All of this in a year that so far is second only to the Great Depression in financial ruin. It’s also worth pointing out that as Trupanion has managed to attract new enrollees, more Americans are now without health insurance for themselves due to job loss. Put simply, in a year of unprecedented economic and political uncertainty, Americans are spending less money in almost every category – except pets.
“In times of uncertainty, people want to know how they’re going to be able to care for their pet…”
“Trupanion is a product that is resilient,” a company spokesperson explained. “When you enter a period of economic uncertainty, the need for the product is as great if not greater than ever,” she added. “In times of uncertainty, people want to know how they’re going to be able to care for their pet if their pet gets sick or injured. The need for that product only grows.”
And, today, IDEXX, a major veterinary practice laboratory and diagnostics company, announced that the number of visits for its U.S. companion animal practices increased six percent overall for July compared to July 2019; veterinary practice revenue was up by ten percent.
The Big Picture
According to the North American Pet Health Insurance Association (NAPHIA), only about 1.5 million of an estimated 90 million household dogs in the United States were on an insurance plan in 2017, or less than two percent. Still, between 2016 and 2017, according to NAPHIA, the number of American dogs on pet insurance plans increased by a staggering 17.3 percent. And, apparently, that growth has not slowed.
Kristen Lynch, NAPHIA’s executive director, reported in an email responding to a TCR query that, “In discussions with our NAPHIA member companies across the industry, the majority have indicated that they are experiencing increases in pet insurance enrollment since April/May of this year. What we can attribute it to is not only a surge in pet adoptions and acquisitions, but also a change in lifestyle. With the current working from home measures that many companies have in place, with kids not going to school, and with social distancing measures keeping us away from our friends and extended family so many people are now spending all day alongside their pets….”
“COVID has taxed the veterinary industry in a way we haven’t seen before. In a short amount of time, the pandemic created the perfect storm of too many animals needing help and not enough people to help them…”
With so many people working from home, “pandemic puppies” have emerged as one of the year’s most defining trends. The result: many of America’s veterinarians are finding themselves more in demand than a top Manhattan heart surgeon. “Emergency in the ER: Veterinarians short-staffed, burning out. Hospitals seek new ways to attract, retain doctors” a recent story from VIN News reported. “COVID has taxed the veterinary industry in a way we haven’t seen before. In a short amount of time, the pandemic created the perfect storm of too many animals needing help and not enough people to help them,” veterinarian Teresa Hershey wrote today in a column for the Southwest Journal in Minneapolis.
Hold on to your vets.