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