Specialist
Former executive at Independent Vetcare Ltd (IVC Evidensia)
Agenda
- UK veterinary care market update and key trends
- IVC Evidensia performance analysis vs key players such as CVS (NYSE: CVS)
- Growth outlook – consolidation strategy assessment and portfolio expansion opportunities such as in farm and equine
Questions
1.
What’s your outlook for the veterinary care market? How should we think about it now after the pandemic, considering the increase in pet ownership we saw during the pandemic years?
2.
How do you think small animal ownership will trend over the next 1-3 years? Are we just seeing puppies bought during the pandemic getting older, or will we still see the same adoption rate for personal animals in the UK?
3.
Could you roughly quantify YoY growth for the next 1-3 years, appreciating it’s difficult to estimate?
4.
How should we think about the 10-12% growth YoY for small animal ownership if we find ourselves in an inflationary environment with some macroeconomic pressures, especially weighing on these pets’ owners or possible owners? Do you think growth will decrease?
5.
How do you think IVC Evidensia is positioned within the standard of enhanced quality of care?
6.
Within service demand type, we mentioned the small animal market. What about other types of services? Do you think the pandemic changed the service mix we were seeing in players such as IVC and everyone in the market?
7.
How should we think about growth for the equine segment in the next 3-5 years?
8.
How should we think about market consolidation, especially in the UK? Some articles mentioned 50% consolidation, as we’ve seen various large players be especially aggressive in M&A opportunities. What’s your 3-5-year outlook here?
9.
In terms of large corporates, do you think IVC is in a better place than private transactions to acquire the remaining assets and therefore independent practices that are in the market?
10.
How should we think about multiples in the UK market? I assume that a number of consolidated practices could factor in a higher multiple than a single independent practice?
11.
How do you think the EBITDA valuation will trend in the next 3-5 years?
12.
Reflecting on IVC’s acquisitions so far, especially of smaller practices across the different service types, how successfully do you think the company has integrated these smaller clinics into its portfolio? How many synergies does it actually gain, considering how much it has acquired?
13.
In terms of IVC’s service mix, we mentioned that the pandemic pushed the small animal services, especially the low-margin ones, but these were higher in volume – such as the puppy services. How should we think about the service mix during 2022 and then looking forward?
14.
In terms of other services for companion animals, we’ve mentioned the spay and vaccine services that are lower-margin service types for IVC. The company saw a lot of that during the pandemic. Is this perhaps an unfavourable service mix? Do you think the company can successfully shift to promoting higher-margin services in its portfolio?
15.
How might service prices trend for IVC? A specialist in a previous Interview highlighted that at the beginning of 2022 there was an increase in pricing across the services to counteract the macroeconomic pressures and inflation. How should we think about price increases over the next 1-2 years, especially from big chains such as IVC?
16.
Do you think IVC can maintain its current prices, considering wage inflation from the customer side and all the macroeconomic pressures we’ve discussed?
17.
We discussed potentially elevated costs. Will the customer become more price-sensitive because of this? To what extent can IVC pass elevated costs to the consumer? How should we think about pricing in the competitive landscape?
18.
How do you think IVC compares on price to CVS?
19.
We discussed returning customers. If you have a puppy and you take it to IVC, how hard is it to switch to another provider or an individual clinic after that?
20.
If a pet owner goes to their independent clinic to get cheap prices on easy procedures and then wants to spend more for more complex procedures to get that quality of care, do you think it could also benefit IVC that the customer has low switching costs?
21.
Are we seeing a stronger shift into pet insurance due to the price increases we’ve discussed? How do you see this trending?
22.
I’ve read some articles around the Europe regulation on prescription medications, especially regarding the replicate pet drugs online in Europe. How much revenue do you think this will bring to IVC, if successful?
23.
IVC recently acquired an animal hospital in Germany – one of the largest in Europe. How should we think about expansion outside of the UK and existing geographies such as Netherlands and Sweden?
24.
How should we think about multiples to acquire clinics in Europe vs the UK? Are we talking about the same range, or is one higher or lower?
25.
How far do you think IVC will penetrate further into geographies such as the US?
26.
If IVC were coming up for sale, which it’s been keen on for a while, how should we think about a potential buyer? Will it likely be another PE fund, due to its size?
27.
We mentioned the shortage of labour and current staff burning out. How should we think about labour in terms of cost for IVC? How much do you think the cost of labour will go up by in the next years because of inflation and the shortage?
28.
Do you think IVC is better-placed than competitors to attract and retain talent? We mentioned some graduate programmes, postgraduate training and so on.
29.
How do you assess the shift into a more telehealth, tele-veterinary service? We’ve seen IVC acquiring various companies for online veterinary consultations, such as PawSquad in the UK, Vets Now Video and another one in Sweden. How do you think these acquisitions complement and support the company’s shift towards a more online presence?
30.
Do you think IVC’s online veterinary care can complement its in-person care, instead of replacing it? If the company were to move these high-volume but low-margin services online, especially in terms of prescriptions, would this help it gain more traction into the high-margin services?
