Mars, IVC Evidensia expansions suffer French setback

Court asserts that veterinary practices must be controlled by veterinarians

Published: July 31, 2023
Photo courtesy of IVC Evidensia
This specialist referral practice, called Oncovet, operated by IVC Evidensia, is located in Villeneuve-D'Ascq in northern France. It is one of four French practices that were the subject of a court battle over how much control corporate consolidators should have in the veterinary profession.

Corporate consolidators, including Mars Inc. and IVC Evidensia, have been forced to reassess the status of their operations in France after a court asserted that veterinary practices there must be controlled by veterinarians.

The landmark ruling comes as governments and regulators worldwide grapple with the rapid rise of large corporations in the profession — and whether an apparent focus on generating high returns on investment could jeopardize animal welfare. Ireland, for instance, is considering legislation that would restrict the ownership of practices to veterinarians.

The ruling in France was made July 10 by its Council of State in separate but accompanying judgments applying to four practices: two operated by Mars' European division, AniCura, one by IVC Evidensia, and another by French consolidator MonVeto.

The lawsuits were brought by the companies, which were appealing a decision by France's regulator for the profession, the Order of Veterinarians, to deregister the practices, effectively banning their operation, on the grounds that their ownership structures undermined veterinarians' professional independence.

Dr. Jacques Guérin, president of the Order of Veterinarian's National Council, told the VIN News Service that in light of the ruling, the companies have been given an opporunity to make amends and avoid service disruptions to pet owners. The so-called "commitment protocol," drawn up with the backing of the French government, requires them to declare their intention to comply with the law, Guérin said in an email.

In brief

It wasn't all bad news for Mars and IVC Evidensia. The court rejected an assertion from the Order of Veterinarians that Mars and Nestlé should be banned from owning shares in the respective practices, on the basis that their ownership of vast pet-food empires presented a conflict of interest for their veterinarians. (Nestlé is a minority shareholder in IVC Evidenisa, which is controlled by the Swedish private equity firm EQT.)

How the rulings will affect the operations of corporate consolidators in France is unclear. IVC Evidensia, which has 260 practices there, said in a press release that it had anticipated the risk of losing the case and preemptively took measures that would allow the affected practice to stay open.

The measures involved "adapting the clinic's legal organization," a spokesperson for the company said in an email, without elaborating on how it was changed. The practice, a specialist referral hospital called Oncovet, comprises a team of 11 veterinarians, according to its website.

On its broader business, IVC Evidensia added that it was "setting up an alternative legal organization in France" to comply with the ruling and "will continue to provide full support necessary for the clinics concerned during this period.”

Still, the company said the ruling "put a large number of veterinary clinics at risk." It called on the French government to create a working group to facilitate dialogue with the Order of Veterinarians "to find a common interpretation" of the law "and thus avoid further clinic deregistration and potential closure." Costs associated with establishing the new legal structure and any impact it could have on future revenue weren't detailed by the company.

Mars declined to comment on the court's ruling. The French language website of its AniCura division lists 28 practices in France.

It's not uncommon for consolidators to revamp their ownership structures to adapt to new or existing rules. In the United States, for instance, a number of states allow non-veterinarians to own veterinary practices outright, while others restrict ownership to licensed practitioners. Regardless, corporations in the U.S. can sidestep restrictions by setting up management companies that provide a host of services to businesses that technically remain owned by veterinarians.

Mars and IVC Evidensia are the two largest owners of veterinary practices in the world, having grown quickly to control more than 5,000 practices between them. Mars, based in McLean, Virginia, and otherwise known for making candy, owns the brands VCA, Banfield Pet Hospital and BluePearl in the U.S., as well as Linnaeus in the United Kingdom and AniCura on the European mainland. IVC Evidensia, based in Bristol, England, has a large operation in the U.K., has been expanding on the European mainland and recently expanded into North America with the acquisition of Canada's VetStrategy.

Britain's CVS enters Australian market

In separate news, another large British corporate consolidator, CVS Group, said it had entered the Australian market via the purchase of four small animal practices there that operate a combined six sites.

Two of the practices are located in Brisbane, one in Sydney and one in Cashmere, a suburb north of Brisbane.

"Alongside the acquisitions announced today, we have a pipeline of opportunities, and our focus will be on cities including Sydney, Melbourne, Brisbane, Perth, Canberra, Newcastle and Adelaide," the company, which owns around 500 practices in the U.K., Ireland and the Netherlands, said.

CVS announced the move while releasing a trading update that indicated pet owners are still opening their wallets, despite rising cost-of-living pressures.  The company's like-for-like sales for the 12 months to June 30 grew 7.3% compared with the year before, amid what it said was "resilience" in the veterinary sector. (Like-for-like is a measure of sales from assets the company owned during both time periods.) CVS didn't state any profit numbers but said its adjusted earnings margin — a measure of sales minus costs — would be within its goals, and that its earnings would "comfortably" meet market expectations.

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