Overview of Veterinary Practice Consolidators

April 20, 2021

Veterinary Practice Consolidators Overview

The continuing vigorous pace of “corporate” purchases of veterinary practices makes understanding the players and this process, important for every independent practice owner. In its effort to help practice owners understand this complex environment, VetValue.pet has taken a close look at the current universe of the potential purchasers of animal hospitals. While this list will continue to evolve as veterinary consolidators merge, enter or exit the market, providing a snapshot of these organizations at this time can provide independent practice owners with some of the knowledge they need to navigate these tricky waters.

Who is Buying Veterinary Practices?

First, it makes sense to define what a corporate veterinary consolidator is. Many people immediately think of large corporate branded consolidators like Veterinary Corporation of America (VCA). And, these large corporate brands do make up almost 50% of the all the practices owned by consolidators.

Nevertheless, many of the almost 40 or so consolidators currently in business are smaller players. Some of these consolidators are the brain-child of entrepreneurs, some were seeded and funded by family offices, some were founded and funded by private equity firms and some were created by enterprising business-oriented veterinarians. These potential acquirers of veterinary hospitals also often have different focuses, sometimes geographic and sometimes practice-oriented. For example, the O’Brien Veterinary Group is a small family owned consolidator solely focused on the Chicago metro area market. Meanwhile, Destination Pet is a private equity-owned company focused on primarily grooming and boarding practices nationally.

Veterinary Integration Solutions has done some great work on the industry, including compiling a comprehensive list of consolidators, which you can view here

Why Have Veterinary Practices Become the Targets of Corporate Consolidators?

It also makes sense to explain why the veterinary practices have been a magnet for these corporate and financial consolidators. As veterinarians know better than anyone, pet owners are typically dedicated to their companion animal's health and welfare. This commitment to veterinary medicine has only deepened as Americans have sought solace from interactions with their pets during the pandemic.

Continued growing demand for pet healthcare services coupled with the point of sale nature of most practices and little tort risk, make veterinary practices particularly attractive businesses for practice consolidators. The only problem has been the ability to create businesses large enough to warrant growing valuations in what by its nature is a fragmented market. This situation has been addressed by consolidators through the significant number of veterinary hospital acquisitions they have made in recent years, a trend often times bemoaned by some veterinary pundits and practice owners.

Just the Facts

We found 40 active consolidators or corporate operators of veterinary practices at the current time. These range from behemoths like VCA (+1,000 practices) or NVA(approx. 700 specialty and general practices) to single digit general practice regional or specialty operators with 4 or 5 animal hospitals. Some consolidators, like Western Veterinary Partners, explicitly focus on certain regions of the United States. Others are ostensibly national, but often try to create a critical mass of practices in certain focused geographic areas. For example, one large consolidator has 19 practices in the Atlanta metro area and 13 in and around Memphis. Our assumption is that this strategy allows consolidators to bring synergies to certain markets as well as facilitating additional acquisitions particularly of smaller practices.

Practice consolidators also often target larger veterinary practices with $1.5 million or more in revenue. This focus is confirmed by the fact that the average number of veterinarians working in the +2,000 corporate practices we studied was 3.5 doctors per practice.

The Pitch from Most Consolidators

Not surprisingly, most consolidators’ websites encourage veterinarians who are considering a transition to directly contact them. Some even offer free valuations for interested practice owners. The pitch most practice consolidators make is fairly simple, namely we will take over and vastly improve a practice’s back office operations, while allowing the doctors on staff to do what they are passionate about – practicing veterinary medicine. This premise resonates with many practice owners who spend a significant amount of their time on practice business as opposed to practicing medicine. More importantly, it can often be true.

However, the bottom line is how to go from independent to corporate-owned while making sure the practice owner selling to corporate gets fairly compensated for the value they have spent their career building and ensuring their practice continues in the way they envision. Fairness and fit are key components of a successful transition from the selling practice owner’s perspective. Like any complex process, practice owners can benefit from the knowledge of experienced advisor. The right advisor can ensure that if a transition is appropriate it is done using a market-based process that helps drive valuations in favor of the practice owner while allowing a focus on which of the many consolidators would be the best partner.

The Takeaway

Our expectation is that the trend toward consolidation or corporatization of veterinary practices will continue as existing and new consolidators aggressively pursue acquisitions. This trend will create both opportunity for and pressure on independent veterinary practice owners. In order to meet this challenge, our suggestion is that practice owners carefully weight using an advisor if they are considering a transition.

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