Portland-based Covetrus Inc. has announced the departure of a second top executive just two months after replacing its former president and CEO.

The veterinary technology and services firm, which has admitted “self-inflicted missteps” in its first year of operation as a publicly traded company, announced Monday that Christine Komola, its executive vice president and chief financial officer, has stepped down.

Covetrus demoted its co-founder and former president and CEO Benjamin Shaw to an advisory role in October, and in September it announced that co-founder David Shaw, Benjamin Shaw’s father and founder of Westbrook-based Idexx Laboratories Inc., was stepping down from his role as chairman, although he remains a director on the board.

An investor lawsuit filed in September accuses both Komola and Benjamin Shaw of lying to investors about the company’s financial and operational health prior to its launch in February.

Covetrus declined to provide an explanation for Komola’s departure. It named former FTI Consulting senior managing director Stuart Gleichenhaus as its acting chief financial officer and said Komola would serve in an advisory role for one month to ensure a smooth transition. FTI Consulting is a publicly traded business advisory firm headquartered in Washington, D.C., whose specialties include corporate finance and restructuring, forensic and litigation consulting, and strategic communications.

Covetrus stock began trading publicly on Feb. 8 at roughly $43 per share on the Nasdaq stock exchange under the symbol CVET. It immediately became Maine’s largest publicly traded company in terms of annual revenue, although two other companies, Idexx and Portland-based Wex Inc., have higher market capitalization – the total value of their outstanding shares.


The company’s primary contribution to the veterinary market was its development of a pharmacy management and prescription fulfillment system for independent veterinary clinics that allows them to better compete with large, online retailers. Covetrus also sells and distributes a wide range of veterinary supplies, software applications and business services for animal hospitals and veterinary clinics.

After forming from the merger of Portland-based Vets First Choice and a spinoff of the animal health division of Melville, New York-based Henry Schein Inc., the company’s Aug. 13 earnings release for its first full quarter of operations fell far short of analyst expectations and led to a stock sell-off that slashed the company’s share value by 40 percent in a single day. Covetrus reported a quarterly net loss of $10 million on revenue of $1.01 billion and revised its previous earnings outlook for 2019 from $250 million to $200 million, citing unanticipated merger-related costs and a slowdown in customer activity.

The company has subsequently revised its earnings outlook downward again but only slightly, to a range of $190 million to $196 million for the year. It remains on track to generate about $4 billion of revenue for the year.

In late September, a Covetrus institutional investor, the City of Hollywood (Florida) Police Officer Retirement System, filed a federal lawsuit seeking class-action status that accuses the company and its former top executives of securities fraud. More than a dozen other class-action law firms have issued calls for additional plaintiffs to join the case, filed in U.S. District Court for the Eastern District of New York.

The investor lawsuit alleges Komola and Benjamin Shaw overstated the company’s ability at launch to manage and distribute inventory to its global customer base, while understating the amount of cash Covetrus would need to invest to bring its supply chain infrastructure up to the required level.

Shaw and Komola indicated to investors in January that the integration effort was further along than it really was, and they downplayed the impact on earnings of online competition and the loss of a major customer prior to the initial public offering, the lawsuit’s complaint says.


“Covetrus fundamentally misrepresented the company’s business outlook, particularly related to the newly combined companies’ infrastructure and capabilities as well as the true costs of becoming independent from Henry Schein,” it says. “In addition, Covetrus made false and misleading statements about the financial health of the company, including unsupported financial guidance, and falsely assured investors of the success and progress of the integration.”

The story of Covetrus and its local predecessor, Vets First Choice, generated glowing headlines as the company rose from a startup in 2010 to a publicly traded company. It has the potential to become a top employer in Portland, with plans to build a five-story headquarters downtown that could accommodate up to 1,200 more employees than its current local workforce of about 300.

In November, the company issued a third-quarter earnings report that offered hope for a financial turnaround, with better numbers and a promise from its acting president and CEO, Benjamin Wolin, to shape Covetrus into a more focused and successful company. The report prompted an immediate 22 percent spike in the company’s stock price, and in an interview with the Press Herald, Wolin said the company’s employment outlook remained bright.

Covetrus reported third-quarter revenue and net income from operations that exceeded analysts’ expectations, while recording a massive “goodwill” impairment charge of nearly $1 billion in an attempt to square the company’s value on paper with its operational reality.

Goodwill is an intangible asset whose dollar value is based on the perceived potential of a company to make money in the future. Decreasing the value of a company’s goodwill has no effect on operations, but the company still must record the impairment as a net loss.

As of Tuesday’s market close, Covetrus stock was valued at $13.40 per share, down nearly 70 percent from the company’s initial public offering price.

Vets First Choice received city approval in fall 2018 to build a five-story, 170,000-square-foot headquarters for Covetrus in downtown Portland. The facility is expected to provide office space, a pharmacy, fulfillment center, and software and data science labs. Covetrus employs about 5,500 workers worldwide.

The company said in October that the Portland headquarters project is proceeding as planned.

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