Investor Information

Pethealth Overview


Pethealth Inc. (“Pethealth” or the “Company”) is North America’s second largest provider of medical insurance for dogs and cats to pet owners operating in Canada, the United States and the United Kingdom. It sells its policies under several different brand names using a model which includes co-branding, white labelling and private labelling programs with distribution partners. In addition, the Company is a leading provider of pet recovery database services in North America, a market it entered in February 2003 under the brand 24PetWatch™. Furthermore, the Company, through its web-based product, PetPoint™, has become the leading provider of management software to animal welfare organisations in North America, a market it entered in 2005.


Company Business Model


The Company’s business model combines the financial benefits of a stable and growing recurring revenue base from the sale and retention of pet health insurance policies with the potentially more significant “blue sky” opportunities generated from the platforms created by the Company’s industry-leading web-based ASP .NET applications. Together, these two complementary aspects of the model well position the company to take advantage of the confluence of the changing demographics in pet ownership and the ever increasing reliance of pet owners on the Internet to purchase services and to obtain information.


Company Strategy1

The Company’s strategy is to establish itself as: (a) the number one provider of financial related health services to owners of companion animals throughout North America and a leading provider in the United Kingdom; (b) the leading seller of online media advertising to retailers and national brands targeting companion animal owners in North America; and (c) the leading provider of continuing education tied to epidemiological information to animal clinics, animal welfare organisations, and the pet owning public in North America.


The Company currently operates six operating subsidiaries which are broken down into these three categories:



Insurance/Reinsurance/Managed Care

The Company’s financial services business is currently being underpinned by its long standing provision of pet health insurance in North America and its more recent expansion into the United Kingdom through its acquisition of Pet Protect. The Company began sharing in a portion of the U.S. pet insurance risk in 2006 and began to absorb a portion of its U.K. pet insurance risk in August 2008. Owing to the recent decision by major retailers in the United States to begin offering pet pharmacy services to their respective pet owning clientele, the Company believes that there will be opportunities, through the adjudication of pet pharmacy claims leveraging the Company’s Managed Care/PPO/Cash Discount Card programs and EVE application (described on page 9), to further diversify its companion animal related revenue streams.




The general landscape for online advertising in the pet category is shifting. Whereas advertisers once focused on page views and time spent on sites as a way of measuring return on investment, they are now looking to purchase and have delivered to them specific demographics. The Company is well placed to take advantage of this change as it relates specifically to the growing subset of pet owners now choosing to adopt a dog or cat from a shelter as opposed to purchasing their pet from a pet store or a breeder. The growth and attractiveness of this audience is evidenced by the degree to which many national brands and retailers are dedicating their advertising dollars specifically on what the Company calls the pet adopter demographic. Pethealth is uniquely positioned to deliver these brand names to this demographic based on the integration of its PetPoint ASP.NET application, now the most widely used application in the animal welfare community, and its 24PetWatch RFID microchip platform which connects the Company to those adopters and adopted pets leaving shelters. The Company’s strategic advantage is that it is both able to make this connection with the adopter at the point of adoption and influence purchasing decisions prior to that adopter establishing his or her buying habits for their new dog or cat as well as the ability to maintain an on-going relationship based on the provision of various product and services, including pet insurance and on-line social networking, which leverage the integration of the PetPoint and the 24PetWatch infrastructures.


While the Company’s commitment to the animal welfare community is that it will not sell shelters’ data to third parties, the Company is nevertheless in a position, by virtue of its integrated Internet platform, to communicate directly and regularly with pet owners on the merits of various products and services on behalf of third parties.


Medical Information/Data Publishing


The medical information and data publishing business is the third major area that the Company intends to develop. The Company believes that there is a growing need for quality online continuing education tied to quality epidemiological information – whether it be from pet owners with respect to the information they can gather on how best to manage the lives of their dogs and cats; animal welfare organisations looking to better train staff in achieving their goals of 100% pet adoption; or veterinary clinic owners looking to better train staff to offer higher quality medical care and that the demand for this information is only set to continue. The Company is uniquely positioned to generate, on an on-going basis, quality medical and other data that it expects will satisfy much of this growing demand. The Company is pursuing a business model which will generate both subscription and advertising based revenue.


The Company’s platforms, including its ASP.NET applications, its RFID microchip registry and the considerable medical information it gathers as part of its pet insurance businesses, puts it in a unique position to offer these services.

1 The “Company Strategy” section contains certain forward looking information. Please refer to the first page of the Management Discussion & Analysis for a discussion of the risks and uncertainties related to such information.

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