Organic growth, acquisitions underpin CVS Group growth

Veterinary service provider CVS Group reported continued organic growth in an update on Thursday, with like-for-like sales growth for the financial year just ended of 8.0%, compared to 17.4% a year ago against a Covid-impacted comparator.

The AIM-traded firm said membership of its ‘Healthy Pet Club’ preventative healthcare scheme increased by 20,000 members in the 12 months ended 30 June, to 470,000 members.

It said adjusted EBITDA for the full year was now expected to be “marginally ahead” of market expectations.

The board reported a 6% increase in the average number of vets employed, with its vet vacancy rate remaining stable.

CVS completed three acquisitions in the second half and a further acquisition since the year ended, with the company describing an “increased pipeline” of opportunities.

It also reported “strong” cash generation, with net bank borrowings of £45m, and leverage expected to be “significantly below” 1.0x for the full year.

“The veterinary market continues to grow with the humanisation of pets and clinical advancement underpinning attractive and resilient long-term organic growth for the group,” the directors said in their statement.

“We are pleased to report that the membership of our loyal Healthy Pet Club has increased further, and demand across our veterinary practices remains strong.

“Since the financial year end, we completed a further acquisition of Werrington Vets on 27 July - a single site companion animal practice in Peterborough, funded from existing cash reserves.”

CVS said its UK acquisition pipeline remained “strong”, with the board also exploring new opportunities in Europe.

“Whilst the board is mindful of inflationary pressures and the wider economic backdrop, the group is very well placed for further growth in the 2023 financial year and beyond, with a strong balance sheet and committed undrawn bank facilities, which can be used to fund investment in our practice refurbishment and relocation strategy, technology advances, greenfield sites and acquisitions.”

CVS Group said it was planning to announce its preliminary results for the year ended 30 June on 22 September.

At the close on Thursday, shares in CVS Group were up 2.92% at 1,725p.

Reporting by Josh White at Sharecast.com.