Inspire Veterinary Partners (NASDAQ: IVP) Just Made its IPO Splash into One of the Fastest Growing Industries Around!
With the U.S. pet industry in full sprint, it may be time to add a four-legged element called Inspire Veterinary Partners (NASDAQ: IVP) to your portfolio!
With a recent IPO on the NASDAQ, Inspire Veterinary Partners is poised to make its mark on the fast-growing pet care industry!!
Veterinary practices are increasingly owned by private equity, but Inspire Veterinary Partners has found a better way.
The management of Inspire Veterinary (NASDAQ: IVP) has discovered a tremendous opportunity where long-term play in ownership of hospitals allows the company to build sustained YOY growth which it believes is expected to generate sustainable shareholder value!
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How does IVP stand out?
- Among the newest players in the highly lucrative pet care industry…
- A huge market opportunity with 28,000+ hospitals in the U.S…
- Targeting a largely unconsolidated industry with $50B in annual revenues.
- A relatively recession-proof arena with pet spending increasing...
- A differentiated and unique market approach…
Greetings Investors,
Many Americans love their pets and aren't above spending good money to ensure their furry friends remain a big part of the family!
Even when inflation and soaring consumer product costs take a big bite out of household budgets, many Americans are still committed to providing good care for their furry best friends.
It should be crystal clear to see how much Americans love their pets when you read these pet industry statistics.
The U.S. pet expenditures market is expected to reach $143.6 billion in sales in 2023, up from $136.8 billion in 2022 and $90.5 billion in 2018, according to the American Pet Products Association.
According to Packaged Facts' 2023 Survey of Pet Owners, pet products and services "are at the bottom of the list of household spending cutbacks, second only to human medicine and health care.” The report adds, “Pet parents remain tenacious when it comes to pet care, with 68% spending more in February 2023 vs. January 2022 even as they looked for ways to economize.”
And if a furry friend is sick, many owners take them to hospitals in hopes that they will get better.
The U.S. veterinary market size was valued at USD 11.92 billion in 2022 and is expected to grow at a compound annual growth rate of 8.7% from 2023 to 2030.
How is the pet care industry faring on Wall Street?
Zoetis Inc. (ZTS), an animal health technology stock, has been on the rise this year with the company reporting first-quarter earnings that beat analyst expectations.
Idexx Laboratories Inc. (IDXX), an animal veterinary products and services company, is also on a tear in 2023. The company is benefiting from tremendous veterinary services demand. In the past five years, IDXX earnings have risen about 19%.
Chewy Inc. (CHWY), the pet products e-commerce company, should see 10% revenue growth and solid market share expansion through 2027 according to Goldman analyst Eric Sheridan.
Freshpet Inc. (FRPT), the pet foods provider is up nearly 30% on a year-to-date basis and analysts like Jefferies are lining up with bullish ratings.
Trupanion Inc. (TRUP) is one of the world's top pet insurance companies, benefitting from the U.S. pet insurance market rising by 23.5% over the last year according to the North American Pet Health Insurance Association.
The expansion of pet spending opens a door for investors seeking a growth area that should remain resilient for years.
Newly traded Inspire Veterinary Partners (NASDAQ: IVP) could see a significant upside ahead as it takes on the largely unconsolidated veterinary space with a unique approach!
The Problem:
Recently, veterinary groups have been increasingly owned by private equity. After purchase, decisions are ultimately made based on what will provide the greatest return on investment when the portfolio is recapitalized or sold. Many of the problems originate from the misalignment in priorities between private equity and veterinary hospital team members.
Inspire Veterinary Partners is turning this model on its head with a New Equity Model!
The Answer:
A company that is owned by its shareholders and employees and is led by experienced veterinary professionals - from client service representatives to technicians to veterinarians.
After acquisition by Inspire Vet, owners can benefit from high value purchase structures for their hospitals as well as extremely customizable compensation packages when they choose to remain post-sale.
Additionally, NASDAQ: IVP builds comprehensive pay and benefits packages, plus equity for team members. All of this is designed to take care of owners and their teams, which provides peace of mind. Employees build the kind of practice that inspires them while sharing in the rewards of what they have built.
