Research undertaken by Plimsoll Publishing into the UK’s top 1000 veterinary practices has revealed that one in four is making a loss, suggesting that the sector is likely to experience significant consolidation as businesses are either taken over or close.
Nationally, over 60% of veterinary firms with a turnover of less than £5 million have reported losses. Average margins across all loss making practices have fallen from .03% to -2.9% in the last year.
But, it is not all doom and gloom. Whilst sales across the industry as a whole are flat, the 814 best performing businesses have seen margins increase from 2.7% to 3.8%.
Plimsoll’s senior analyst, David Pattison commented, “The rich are getting richer whilst the poor are getting poorer. I would be very surprised if we don’t see a period of acquisition and merger.
“And, with loss making firms fairly evenly distributed right across size spectrum, from £5 million to £50 million in turnover, there would appear to be rich pickings for profitable businesses of all sizes,” he added.
Analysis by the team at Plimsoll Publishing reveals that average sales per employee have decreased to just £61,000 over the last year. Declining sales per person, set against a backdrop of increased profits within the sector, would suggest that performing veterinary firms are finding profit from increased margins and cost cutting rather than sales.
David Pattison continued, “Clearly some operators are running highly efficient business models. They will be analysing cost centres and acquisition opportunities closely and will inevitably see opportunity in the efficiency gains that can be achieved through the restructuring of newly acquired operations. There will be opportunity for those looking to buy, as well as those looking to sell.”