By Sabrina Artusa
Across Long Island and the United States, private equity firms are buying privately-owned veterinary clinics. Veterinary hospitals hold steadfast against economic recessions, making them an attractive acquisition for private equity firms looking for a profitable, fragmented industry in which to invest.
The veterinary industry poses a unique opportunity for private equity firms. The cash-based industry is brimming with private practices and has reaped enormous benefits as pet ownership increases in the U.S. In 2021, an estimated 70% of U.S. households owned at least one pet, an increase of 13% in three years. According to American Pet Products Association, pet industry expenditures reached $147 billion in 2023, with $38.3 billion spent on veterinary care and product sales.
In 2021, CareVet, a veterinary practice management group, acquired Countryside Animal Hospital, a small Port Jefferson clinic founded in 1958 according to its website. CareVet boasts plentiful employee benefits and services such as paid time off and competitive pay. The perks are especially advantageous for recent graduates, who would have the chance to participate in a mentorship program.
CareVet is a relatively small group, with nine other investments, but it is owned by Compass Group Equity Partners, a private equity firm with over 100 investments.
Dr. Steven Templeton, owner of Animal Health & Wellness in East Setauket, said he has noticed neighboring clinics get absorbed by corporations in the last five years. Indeed, from 2017-21, private equity buyouts of veterinary clinics quintupled in value.
The money is a major factor in private owners selling to corporations as opposed to younger veterinarians. Contracts are often millions more than would be plausible privately.
Moreover, younger veterinarians aren’t as eager to buy a practice. Veterinarians endure long work hours in high-stress situations, and adding 10-20 hours a week managing a business isn’t something many want to take on. The shortage of veterinarians adds to the challenge of finding a private buyer.
“Money is not the whole thing — being able to practice how you think you should practice is part of enjoying your job,” Templeton said.
Vet clinics are undeniably lucrative and have become even more so in the past couple years. People are humanizing their animals in a way they didn’t decades ago, often treating their pets as part of the family. As a result, they are more willing to spend money on their pets’ ailments.
This type of relationship between pet and owner was only heightened by the loneliness and isolation of the COVID-19 pandemic.
“People’s feelings about their pets changed with COVID,” Templeton said. “They were their anxiety medicine.”
Before the pandemic, pet owners in the U.S. were spending less on their animals. Now, not only is there an increase in demand for veterinary clinics, but many clinics are expanding their services.
In some corporation-owned practices, employees reap the benefits of working for a bigger, richer company. They may have more paid time off, normal hours and current technology.
Corporations reportedly have a more regimented approach to treating a pet’s health issue, with set responses to certain issues. This standardized approach may be effective but not always to a client’s benefit.
“There are templates laid out for what you have to do in every situation which makes it more expensive,” Templeton said. “You don’t have that leeway as an employee to discuss that with the client.”