Veterinary medicine gets to stay in the hands of the only people who are qualified to own and shape it: you.
How It Works:
After purchase, your practice is supported by Inspire field and office leadership and coaching team at Blue Heron Consulting. We meet with the hospital team in person, spending time to understand the individual needs of each person in the hospital. From there, the Inspire team works with hospital leadership to build goals which matter to you, support your clients and pets and continue the professional development of everyone in the hospital.
“Our industry continues to grow year over year and, with that growth, come the challenges faced by our clinical professionals. We created Inspire because it’s time that support and development for all team members was combined with an equity sharing model that rewards those working each day to make lives better through caring for pets.”
10 Reasons to Have NASDAQ: IVP High on Your Radar:
- Sustainability of the industry: According to Covid and millennial data, pet ownership continues to increase with millennials adopting pets as "practice children."
- A favorable business outlook: Largely recession-proof, increasing spending on pets, greater insurance use and advancements in care translate to growth.
- A differentiated approach: The company's leadership team possesses a unique combination of leadership at the enterprise scale within VetMed, as well as academia, consulting, and ownership.
- A partnership with industry leader Blue Heron Consulting: The company has created a process for improvement and daily oversight of hospitals which produces demonstrable results while remaining cost-effective compared to other industry operators.
- An operational strategy: The strategy is built on the cohesion of medicine and business, as opposed to a combative approach, the company's growth projections, acquisition roadmap, and long-term goals are written with feasibility at the hospital level as top of mind.
- A strategy that isn't "exit driven": This allows decisions to be made for the long term. Shareholder value and internal stakeholder return are linked, versus antithetical.
- The company's consultative and geographically distributed leadership model allows it to operate throughout the United States and it is seeking acquisition targets nationwide.
- Impressive numbers: A revenue run rate of $19M, 13 locations across 9 states, $3.5M in REI; several new locations under review for potential acquisition post IPO
- Anticipating breaking even within 2023: The company is targeting single-digit profit for FY 2023, growing in 2024 and beyond.
- Adding key leadership roles: This will foster OPs excellence, enhance internal controls, and improve reporting capabilities.
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The company’s collaborative consolidation approach is resonating with transitioning vet owners and is positioning NASDAQ: IVP to grow quickly as it addresses a massive market opportunity!
Inspire Veterinary Partners owns and operates veterinary hospitals throughout the United States. The Company specializes in small animal general practice hospitals which serve all manner of companion pets, emphasizing canine and feline breeds.
As NASDAQ: IVP expands, additional services are becoming a part of the offerings at its hospitals, including mixed animal facilities, critical care and other specialty services, and, as of December 2022, equine, or horse, care and emergency in one location.
The company acquires practices, and, in many cases real estate, and then works with teams on a long-term basis to improve and maintain hospital operations, grow revenues, and maximize earnings.
Services provided at the Company’s hospitals include preventive care for companion animals consisting of annual health exams which include parasite control; dental health; nutrition and body condition counseling; neurological examinations; radiology; bloodwork; skin and coat health and many breed-specific preventive care services.
Surgical offerings include all soft tissue procedures such as spays and neuters, and other types of surgical offerings based on a doctor’s training.
In many locations, additional means of care and alternative procedures are also offered such as acupuncture, chiropractic, and various other health and wellness offerings.
Inspire Veterinary Partners currently has thirteen veterinary hospitals located in nine states and has expanded and plans to further expand through acquisitions of existing hospitals that have the financial track record, marketplace advantages, and future growth potential.
CONSOLIDATION HAS BEEN UNDERWAY FOR OVER A DECADE!
During the last decade, consolidation has become an increasing factor in the highly fragmented pet care industry, with corporate buying groups, private equity firms, and veterinary service organizations increasing their holdings in the U.S. veterinary care market.
Multi-unit veterinary organizations must possess several disciplines and capabilities to be successful in this dynamic industry.
Why Consolidate?
With few career paths open to veterinary professionals beyond general practice, many veterinarians find themselves as veterinary practice owners as ‘the next step’ after a few years in practice.
Unfortunately, many do not have the business training or skill to transition to become successful entrepreneurs such as knowing how to lead teams, deliver profitability and protect their service offerings.
