CVS Group outlines five-year plans for continues growth

Veterinary operator CVS Group updated the market on its five-year ambitions at its capital markets day on Tuesday, confirming that it was aiming for organic revenue growth of between 4% and 8% per annum.

The AIM-traded firm said its goal was for an adjusted EBITDA margin of between 19% and 23%, subject to mix, with the opportunity to improve practice margins through investment in facilities and equipment.

It said it would make continued investment in further practice refurbishment and relocations, delivering “high-quality clinical care”, with an opportunity to invest between £30m and £50m per year to drive additional organic growth.

Greenfield investment would also be made, with plans to open three greenfield sites in the financial year to 30 June 2023, and further opportunities over the five-year period.

CVS also said it had ongoing opportunities to invest in technology, after it recently announced a new cloud-based practice management system, while it would also continue to make investments in people.

Acquisition opportunities in the UK and scalable international consolidation opportunities were also being looked at, which the board said would be subject to its “disciplined acquisition criteria”, with expected investment of at least £50m per year across the five-year period.

The company said it was aiming for organic operating cash conversion of at least 70% with leverage remaining less than 2x, while sustainability and environmental, social and governance (ESG) would remain “at the heart” of delivering its growth strategy.

“I am delighted that the strategy set out in 2019 to focus on our organic growth augmented by acquisitions has delivered strong and robust growth for the group,” said chief executive officer Richard Fairman.

“Whilst we are mindful of the macroeconomic backdrop, our market is resilient and the group remains well positioned to deliver further growth.

“Today we set out key elements behind our ambition to double EBITDA over the next five years, by delivering our purpose of providing the best possible care to animals, and our vision to be the veterinary company people most want to work for.”

Fairman said the firm was outlining its plans for investment across a number of areas, in support of organic and inorganic growth and margin enhancement.

“Combining the scope for enhanced earnings with the highly cash generative nature of our business, we believe that the group is well placed to continue to offer attractive returns to shareholders.”

At 1052 GMT, shares in CVS Group were up 1.86% at 1,970p.

Reporting by Josh White for Sharecast.com.