Michael Marmesh, co-owner of the Coconut Grove Animal Clinic in Miami, has received several approaches from larger companies looking to buy the family business. But the vet, who first joined his father at the practice in 1978, has resisted even as peers across the city sold up.
“My experience has been that if we had a corporate takeover, it costs my clients more and the quality of medicine goes down. I’d like to retire but I wouldn’t want to sell to them — I’d like her to take over,” he said, nodding to his daughter Kate, who works alongside him at the clinic.
Soaring demand for veterinary care amid a surge in pet ownership has sparked a rush of consolidation in the sector, led both by large companies and private equity firms.
Meanwhile, the cost for consumers has surged. The Office for National Statistics estimates that the cost of vet and other pet services in the UK has risen about 50 per cent since 2015. The average price of an annual pet vaccination has almost doubled over the past 15 years to £64, according to consumer rights site Which?
US prices for veterinary services have jumped roughly 60 per cent in the past decade, according to the Bureau of Labor Statistics. American spending on pet services is expected to hit $112bn in 2030, according to research by Morgan Stanley, up from $48bn in 2019.
Critics of the “roll up” strategy say the price rises stem from reduced competition in what was once a “mom and pop” business. The industry counters that bill inflation is more the result of advances in animal healthcare and of owners expecting ever more sophisticated treatments for their increasingly pampered pets.
“We’ve gone from a dog in the yard, to dog in the house, to dog in the bed,” said David Steinberg of Marlowe Partners, a New York-based fund that invests in animal health companies. “Life expectancy is going up because there are new treatments that were never there before. It’s a new paradigm.”
Regardless of the cause, pet owners are often left aghast when hit by a vet bill.
Some content could not load. Check your internet connection or browser settings.
“My dog Leo got a foxtail seed stuck in his nose and the vet asked us for €600 for a trip to the emergency room,” said Elisa Pizzetti, a video editor in Milan. “These prices are wild. I love him, I would do anything for him, but it really is a lot — my annual gynaecological check-up is cheaper than Leo’s annual vaccines”
New Yorker Josh Bombart said the bill for his husky “runs close to $600 or more just for a check-up and yearly vaccines. Because she is older they recommend all this extra expensive [work] — who knows if it does anything’.”
Some of the largest vet consolidators include JAB-owned National Veterinary Associates, KKR-owned PetVet, London-listed CVS, Mars’s Veterinary Health and EQT-backed IVCE Evidensia.
Mars started acquiring smaller petcare chains in 2007 and now controls 3,000 vets globally. IVC Evidensia embarked on a buying spree after EQT acquired it in 2016 and now owns more than 2,500 clinics, mainly in Europe.
Dealmaking is advancing. Private equity firms Silver Lake and Shore Capital Partners struck a deal in November to combine US chains Southern Veterinary Partners and Mission Veterinary Partners to create an $8.6bn group with 750 locations worldwide.
The wave of consolidation has drawn the scrutiny of competition regulators on both sides of the Atlantic.
The US Federal Trade Commission in 2022 forced JAB to divest clinics as it tightened grip on the sector. Up to 30 per cent of American veterinary practices, including nearly 75 per cent of speciality clinics, are under large corporate or private equity ownership, according to the American Veterinary Medical Association.
In the UK, an even more consolidated market with almost two-thirds of clinics owned by chains, the competition regulator last year launched a probe into the sector after finding that pet owners may be overpaying for medicine and that consolidation had weakened competition.
However, the replacement this week of the head of the CMA as the government presses regulators to make “pro-business decisions” has raised hope in parts of the vet industry that the investigation will be softened.
“The inquiry has injected significant uncertainty, which has had a noticeable impact on both investment and investor sentiment,” a person at one of the country’s largest veterinary groups told the FT, adding that they hoped the CMA “recognises investment in new facilities and professionalising our sector”.
Elizabeth Mullineaux, chair of UK vets trade group the BVA, said prices would have risen “regardless of corporatisation”, pointing to advances in diagnostic equipment and a shortage of vets that has driven up wages. On top of this, she added, people in the UK were shielded from the real cost of medicine because their own healthcare is state-funded.
“That’s a shock when people suddenly get a bill for their dog,” she told the Financial Times, adding that while many consumers may expect the CMA investigation to result in lower medicine prices, “I’m not sure that reductions are possible at the moment”.
Some content could not load. Check your internet connection or browser settings.
Gudrun Ravetz, group chief medical officer at IVC Evidensia, said larger employers had brought professionalisation to the sector, introducing benefits such as maternity leave and flexible working that were previously unavailable to vets.
“When I had a child, back in practice, I had no maternity leave,” she said, adding that IVC had introduced subscription models that helped pet owners spread their costs.
Despite the industry’s protestations, many vets feel dealmaking in the sector is driving up prices.
Marco Melosi, president of Italy’s ANMVI, said that while consolidation in the country was still at an early stage with only about 150 clinics acquired by chains, fees had already started to rise.
“If before only the vet stood to gain, now it is the vet, plus someone else on top of them,” he said. Corporate clinics had “performance targets” and, as they offered a wide range of services, may suggest performing a series of checks and analysis that “in some cases might actually be superfluous”.
In its initial UK inquiry, the CMA found that large corporate groups may be concentrating on providing “more sophisticated, higher-cost treatments”.
Some content could not load. Check your internet connection or browser settings.
“The question the CMA is asking is whether vets have encouraged consumers to spend more . . . perhaps in circumstances when they shouldn’t have,” said Charles Weston, equity analyst at RBC Capital.
“You have to perform at an economic level,” said one vet who has worked for UK chains including private equity-owned Medivet and Goddard for almost a decade.
“To have a pay rise, you need to generate six times the value of your net salary,” they added. “In terms of consultations, surgery, diagnostic imaging, meds — they know how much you’re generating.”
But despite the boom in prices, investors and analysts say the sector is going through a rough patch, with a shortage of vets, weak consumer demand and now regulatory pressure all weighing on providers.
Pete Orpin, chair of the UK’s Society of Practising Veterinary Surgeons, said that while corporate investment had driven up prices overall, much of the rise was down to vet shortages and soaring pet ownership since Brexit, the sophistication of new procedures and an ever closer bond between owner and pet.
“Back in the day there was almost no procedure that would cost more than £1k,” he said. “We did the best we could. Now there is no limit in terms of where you go to with vet treatment.”