Many such professionals have difficulty maintaining their value or growing their hospitals year after year. For these reasons and others, many clinicians seek a less stressful path after their initial stint as owners. Others, having been owners for years, seek to exit the space or the need to work on a full-time basis in it.
These are the owners who consolidators have traditionally sought out.
Anticipated Growth Through Acquisitions:
In the near future, Inspire Veterinary Partners anticipates targeting a ten-unit-per-year acquisition pipeline with the five-year goal to acquire 50 locations throughout the United States.
The company plans to emphasize acquisitions of seasoned existing veterinary hospitals, but it has not ruled out the acquisition of newer practices.
Actions/characteristics critical to the achievement of these goals are:
- Identification of states which have favorable designated market areas where the following combination of factors exists:
- Strong pet counts and addressable market as measured by three-, five- and ten-mile radius measurements;
- Favorable household income and other factors in households within such radius measurements; and,
- Positive livability and resident growth trends which indicate the location is an area of choice for veterinary professionals to settle and achieve a stable workforce; and,
- Veterinary practice laws and regulations that are complementary to its business model
Market Opportunity:
In 2020, veterinary care made up 30% of the $103 billion U.S. pet industry.
In that same year, there were 83.7 million pet dogs and 60 million pet cats in the United States, with 45% and 26% of households owning at least one of those species respectively.
From 2016 to 2020, there has been marked growth in both the pet population and in the number of households that own a pet and, therefore, the addressable population which requires care is expanding.
Due to strong trends in year-over-year growth, Inspire Veterinary Partners believes there is continued upside in the pet care industry and for owners of veterinary practices.
With nearly 30,000 veterinary clinics in the United States and less than 30% of that figure having been consolidated under current multi-unit veterinary operators, management believes there exists a large opportunity for acquisitions within the pet care space!
Despite a marked increase in acquisition and consolidation activity in recent years, with attendant increases in veterinary clinic valuations as a multiple of EBITDA, management believes there are industry indications that the purchase price for clinic practices may be stabilizing.* (* Industry data reported in American Veterinary Medical Association/Today’s Veterinary Business).
With new technologies and therapies entering the space, new care models and increasing education regarding the availability, and adoption, of pet insurance as well as other factors contributing to longer pet life expectancy, pet care spending continues to increase for pet owners who appear willing to pay larger sums for routine and advanced care for their pets.
These factors, coupled with industry data from the American Pet Products Association which shows millennial consumers spending more on pets, plus an explosion of pet adoption during 2020’s Covid-19 epidemic (according to Associated Press reports), suggest that veterinary care will continue to be an essential service with strong growth in the coming years.
Morgan Stanley expects annual growth of 8% in the pet industry by 2030, noting that there has been an addition of nearly 5 million pets in the United States as compared to 2019, mainly due to the COVID-driven lockdowns.
AlphaWise, the proprietary survey and data arm of Morgan Stanley Research, carried out a survey of about 2500 pet owners not long ago. The survey shows that “fur babies” have made a permanent place in the hearts and households of their owners, significantly affecting spending patterns of pet parents across the US and worldwide.
On the household level, Morgan Stanley forecasts spending to rise to $1,320 per pet by 2025, and this figure will reach $1,897 by 2030.
Management:
Kimball Carr
Mr. Carr has served as Chief Executive Officer, President and Chair of the Board since February 2021. Mr. Carr has over a varied 30-year career in many roles with private and public business entities. With early education in journalism and continuing education at the University of Virginia’s Darden Business School, Mr. Carr’s leadership career includes elevated roles for Starbucks Coffee Company, Mars Incorporated and Trupanion Medical Insurance. Mr. Carr served as Managing Director of Star Circle Advisory, LLC, an investment advisory and advisory services firm with legal, management and consulting, accounting and media production expertise.
From March 2018 through January 2023, Mr. Carr served as President of Ocean 35 Inc., owner of retail brands focused on the sports of surfing and skateboarding as well as education and support of youth participation in the sports. From December 2019 through February 2021, Mr. Carr was the director of learning and development of Blue Heron Consulting, offering comprehensive operational, financial, and medical team coaching for veterinarians and animal health care industry professionals across the country.
