Farm vet revenue grows as main players expand rapidly

The vet sector has undergone huge change in the past five years, consolidating rapidly as individual businesses expanded by taking over established practices.

Three operators now account for more than 40% of business in the UK, according to a report by industry analyst IbisWorld.

Veterinary Services in the UK, published in July, puts income growth for the sector overall this year at 9.7% as it recovers from the large Covid-related small animal dip last year.

Farm practice income between 2017 and 2022 is estimated to have risen by 6.9% overall.

See also: Vet survey reveals serious challenges ahead for profession

The percentage of revenue generated from farm animal practice has increased over the past five years, and is expected to continue growing.

This is partly through the need to meet health and safety regulations related to meat products following the UK’s exit from the EU, alongside expected growth in poultry numbers.

However, the report cautions that changes to farm subsidies could negatively affect demand for farm vet services, as could falling meat consumption and a possible reduction in livestock numbers.

Main players

The sectors’ three main players are Independent Vetcare (accounting for 18.4% of sector revenue according to the report), VetPartners Group (11.7% share) and CVS Group (9.7%).

These have expanded rapidly, mainly through buying existing practices, with Independent Vetcare owning 180 UK practices in 2018 and now owning about 1,000.

Independent Vetcare is owned by Swedish private equity firm EQT, which acquired a majority stake in the company in December 2016.

CVS bought 34 smaller surgeries in 2018-19 and a further seven in 2019-20, according to the report, and has continued its expansion since then.

Mark Harwood is a partner in accountant Hazlewoods and advises veterinary practices. He estimates that farm animal practice accounts for about 10% of the vet services market.

Putting the shifting ownership in context, he reckons that 10 years ago only 10% of small animal practice was in corporate hands, now it is more than 75%.

Over the same time period, ownership of equine vet practices has gone from 1-2% to 15-20%.

Greater interest in farm vet sector

“The shift has not been as rapid in farm vet practice,” he says. “But the past five years has seen greater interest.

“Revenue streams are changing – for example, for every £1 of fees before VAT, there would be about £1.60-£1.80 worth of drug sales.

“But in some areas we have seen reduced drug pricing, which has put farm practices under pressure and made it harder to sustain profits. The buying power of the corporates is a fact of business.”

Some of the ebbs and flows in milk prices have also been quite challenging for farm vets, says Mr Harwood, but proactive independent farm practices can be high-performing.

One challenge for a corporate taking on a farm practice is the question of customer loyalty to an individual or group of partners, he says, with the risk that if a respected partner leaves, this risks a loss of business.

“Independents can shape their own destiny, and the differentiation can be powerful,” says Mr Harwood.

“However, the corporate model offers different career opportunities.

“A clinical director or lead farm vet would be looking at a salary of about £65,000-£75,000/year with a corporate, perhaps with a bit of bonus.

Earning potential

“The independent sector varies hugely – at some practices the owners don’t earn more than they would as an employee with a corporate, but then there is scope for considerably more [as a partner] in a really well-run independent practice.

“Overall, the corporates have been good at pulling up individual earnings levels – a corporate new graduate would be looking at a starting salary in the early £30,000s.” 

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