The UK veterinary group could see a rebound in its share price once the UK regulator concludes its market study into the veterinary sector — a process that has weighed on the stock for more than a year.
CVS Group posted strong first-half results and has smartly adjusted its strategy to soften any potential impact from the investigation. The company is expanding its presence in Australia, a move that diversifies revenue and reduces exposure to regulatory risks in its home market.
The Competition and Markets Authority (CMA) is expected to complete its market study in early 2026, but the key moment comes sooner: the provisional decision on remedies, likely due in October 2025. This could act as a catalyst for the stock, as we believe the proposed measures will be moderate rather than intrusive.
REGULATORY EVENT
Back in early 2024, the CMA decided to take a hard look at how vets price their services. Too expensive, too opaque, too few options — that was the suspicion.
For CVS, the country’s largest listed veterinary chain, that announcement hit like a thunderclap. The stock lost over half its value as investors feared the worst: forced clinic sales, caps on prices, or limits on future acquisitions.
The regulator could take any remedy necessary if it finds antitrust problems, from mere suggestions to change prices, to order divestitures of firms. That’s why investors feared severe damage to the company. Fast-forward to this autumn, and the mood is finally shifting. The CMA’s provisional remedy findings looked far more moderate than anyone expected. Instead of breaking up the big players, the regulator seems ready to impose behavioural fixes — things like:
- clearer price transparency for pet owners,
- easier access to written prescriptions, and
- possible caps on medicine mark-ups.
In other words, the CMA wants the system to be fairer, not to tear it apart. That’s why CVS’s stock bounced 15% the day the draft remedies came out — investors suddenly realised the company wasn’t facing a death sentence after all.
But the company is not out of woods yet. The investigation will officially run until May 2026, but the heavy lifting is mostly done. If the CMA confirms its light-touch approach by the end of October (when the regulator is expected to publish the final remedy proposition), the cloud hanging over CVS may finally clear — and that could unlock a relief rally.
COMPANY ANALYSIS
Let’s step back and look at what CVS actually does. It’s not just your local vet. CVS is a veterinary group with three main engines:
- Clinics – the bread and butter, around 86% of total revenue.
- Laboratories – a smaller, recurring-revenue business that runs diagnostic tests.
- Animed Direct – its online shop for pet medicines and food.
In the first half of 2025, CVS delivered 6.6% revenue growth, reaching £341.8 million, and EBITDA margins near 20%. That’s solid for a company that’s been operating under regulatory pressure.
What’s interesting is the geographic shift. In the UK, growth has slowed. With the CMA blocking further acquisitions, CVS can’t expand by buying more clinics — its traditional playbook. But abroad, things look brighter.
In Australia, CVS already runs 36 sites generating around £55 million a year, with plenty of room to grow. Only about 15% of the Australian market is owned by big groups (compared with 50%+ in the UK), meaning CVS can repeat the same consolidation story from ten years ago — but with higher returns. Management says its Australian deals are already producing double-digit returns, comfortably above the 10% hurdle rate.
The company also keeps building its Healthy Pet Club, now with over 500,000 members paying for preventive care plans — a simple but effective source of steady cash flow.
Put together, it’s a balanced mix:
- the UK business is mature and cash-generative,
- the Australian arm is growing fast, and
- Animed is positioned to benefit from any online shift the CMA encourages.
MORE RESEARCH
If we look at the company’s data, we find some flags too. CVS Group’s core veterinary practices segment, which accounts for roughly 86% of revenue, is experiencing stagnation in its home market. In the first half of FY2025, like-for-like sales in the UK were essentially flat (0% in the vet practice division) a sharp slowdown from 6.5% growth a year prior. This indicates limited capacity to drive growth through price increases or volume, even before any regulatory intervention. Now the CMA is proposing remedies to spur competition, which would directly pressure CVS’s UK revenues and margins.
The CMA’s focus is largely on price-related practices that could be inflating pet owners’ bills. Proposed actions include requiring vets to proactively offer a prescription that clients can fill elsewhere, abolishing or capping prescription fees, and even a possible temporary cap on medicine prices. Additionally, the CMA aims to increase transparency – mandating clearer communication of treatment costs and options – and has singled out practices like pet cremation services for potential price regulation. If implemented, such measures would likely compress CVS’s UK revenue and margins in multiple ways. The group might be constrained from raising consultation or treatment prices (due to transparency and competition), while medicine-related income is at risk as customers are encouraged to seek cheaper online pharmacies. In short, CVS’s UK clinics may have to operate in a more competitive, price-sensitive environment, likely dampening same-store revenue growth and putting downward pressure on operating margins.
Online Pharmacy: Free Prescriptions Squeeze Monetization
CVS’s online retail platform, Animed Direct, is another area in the regulatory crosshairs. Animed sells pet medications (including prescription drugs) and supplies direct to consumers, contributing £50.0m of revenue in FY2024. Growth has already been modest – just +1.8% last year – and EBITDA fell to £3.3m (a slim 6.6% margin) amid rising costs and competitive pressure. The CMA’s proposed remedies on prescriptions threaten to further undermine Animed’s profitability even as they potentially expand the overall market for online pet meds.
A key proposal is to make written prescriptions easily available at little or no cost to pet owners. The CMA is weighing caps on prescription fees or an outright ban on charging for them, which would effectively eliminate the friction (and extra expense) currently discouraging some owners from taking a script to an outside pharmacy. In principle, easier access to prescriptions could boost volume for online suppliers like Animed, as more pet owners shop around for medications. However, it will also flood the space with price-sensitive demand, heightening competition among online pharmacies.
For CVS, the net effect is likely a redistribution of profit from high-margin in-practice sales to lower-margin online sales. Every prescription that shifts from a clinic purchase (where vets often mark up medications significantly) to an online fill will shave revenue from the veterinary practices segment. CVS may recapture some of that via Animed, but at a much thinner margin. For example, suppose 10% of CVS’s vet practice medicines revenue (potentially ~£50–60m, given that up to a quarter of practice income can be meds) migrates to outside pharmacies. Even if Animed Direct wins a healthy share of those sales, it might only break even or earn a single-digit margin on them, versus perhaps a 20–30% margin when sold through a clinic. We estimate that free prescriptions and online competition could reduce Animed’s EBITDA by roughly £1–2m annually (a 30–50% drop from FY2024 levels) if pricing adjusts downward in the face of new competition. Meanwhile, the veterinary clinics could see a several-percent drag on revenue growth as pharmacy sales leak out; without equivalent cost cuts, that would compress practice EBITDA margins. In sum, the CMA’s push for mandatory prescriptions and fee caps is a double-edged sword for CVS: it opens a larger market for its online business but simultaneously erodes the profitability of that business and the clinics behind it.
