1、Q4 2022Veterinary Services-Sector UpdateThe veterinary services industry has seen an unprecedented and accelerating level of consolidation in the last several years.Significant M&A Activity in the Vet Sector2Acceleration of Scaled M&AWith Several Major Players Emerging 201520162017201820192020202142

2、 STATES2,500+CLINICS15,000+DVMs45 STATES1,000+CLINICS4,000+DVMs37 STATES450+CLINICS1,000+DVMs36 STATES455 CLINICS1,000+DVMs14 COUNTRIES2,300 CLINICS15,000+DVMs2022The macro and sector tailwinds are well understood and will continue to propel the veterinary services industry forward.Due to Sustained

3、Industry Tailwinds3“Humanization”of PetsIncreasing Pet ExpendituresGrowing Household AdoptionLengthening Pet LifespansPet parents view pets as essential family members;continued pet“humanization”creates inelastic demand for veterinary servicesAdvances in preventive care measures and specialty treatm

4、ents have lengthened pet life expectancy,resulting in more frequent and higher-cost care for an aging populationEmotional bond between owners and pets drives growing health-related expenditures;pet parents expect to spend 10%more(compared to today)over the next 5 yearsGrowing pet ownership rates wer

5、e accelerated due to COVID-19,largely driven by pet adoption among younger cohorts4.8%annual industry revenue growth from 2018 to 2022(2)30%of households adopted a pet during COVID(2)(1)OnePoll and MetLife survey(2)IBISWorld Veterinary Services in the US report,June 202250%of people report spending

6、more on their pets than themselves each year(1)200 million total pets owned in the United States(2)Even the largest,most sophisticated platforms have immense value creation opportunities left to explore.With a Long Runway for Continued Value Creation410%20%Growth LeverValue Creation OpportunityComme

7、ntaryNascentMature“Pet Parent”EngagementThe“pet parent”experience is becoming increasingly important as consumerization acceleratesMany platforms are borrowing consumer retail strategies to develop new approaches for tailored client engagementFocus on leveraging technology to improve client connecti

8、vityDVM Recruitment&RetentionDVM recruitment and retention represent areas for continued improvement,especially in todays tight labor marketDeveloping partnerships with veterinary schools and deepening the associate DVM pool represent clear value creation opportunitiesMany platforms are heightening

9、their focus on employee development programs as a DVM retention toolPlatforms are increasingly focused on initiatives to improve the mental health and well-being of their DVMsService Mix ExpansionPlatforms are looking for opportunities to integrate service lines and benefit from cross-selling opport

10、unitiesContinued trend of integration across veterinary services,non-medical services,and product salesDe Novo ExpansionPlatforms with proven de novo strategies possess a unique growth angle that is largely nascent among many players in the market and can be an attractive differentiatorPace of de no

11、vo activity will likely accelerate as more platforms develop the DVM recruitment capabilities needed to execute de novos at scaleM&AThe veterinary landscape remains fragmentedThe“land grab stage”has matured,and a successful M&A strategy requires tangible value creation rather than pure asset aggrega

12、tionPrevalence of regionally strong platforms creates the opportunity for consolidation of the consolidatorsThe veterinary services industry has entered a new phase of its evolution,as investor focus has shifted toward improving the veterinarian and pet parent experiences.Investor Focus Has Shifted5

13、StageInnings 1 3 The Land Grab StageInnings 4 6The Professionalization StageInnings 7 9 The Consumer StageState of PlayMix of independent and small,newly created sponsor-backed platformsEarly-stage M&A activity paired with de novo strategy to complement growthInvestment focused on management and bas

14、ic infrastructureFocus on building scalable platforms and driving operational improvementsInvest in systems and infrastructure to support expansion and manage clinical qualityStill highly fragmented market supports robust M&A strategyPresence of multiple large regional and national platforms in the

15、space Greater emphasis on using technology and business analytics to optimize operations Shift in focus toward improving the pet parent and DVM experience and maximizing revenueLevel of SophisticationClinical Efficiency&AnalyticsBack-Office CapabilitiesVeterinarian ExperienceCustomer Experience Focu

16、sAncillary Service OfferingsScale DevelopedLevel of ConsolidationKey Capabilities DevelopedCore administrative functionsFinancial management operationsEquipment and suppliesTechnology infrastructureProvider recruitmentPayor contractingMarketing,branding,and patient acquisitionPet parent experienceDV

17、M recruitment and retentionBusiness analyticsFocus on professionalization and building scalable platform infrastructure to support growthFocus on the pet parent experience,service mix expansion,pet parent engagement,and operational optimization,with significant opportunity for investors to continue

18、adding valueHarris Williams believes that investor interest in the sector will continue to be strong into the future.And the Future of the Industry Remains Very Bright6Platforms will continue to capitalize on sustained industry tailwinds and favorable demand trendsSUSTAINED TAILWINDSVeterinary servi

19、ces will continue to be a fundamentally attractive sector with superior structural dynamicsSECTOR ATTRACTIVENESSThe industry has entered a new phase of growth,and investors are putting a greater emphasis on using technology and business analytics to optimize operations and grow organically rather th

20、an focusing on pure asset aggregationFOCUS ON OPTIMIZING OPERATIONSInvestors have historically been eager to seek investments in general practice,specialty,and emergency vet care sectors,as well as ancillary services such as boarding and grooming services;Harris Williams believes this trend will onl

21、y accelerate as notable industry participants continue to integrate offeringsANCILLARY SERVICE EXPANSIONVeterinary Services Market Map7PLEASE CONTACT HARRIS WILLIAMS TO DISCUSSWe pool the expertise in consumer,healthcare and life sciences,and technology to advise premier companies across the consume

22、r healthcare landscape.A Collaborative Approach to Consumer Healthcare8Corey BenjaminManaging DirectorConsumer G+1 804.932.1342Andy DixonManaging DirectorHealthcare&Life Sciences G+1 415.217.3419FOR MORE INFORMATION ON OUR EXPERIENCE IN THE VET SERVICES SECTOR,CONTACT WHIT KNIER&GEOFF SMITH:Geoff Sm

23、ithManaging Director and Co-HeadHealthcare&Life Sciences G+1 804.915.0195Beau PierceDirectorConsumer G+1 804.887.6113Nate RobertsonDirector Healthcare&Life Sciences Group +1 804.887.6135Dan LinsalataManaging Director Technology G+1 617.654.2122Whit KnierManaging Director Healthcare&Life Sciences G+1

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