During his tenure as a business leader, he has built multi-year growth strategies, led teams of over 2,000 professionals and delivered collective revenues in excess of $1 billion. He brings deep experience in veterinary and field operations, start-up processes, leadership development, growth strategies and turnarounds. He has led the acquisition and de novo opening of hundreds of company units over the course of his career and has built highly effective field leadership teams which have delivered industry-leading results. His connection to the pet care industry is highlighted by deep relationships he has across the sector, providing access to talent which IVP intends to leverage.
Mr. Carr’s volunteer work includes service as President of the Banfield Associate Relief fund, an employee assistance program founded in relation to his role in the recovery for Banfield associates from Hurricane Sandy in the Northeast United States. Mr. Carr attended Tidewater Community College in October 1991 and attended the University of Virginia Darden Business School executive master’s of business administration from 2004 to 2006. We believe Mr. Carr is qualified to serve on the board due to his extensive background in retail business, his demonstrated success in entrepreneurial enterprises and his more than a decade of expertise in the veterinary medicine services industry.
Richard Paul Frank – Chief Financial Officer From 2021 through the present
Mr. Frank has been Chief Executive Officer of Purcell Flanagan Hay & Greene, a law firm based in Jacksonville, Florida. From 2020 through 2021, he served as Chief Financial Officer of Skygeek.com, an aviation parts e-commerce company.
From 2019 to 2020, he was an independent consultant with PKF O’Connor Davies, an accounting and advisory firm. Mr. Frank also served as Chief Operating Officer and Chief Financial Officer of Beval Saddlery, LLC, a private equity owned multi-location retailer/wholesaler and e-commerce company from 2014 through 2019.
Earlier in his career he was engaged in senior management positions with Blue Chip Farms, LLC, the largest equine breeding farm in New York State, Medical Recruitment Solutions, Inc., private equity owned medical staffing start-up enterprise, Indotronix International Corporation, an information technology staffing company, Microcast, Inc., a video streaming start-up enterprise, and Factset Research Systems, Inc., a SaaS financial information company with operations in the United Kingdom, Australia and Japan.
He has over twenty years of experience directing all aspects of enterprise-wide finance, operations, business development, marketing, administration and customer service, including experience in private equity owned companies, start-ups and companies with greater than $100 million per year in revenue.
Mr. Frank graduated with a Bachelor of Science in Finance in 1992 from Mercy College in Yorktown, New York.
Charles Stith Keiser – Mr. Keiser has served as Chief Operating Officer, Vice-Chairman and Director since early January 1, 2022.
He has served as Chief Executive Officer of Blue Heron Consulting, a veterinary consulting company serving hospitals of all sizes and specialties across North America, since March 2015. Earlier in his career, he served as Director of Student Programs for the American Animal Hospital Association from September of 2011 through March of 2015.
He grew up in veterinary medicine as the son of a practice owning veterinarian and has spent his entire career in the industry. In addition to his employment, Mr. Keiser continues to volunteer as a facilitator and lecturer for professional skills curriculum at veterinary schools across the country. Mr. Keiser continues to develop and deliver professional development content as an adjunct faculty member at several U.S. veterinary schools.
Mr. Keiser’s volunteer experience includes serving as Chair of VetCAN (Veterinary Career Advisory Network), terms as President of VetPartner’s Career Development and Practice Management Special Interest Groups, participation in Washington State University’s CVM “Diagnostic Challenge” and a seat on the AVMA’s Economics Advisory Research Council Financial Literacy task force.
Mr. Keiser has served in the veterinary profession since his graduation from Hope College with a degree in Business, Management and Accounting in 2008.
In Summary…
There’s no denying that the pet industry is booming. Americans have deep commitments to their pets and pet parents remain tenacious when it comes to pet care.
A unique model focused on “WE” and not “ME” could position Inspire Veterinary Partners (NASDAQ: IVP) to become a household name in the consolidation of veterinary hospitals across the U.S.
If you’re a pet owner yourself or simply an investor looking for an industry that’s growing by leaps and bounds, a pet care company like NASDAQ: IVP should be on your watch list!
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