Veterinary Services Industry Profile

The US veterinary services industry includes about 28,000 veterinary centers and animal testing laboratories, with combined annual revenue of $25 billion. VCA Antech and Banfield, located in PetSmart stores, are the largest operators of animal hospitals. VCA Antech also operates testing labs. The industry is highly fragmented: the 50 largest companies hold less than 10 percent of the market. The typical veterinary services company operates an animal hospital with less than 20 employees on staff and has annual revenue under $1 million.

COMPETITIVE LANDSCAPE

Demand is driven mainly by the number of cats and dogs kept as pets, which is affected by demographics. The profitability of an individual clinic depends on marketing skills, and by the range of services the practice offers. Large practices enjoy economies of scale in marketing as well as more capital to invest in onsite diagnostic equipment. Small practices can compete effectively by specializing in particular animals or types of treatment, or by serving an exclusive area.

PRODUCTS, OPERATIONS & TECHNOLOGY

Animal hospitals and clinics treat injuries and disease, but derive most revenue from animal health procedures like neutering and spaying, vaccinations, and regular checkups. Some animal hospitals also bathe, groom, board, and provide testing services. Sales of pet food, vitamins, and accessories account for about 40 percent of industry revenue, while veterinary care represents more than 25 percent. The industry is divided into services for pets ("companion animals") and food animals ...