CVS Group dogged by shortage of vets

CVS Group’s shares dropped ahead of its annual general meeting on Thursday as a warning about a squeeze on margins due to the continued shortage of veterinary surgeons and nurses overrode news of continued sales growth.

For the four-month period ended 31 October the veterinary services provider’s total sales increased by 24.7% compared to the same period last year, or up 4.7% when new acquisitions were excluded.

Elsewhere, Animed sales jumped by 14.9%, Crematoria’s increased by 12.4% and Laboratory sales rose by 7.8% as CVS kept up the pace of acquisitions.

In the year to date the AIM-listed company has acquired 19 practices and instrument and equipment supply business Vet Direct for a total of £48.4m, and reports that the performance of new acquisitions has been “fully in line” with its business plan.

“The group continues to have a strong pipeline of acquisition opportunities and we expect to complete a number of further acquisitions in the remainder of the current financial year and beyond. CVS will continue to be selective and will seek acquisitions where they complement the existing business and where acquisition multiples are acceptable,” CVS said in a statement.

Directors also noted the continued industry headwinds in relation to the shortage of veterinary surgeons and nurses, with a continued need to rely on locums for flexibility, while market rates for veterinary locums have increased around 14% over the same period last year.

This and other cost inflation factors has resulted in profit margins for the group declining year-on-year.

In recruitment, the company welcomed a record 130 new graduate vets into its two-year graduate induction programme and also reported reductions in vacancies for surgeons and nurses after raising wages above industry standards to deal with a shortage of qualified individuals.

The period also saw the launch of a return-to-work programme to support veterinary surgeons and nurses who wish to return to the profession and a "women in leadership" programme to ensure equal opportunities for career progression.

CVS’ shares were down 8.74% at 663.00p at 0854 GMT.