Pet ownership in the United States continues to grow, with the APPMA citing 74.8 million dogs and 88.3 million cats in the United States. In 2006, 63% of the American population owned at least one pet (vs. 57% in 1990), with 39% of the population owning at least one dog and 34% having at least one cat. Additionally, ownership of exotic pets such as reptiles, fish, and birds continues to gain popularity.

• More than 37,000 veterinarians practicing at over 22,000 animal hospitals. Highly fragmented industry; only 5% consolidated. Potential exists for roll-up of many of these groups, as national competition is limited.
• Largest public competitor, VCA Antech (NASDAQ: WOOF), has revenue of $1.01 billion, market cap of $3.2 billion, enterprise value $3.55 billion, 431 centers, EBITDA of $217MM. At 431 centers, VCA has 2% of market. VCA espouses no regional or hub and spoke strategy. Centers are not strategically geographically located.
• The practice of veterinary medicine is subject to seasonal fluctuation (significantly higher during the warmer months because pets spend a greater amount of time outdoors).
• Changes in industry makeup (female vs. male DVM’s, lack of brand identity, importance of quality of care) lean toward a best of breed branded name in the industry.
• Lower insurance costs: The DVM industry has much lower malpractice insurance than the human medical industry. The largest case ever of veterinary malpractice involved a settlement of approximately $15,000. The average settlement in cases of DVM malpractice or negligence is the cost of replacement of the pet.