British veterinary practice chain CVS shuffles management

Innes reign ends as consolidator slows pace of acquisitions

Published: November 12, 2019
By Ross Kelly

CVS Group photo
Simon Innes addresses employees at a CVS Group conference in November 2018. After 16 years as CEO, and following a period of rapid expansion, Innes stepped down this month.

Long-serving chief executive Simon Innes has stepped down from CVS Group, Britain's largest publicly traded veterinary corporation, at a time when the company is tapping the brakes on a rapid, acquisition-fueled expansion.

The former British Army captain, at the helm since January 2004, oversaw a swelling of CVS's practice holdings to 510 at last count, up from 128 when the company went public in 2007. The company, based in Diss, Norfolk, owns veterinary hospitals in the United Kingdom, Netherlands and Republic of Ireland.

Innes also helped guide an expansion into diagnostic laboratories, veterinary crematoria and online distribution of pet medication, food and equipment. CVS calls itself "the largest integrated veterinary services provider in the U.K."

Innes's departure, effective Nov. 6, triggered a management shuffle at CVS, starting with the appointment of Richard Fairman as CEO. Fairman joined the company in August 2018 as finance director. He's a former chief financial officer at REC, a private-equity-controlled automotive services group.

Dr. Ben Jacklin, CVS's previous director of practice operations and most senior veterinarian, was promoted by Fairman to the role of chief operating officer. Jacklin is an equine surgeon who studied at the Royal Veterinary College and the University of Cambridge, for which he also played rugby. Until 2016, he was clinical director at Oaklands Veterinary Centre, a practice acquired by CVS.

Fairman chose Robin Alfonso, whom he once worked alongside at REC, to replace him as CVS finance director.

Innes did not elaborate publicly on why he left. "After 16 very happy years at CVS, I have decided it is time for me to move on," he was quoted as saying in a company market filing.

CVS Group photo
Richard Fairman is CVS's new CEO. His background includes serving as chief financial officer of REC, an automotive services group.

As for what the new executive appointments mean for CVS's strategy, the company declined to comment. Fairman told the VIN News Service by email only that he was "delighted" to be appointed as CEO and "looking forward to continue the first-class level of service we provide to our customers and their animals."

The changes at the top come at a time when the flow of acquisitions by CVS has slowed to a trickle amid a shortage of skilled labor and high veterinary practice valuations. The company in September reported that its annual profit for the financial year ending June 30 had fallen 17% to £11.7m (US$15 million), as acquisition and employment costs offset a 24% rise in sales.

At the time, CVS acknowledged its rate of veterinary practice acquisitions had slowed considerably in the six months ending June 30 and that it was focusing more on organic, or internal, growth.

The departure of Innes, however, is not necessarily indicative of a change in direction, said Charles Hall, head of research at Peel Hunt, a London-based broker.

"He’s 59, so it's not surprising that he is hanging up his boots," Hall told VIN News. "I don’t think this will mark a change in strategy, as they were already moving to more of an organic growth model and selective acquisitions ...."

He added: "They are clearly working hard on improving existing operations by streamlining their back office and improving vet retention."

CVS shares have been on a rollercoaster ride this year, dipping sharply in January, when the company warned that earnings would be broadly flat amid difficulties filling veterinary staff vacancies and above-inflation pay raises for veterinarians. The vacancy rate had peaked at 12.5% in the previous financial year.

By the end of June, the vacancy rate had fallen to 8.4%, and employment costs had declined to 50.4% of sales in the second half of the fiscal year compared with 51.7% in the first half. CVS's share price recovered as investors signaled their approval.

Peel Hunt, in a note to its clients, welcomed Fairman's promotion as a "sensible move, as he has enhanced the financial controls in the business, as well as showing strong operational capability."

The note, authored by Hall and fellow Peel Hunt executive Andrew Ford, called Jacklin's promotion to COO "well-deserved, given the improved performance in the small animal business from early 2019."

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