CVS Group (LSE:CVSG), the UK's largest listed veterinary services group, has seen its shares fall to 13 times earnings – a ten-year low – under the shadow of a Competition and Markets Authority (CMA) investigation into the sector, according to MoneyWeek.
Despite the regulatory uncertainty, the business has continued to grow, with revenue and profits rising, international expansion and ongoing investment. Since listing in 2007, CVS Group has delivered uninterrupted revenue and Ebitda growth, a record few UK-listed companies can match.
The company operates an integrated healthcare network spanning 500 sites, including general practices, specialist referral hospitals, diagnostic laboratories and an online pharmacy. Around 500,000 owners pay monthly subscriptions via The Healthy Pet Club, providing recurring revenue and encouraging regular visits.
In Australia, CVS Group has acquired 57 practices generating £80 million of annual sales over three years, a market that resembles the UK veterinary market of 15 years ago. The company's valuation has fallen since the CMA announced its investigation, even as the underlying business has grown.
MoneyWeek notes that wage inflation and the need for Australia to prove its long-term success may weigh on margins, but suggests these risks are broadly reflected in the current valuation.