CVS: Vet probe weighs on profit but fundamentals ‘strong’

Veterinary group CVS has said that a competition probe into the vet sector, plus cost of living pressures and a cyber attack, negatively affected its performance over the last year.

The Competition and Markets Authority (CMA) launched a formal probe into the sector in May.

CVS shares plunged 20 per cent after the announcement, and have yet to recover to their former level.

The London-listed Group, which has over 2,000 veterinary clinics, said it would “proactively support” the CMA through the investigation.

Group like-for-like sales increased by 2.9 per cent in the year ended 30 June, down from 7.3 per cent in 2023 and below guidance of four to eight per cent.

Adjusted earnings before interest, tax, depreciation and amortisation grew by 4.7 per cent, to £127.3m from £121.6m in 2023.

Adjusted profit before tax fell by 5.9 per cent, from £87.9m to £82.7m, and operating profit fell by 25.7 per cent, from £68.4m to £50.8m.

Operating profit was affected by an increase in depreciation following a step up of capex investment and an increase in amortisation from acquisitions, CVS said.

The vet group expanded into Australia during the period, with 22 acquisitions for £82.5m.

It also took a loss of £20m on the divestment loss-making operations in the Netherlands and Republic of Ireland.

Richard Fairman, chief executive of CVS, said: “We have faced a number of challenges in the past financial year with our financial results adversely impacted by the cyber attack, the subsequent migration to a new cloud based practice management system and the impact from the CMA Market Investigation announced in May 2024. 

Notwithstanding this, the fundamentals of the sector remain strong and we have laid the foundations for future growth.

In line with our stated strategy, we continue to invest in our UK practice facilities and equipment and have progressed our technology transformation with 375 of our 430 UK practices now operating on our new cloud-based practice management system. 

We also established a new clinical governance framework in the year which reflects our commitment to drive standards within the profession, and to support our clients in providing appropriate care to their animals.”