people still pay for pets

CRITERION: Tim Boreham | February 25, 2009
Article from: The Australian
CONSUMERS may be trimming household costs in the face of adversity, but not to the detriment of the feathered and fluffy clients of this Queensland-based vet chain.

Chief vet Glen Richards says there's been "some tightening", but in the main owners are still willing to spend an average $120-130 on each thrice-yearly visit. "Most of our practices are in the mum and dad heartland and they still have jobs," he says.

"Our target market is the top 50 per cent of owners who do frequent visits and treat their pet as part of the family."

Greencross is in the acquisition game, which proved less than fruitful for medical agglomerators who discovered overlaying a corporate structure on prickly professionals wasn't such a cinch. Vets, it seems, are more easygoing.

In any event, the salary model suits Gen Y vets who want the best facilities and support but not the hassle of running a practice. As for the baby boomer vendors, they can cash in their goodwill and still potter about the surgery.

Richards acknowledges that plenty of consolidators have got it wrong, either by paying too much or being too greedy. He says practice valuations and vendor expectations have tapered off markedly with Greencross further protected by earn-out arrangements based on client retention.

Nationally there's about 2500 vets in a highly fragmented sector, 800 of them in the $1-million-plus revenue category.

Greencross has 43 outlets, having acquired six during the half (and opened its first greenfields site). "Anything from five to 15 acquisitions makes sense to us," Richards says.

Greencross made $1.73million on revenue of $22million, up 20 per cent and 29 per cent respectively. We rate Greencross a long-term buy, if only for pet lovers who can use the 10 per cent shareholder discount.