Dr. Matt Townsend owns a Hometown Veterinary Care in Fairfield and Garland Road Small Animal Hospital in Winslow. He believes that a trend that makes Americans spend $75 billion on them in a year pressures veterinarians, and consolidation is the main reason for that.
Large conglomerates are buying independent veterinary practices and rebranding them. No wonder most veterinarians are concerned and do not sell their practice for years, even though they face issues with managing its business side.
American Pet Products Association reports that Americans spent about $19 billion on veterinary care, which signifies how rapidly animal health business has been growing.
Townsend sold his practice to the Rarebreed Veterinary Partners recently. Even though he was hesitant when selling it, he quickly found advantages. Townsend had to sell his practice as it was taking too much time and effort, which refrained him from dedicating his time to treating patients. He was afraid to trade to the corporate business. However, it appeared to be beneficial as the company buys a controlling share of veterinary practices and runs administrative operations, such as payroll and employee benefits.
“It’s nice to be able to pass that to someone else,” Townsend said.
Rarebreed is growing, and it plans to triple the number of their practices by the end of the year. As of right now, it owns 10 clinics, and the company raised $42 million since it was founded in 2018. It closed $36 million round from private investors last week, which contributes to reaching their primary goal of practices expansion.
The company aims to have ten practices in the next three months, half of which it plans to locate in Maine. Rarebreed hopes to reach 35 practices by the end of 2020, which means they will be looking for 700 more employees. As of right now, Rarebreed has 200 employees at its investment practices, and it employs 15 at its Portland headquarters on Danforth Street.
Rarebreed co-founder and CEO Dan Espinal points out that it is difficult for veterinarians to practice medicine and run business operations daily. Espinol co-founded Rarebreed with Sean Miller, also a former IDEXX employee who is Rarebreed’s chief operating officer and with Matt Campbell, a local Maine investor. He also was in charge of the development strategy for IDEXX.
“We’re focused on taking care of the people who take care of the animals,” he said.
This statement can be good news for anyone who struggles with finding an appropriate business they can sell their practice to. For instance, co-owner of Casco Bay Veterinary Dr. Marc Ouellette, agreed to sell a 75% share of Casco Bay to Rarebreed after five years of searching for an appropriate candidate.
Oullette confirms rapid consolidation that occurs in the last five years. The main Oullette’s concern is the same as Townsend had: both of them did not want a conglomerate to buy and rebrand their practice. That is the reason they were rejecting various offers from companies that wanted to buy their business over the years.
“Rarebreed came in and it operates in the background,” he said. “We’re better than we were in so many ways, and we still are who we are. Clients are seeing the same thing.”
Espinal says that Rarebreed allows veterinarians to own part of the business. It buys 51% or higher majority stake in each practice. The company also makes money from reinvesting the profits of the veterinary practice to expand. Hence, Rarebreed does not charge practices for business services.
Portland is a cluster for various influential health companies, including IDEXX, ImmuCell, Covetrus, and Dechra. Espinal believes that clustering helps to attract the most suitable veterinary professionals and technicians who are in high demand.