The veterinary consolidation landscape has regained momentum after a relatively quiet 2023. This past year started with a bang, bringing a flurry of investments, partnerships and mergers. If 2023 was about holding back, 2024 felt like the beginning of a new chapter for the industry — one with corporate pivots and shifting investor interest.
Major Moves
2024 was full of deal activity, signaling that the veterinary industry is back on the radar of private equity and that investors are looking for growth. After a long search for the right partner, Heart+Paw kicked off the year by securing what it called a “significant strategic growth investment” from Whistler Capital Partners, a private equity firm focused on health care. Also in January, a de novo group, Sploot Veterinary Care, attracted funding from L Catterton, already known for its stakes in Alliance Animal and several other pet care companies.
As summer rolled in, MedVet underwent a significant recapitalization led by Oak Hill Advisors, which has invested more than $1 billion in animal health and pet care. Around the same time, CareVet closed on a new credit facility backed by funds managed by the merchant bank BDT & MSD Partners, giving the veterinary group fresh capital to expand its footprint. Then, in late October, the industry saw a major shake-up: Petfolk announced a $36 million Series C investment led by Deerfield Management, with plans to more than double its clinic count to 40 locations by 2025.
On the mergers and acquisitions front, Veterinary Innovative Partners made waves by acquiring Valley Veterinary Care, a 24-hospital group. Finally, in one of the most recent moves, at-home and mobile care providers The Vets and BetterVet announced a merger backed by fresh financing from founders and institutional investors.
Rumor has it that we may see bigger moves on the horizon, with whispers of a potential merger between Mission Veterinary Partners and Southern Veterinary Partners — and possibly a new parent company stepping in.
Regulatory scrutiny on veterinary consolidation continued to intensify in 2024, with U.S. Sens. Elizabeth Warren and Richard Blumenthal criticizing JAB, the owner of National Veterinary Associates and Ethos Veterinary Health, for the impact of private equity roll-ups on pet owners and veterinary staff. In response, JAB argued that its acquisitions are unlikely to exercise market power given the industry’s fragmentation and competitiveness. The back and forth highlights the tension between regulators and private equity as the Federal Trade Commission keeps a close eye on veterinary mergers.
Investors Pivot
The surge of deals in 2024 signals a clear shift in where capital is flowing. Much of that investment is directed toward de novo hospitals, emergency and specialty care, and mobile services. PetIQ’s closure of 282 in-store clinics over the past two years after unsuccessfully shopping them highlights a key point: Veterinary practices need to be well-established to be attractive acquisition targets and, in many cases, building new facilities is more cost-effective and scalable than trying to revive struggling, existing ones.
De novo groups continue to thrive, attracting strong investor interest. Groups like Petfolk and Bond Vet, which initially operated primarily on the East Coast, and Modern Animal, previously concentrated on the West Coast, are expanding aggressively into new markets like Texas. Other de novo players, such as PetVet365 and CityVet, are moving outward from the middle of the country to the coasts. Additionally, Galaxy Vets has pivoted away from the traditional M&A strategy to focus on building urgent care hospitals in Canada and the United States.
The mobile veterinary care market is gaining traction, fueled by the rise in pet ownership and the increasing demand for convenient preventive care. This segment is growing rapidly, with projections showing an annual compound growth rate of 7.78%, reaching $1.15 billion by 2029. With such strong demand, it’s no surprise that investors are paying close attention to mobile practices, seeing them as a lucrative area for growth. Companies like Vetama are capitalizing on the trend, introducing franchisees into both brick-and-mortar and mobile practice models, offering a more flexible approach for veterinarians.
Market Trends
After the 2023 slowdown, valuations are bouncing back as consolidators adapt. According to Raj Raheja, myVETgroup’s co-founder and CEO, multiples are now 1x to 1.5x higher than before the COVID-19 bubble. While rising costs are a challenge, higher valuations are driving innovations like wellness plans and “buy now, pay later” options, helping practices meet client financing needs. The industry is also seeing more general practices add urgent care services as a more affordable alternative to ER visits.
While prices and the average cost per visit are up, many practices are experiencing a dip in demand. An Instinct Science report, The State of ER and Specialty Veterinary Care in 2024, found that 59% of practices reported the same or lower volume compared with last year. The shift is pushing them to seek operational efficiencies and explore ways to optimize financially.
Consolidators are also being more thoughtful with their acquisitions. Instead of snapping up every available practice, they’re taking a more strategic, long-term approach. According to Bain & Co.’s Global Private Equity Report, future fundraising will depend on how creatively the industry can return cash to investors. Data shows that over half of all unsold assets (54%) have been held for three years or less. However, companies held for five years or more grew 18% in 2023, and those held for four years or more now make up 46% of the total, the highest level since 2012. This shows that longer-held assets are gaining value over time, reinforcing the trend of consolidators focusing on sustainable investments rather than quick flips.
Takeaways for Consolidators
A tough economy opens opportunities for practice consolidators to diversify their revenue streams creatively. With looser telemedicine regulations and the growing adoption of mobile apps, artificial intelligence and at-home smart devices, the industry is ripe for innovation. Rising pet ownership, longer pet lifespans and growing demand for convenient care and wellness-focused services offer consolidators fresh ways to rethink their business models and scale up.
At the same time, consolidators will need to put extra effort into improving their employer reputation and enhancing team retention. While the debate continues over whether a shortage of veterinarians truly exists, one thing is certain: Burnout rates remain high, and competition for talent isn’t likely to go down.
Takeaways for Independents
While 2021’s multiples in the upper teens and 20s might not return, veterinary practices are seeing some of the highest valuations across any sector. Selling at a double-digit multiple is still a great win. Due diligence is as crucial as ever, especially with buyers involving private equity components.
For private practice owners not quite ready to sell, the current environment presents an opportunity to strengthen hospital operations. As demand dips, driving revenue growth becomes more challenging, so the focus should shift to enhancing efficiencies with technology and optimizing expenses. Inventory management, a major cost, is an easy target for improvement and can boost profits, whether for a future practice sale or reinvestment. For those considering an exit in the next year or two, now is the time to make changes, as buyers will scrutinize recent performance to assess the financial health of potential acquisitions.
Many practice owners who didn’t act on the sky-high multiples of 2021 are now more eager to exit and retire. For those owners, the shift in market conditions might be the nudge they need to sell sooner rather than later.
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According to The State of ER and Specialty Veterinary Care in 2024, “Staffing shortages remained the most reported issue in 2024 at 78%, a decrease from 86% in 2023.” Learn more at bit.ly/3YAOf7N.