An expansion in product and service offerings will help industry operators boost their margins
Los Angeles, CA (PRWEB) January 09, 2013
The performance of the Emergency Veterinary Services industry highly depends on the pet ownership rate in the United States and consumers' per capita disposable income. In 2009 and 2010, each of these metrics declined as unemployment jumped. “With fewer dollars in their pockets, Americans cut expenditure on nonessential items, including adding new pets to their households,” says IBISWorld industry analyst Nikoleta Panteva. Moreover, they substituted – to an extent – emergency veterinary visits with traditional vet visits to save money, given that emergency care carries a price premium for its around-the-clock availability. As a result, industry revenue dropped in each of the two years, bringing down the five-year average. Between 2008 and 2013, IBISWorld estimates that industry revenue has declined at an annualized rate of 0.8% to $4.8 billion.
Recovery is underway, both in the general economy and within the industry. According to Panteva, “Per capita disposable income has grown since 2010 and the pet ownership rate rebound in 2011.” As a result, the Emergency Veterinary Services industry has grown since 2011; in 2013, IBISWorld expects a 1.8% increase in industry revenue. Profit (i.e. earnings before interest and tax) also suffered during the downturn, falling to a low in 2010. As downstream demand for emergency services has inched back up, so has profitability. Average margins are significantly higher for emergency veterinary services than they are for traditional veterinarians.
The Emergency Veterinary Services industry is highly fragmented, with more than 3,343 establishments competing for an estimated $4.8 billion of industry revenue. Most operators are single-site, sole-practitioner facilities that tailor services toward local market interests and needs. Over the past five years, industry concentration has slightly increased due to the acquisition activity, particularly by the industry’s largest player VCA Antech. Despite the fragmented nature of the industry, some companies are gravitating toward consolidation due to the purchasing, marketing and administrative cost advantages that can be realized by a large, multiple location, multidoctor veterinary provider. In addition, the cost of financing equipment purchases and upgrading technology necessary for a successful practice are attractive reasons for further consolidation. Other practitioners opt to consolidate their operations to focus on practicing veterinary medicine rather than spending large amount of their time performing administrative tasks necessary to operate a veterinary services facility.
As the economy continues to recover over the next five years, so will this industry. A rise in consumer spending power and pet ownership is forecast to boost industry revenue between 2013 and 2018. Increased adoption of pet insurance will help owners afford healthcare for their companions, including visits to the emergency room. Meanwhile, an expansion in product and service offerings will help industry operators boost their margins. On-site pharmacies and laboratories will allow patients to spend more at the clinic, supporting profit growth. Still, external competition from preventative care measures, such as wellness programs at traditional veterinarians, may infringe on emergency services' performance.
For more information, visit IBISWorld’s Emergency Veterinary Services in the US industry report page.
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IBISWorld industry Report Key Topics
Companies in this industry provide emergency veterinary services to livestock, equines and domesticated animals.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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