Pet owners spent more on vet services in 2024, and so did PE investors

“We expect demand for vet services to grow consistently in the near term, driven by a new generation of pet parents investing substantially more in pet health and wellbeing through preventative care and higher-quality food products,” Gilles Vanhouwe, director at Verlinvest, an international, family-backed evergreen investment firm, told PE Hub.

PE Hub noticed three trends driving deals in the fragmented vet and pet care markets and highlighted them below.

1. Pet owners are spending more on medical care

Increased adoption and humanization of pets has led to increased spending by owners on medical care for their furry little ones’ health, which has fueled investments in veterinary hospitals and practices.

The cost of veterinary services rose by 7.1 percent between April 2023 and April 2024 – the largest increase in pet-related expenses during that time, according to personal finance website ValuePenguin.

L Catterton announced in November an investment in WeVets, a Brazil-based veterinary hospital group founded in 2020 that quickly expanded to 15 hospitals and two labs.

“There’s an opportunity to continue to take advantage of that increasing spending in the vet space, while also adding additional customers, services and capabilities,” RF Investment Partners managing director Collin Abert told PE Hub. “I would say there is also an attractive valuation and transaction structure, and strong margins and cashflow in addition to all of that stability.”

Greater need for vet care providers has inspired PE firms to back veterinary supplies businesses. Carmelina Capital Partners did this in July when it invested in KVP International, a provider of veterinary and small animal supplies.

2. Vets are building and honing their skills

Higher demand for vet care has increased training opportunities for these professionals, with PE backing this type of education.

Levine Leichtman Capital Partners in July agreed to acquire a stake in Improve International Group, a postgraduate training and education provider of courses to veterinarians in 20 countries, from RJD Partners.

Quality vet care practices also require efficient workflows. TA Associates and Five Arrows ran with the trend in February when they made a joint growth investment in Agilio Software, a frontline healthcare operations software provider of programs to help veterinary practices automate and optimize critical operational functions, such as workforce management, compliance and clinical assets tracking.

“The move towards professionalization allows vets and nurses to benefit from the attractive work environment they deserve and for pet parents to receive the quality of care they require,” said Vanhouwe in a nine-deal listicle on H2 2024 pet and vet care investments.

He continued, “activity is typically skewed toward countries with lower levels of professionalization and consolidation, including Italy, Spain and Germany, but we anticipate an uptick in other markets in the coming years.”

3. Pharmacy and service needs are growing

Greater concern for pets’ wellbeing and medical care has also stimulated demand in animal pharma, while increased investments in vet care practices have increased the need for service providers.

RF Investment Partners seized on both trends in October when it invested in Altro and Amici Pharmaceuticals, a veterinary service provider and virtual pharma manufacturer, respectively.

“Pet and veterinary care are pretty recession-resistant,” said Abert in an interview with PE Hub. “In addition, a lot of treatments and/or pharmaceuticals that we’re providing are more generic and not as costly.”

Another example is Veterinary Pharmaceutical Solutions, a licensed animal compounding pharmacy backed by Chicago-based Granite Creek Capital Partners that announced in May its acquisition of Diamond Animal Health, an animal pharma and vaccine manufacturer. The deal was one of five covered in a listicle of H1 2024 deals in vet and pet care.

Pet and vet care saw a slew of deals in 2024 and is expected to continue to see robust investment activity in light of reduced interest rates and GPs seeking fragmented markets to deploy more capital due to pressure from LPs to make more investments.