CVS Group (LON:CVSG) said revenue for the financial year ended June 30 exceeded GBP 710 million, up 5.9% from the prior year, as the veterinary services provider used an investor presentation to reiterate its capital allocation policy and outline expected returns from acquisitions and capital investment.
Chief Executive Richard Fairman said growth was generated across all three divisions, with like-for-like revenue growth of 2.1% for the full year. He said trading in the final quarter was affected by continued weakness in U.K. consumer confidence and “exceptionally hot spells of weather” in late May and late June, which led some customers to defer routine appointments or cancel scheduled procedures.
Management Points to Resilient Veterinary Market
Fairman said CVS operates in a veterinary market supported by long-term structural growth, citing the humanization of pets, a larger pet population since the COVID-19 pandemic, longer pet life expectancy and advances in clinical care. He said the company had “never experienced a full year of negative growth” and argued that veterinary care has shown resilience through economic cycles.
CVS operates more than 475 practices in the U.K. and Australia. Fairman said veterinary practices currently account for about 89% of group revenue, with laboratories contributing 4.5% and the Animed Direct online retail business accounting for about 7%. The group employs around 9,000 people, including 2,500 veterinarians and 3,300 nurses.
Fairman also discussed the impact of the U.K. Competition and Markets Authority process, saying CVS now has “CMA certainty.” He said the company has displayed prices on all U.K. companion animal websites from late 2025 and has more than 80% of U.K. practices jointly branded. He added that the company has put through higher price changes this summer than in the prior three years, after previously taking a more cautious approach during the CMA process.
Capital Allocation Framework Reaffirmed
Chief Financial Officer Robin Alfonso said CVS’s capital allocation priorities remain unchanged. He said the company’s first priority is maintaining a healthy balance sheet, noting that CVS recently refinanced its bank debt and now has committed facilities through May 2030, with a one-year extension at the company’s discretion.
Alfonso said CVS benefits from operating cash conversion above 70%, providing capacity for organic growth, acquisitions and shareholder returns. He said CVS expects to recommend a final dividend for the year just ended, with details to be announced with full-year results in September.
The company recently announced a GBP 50 million share buyback program. Alfonso said that, as of the prior week, CVS had acquired 1.4 million shares at an average price of GBP 12.28 and spent more than GBP 17 million under the program.
Alfonso said CVS expects to deploy about GBP 50 million annually on acquisitions in Australia, subject to timing and the availability of opportunities that meet its criteria. Total capital investment, including maintenance capital expenditure, is expected to be about GBP 30 million per year. Management said essential maintenance capital expenditure is expected to be approximately GBP 12 million annually.
Australia Expansion Highlighted as Major Growth Opportunity
Management devoted much of the presentation to CVS’s Australian expansion, which began in July 2023. CVS completed six acquisitions in Australia during the financial year, comprising 14 sites for initial consideration of GBP 45 million. Fairman said two further acquisitions have been signed and are expected to complete in the coming weeks. CVS now operates across 57 practice sites in Australia.
Alfonso said CVS has focused on acquiring high-quality companion animal practices in major urban areas at multiples of about six times EBITDA. He said the Australian veterinary market is worth about GBP 3 billion, with around 3,600 practices and consolidation of about 20%. CVS currently represents about 1.5% of the Australian market, he said.
Ben Avery, managing director of CVS Vets Australia, said the Australian portfolio includes practices with advanced clinical capabilities such as CT imaging, internal medicine, advanced surgery and laparoscopic procedures. He said clinical depth helps attract and retain employees while supporting revenue and margins.
Avery gave two examples of Australian acquisitions that have produced improved profitability since joining CVS. In one Adelaide practice, he said gross margin improved by 590 basis points and EBITDA margin by about 1,000 basis points, with an expected pre-synergy internal rate of return of 17%. In a New South Wales practice, he said revenue grew by around 18% since acquisition and EBITDA margin improved by about 990 basis points, with an expected pre-synergy IRR of 14%.
Alfonso said CVS does not currently include synergies in its Australian acquisition business cases, but expects synergies could add up to three percentage points to IRR. He said the Australian business could “conservatively” deliver GBP 105 million to GBP 135 million of EBITDA over time, including owned practices and potential market growth.
Capex Focused on Facilities, Equipment and Technology
Chief Veterinary Officer Paul Higgs said CVS has invested in practice facilities, clinical equipment and technology to support organic growth. He said the company has improved the average quality of its practice estate through refurbishments and relocations, while also investing in equipment such as dental X-ray machines and CT scanners.
Higgs said CVS has more than doubled revenues from dental procedures since increasing the number of practices with dental X-ray machines. He also said the company has nearly doubled the number of CT machines across its estate, contributing to an almost 50% increase in imaging revenue to date.
Across clinical equipment investments, Higgs said CVS has generated an average payback of five years, an IRR of more than 20% and return on capital employed of more than 30% by year three.
Management also highlighted investments in technology, including a cloud-based practice management system, online booking across U.K. companion animal practices and trials of an AI scribing tool. Alfonso said improvements to the Animed Direct website, including faster checkout, Subscribe and Save prompts, guest checkout and new payment options, helped improve second-half performance in the online retail business.
Outlook Emphasizes Growth and Discipline
Fairman said CVS has a strong balance sheet, capital to deploy and opportunities to grow through acquisitions in both the U.K. and Australia. He said the company is targeting “high teens returns” on capital employed and believes its valuation remains significantly below pre-CMA levels.
During the analyst Q&A, management said Australia is performing well but did not provide a specific like-for-like growth figure for the market. Fairman said CVS’s ambition is to return to historic like-for-like growth levels, though he noted the current economic backdrop remains challenging.
CVS said it will publish full-year results on Sept. 24.
About CVS Group (LON:CVSG)
CVS Group is a leading provider of veterinary services, operating in the UK and Australia, listed on the Main Market of the London Stock Exchange. CVS is focused on providing high-quality clinical services to its clients and their animals, with outstanding and dedicated clinical teams and support colleagues at the core of its strategy.
The Group operates from over 475 veterinary practices across its two territories, including specialist referral hospitals and dedicated out-of-hours sites. Alongside the core Veterinary Practices division, CVS operates Laboratories (providing diagnostic services to CVS and third-parties) and an online retail business (“Animed Direct”).
The Group employs c.8,900 personnel, including c.2,400 veterinary surgeons and c.3,300 nurses.
