NO DOGFIGHT: NVC TOP DOG IN ITS OWN RIGHT

Written on the 29 February 2016 by Laura Daquino

NO DOGFIGHT: NVC TOP DOG IN ITS OWN RIGHT

HALF a year since its ASX debut, National Veterinary Care (ASX: NVL) is performing ahead of expectations to show the market can handle another vet-and-pet player.

The Brisbane business has also announced the purchase of another three local veterinary clinics today which should be settled before 30 April 2016.

This will bring total NVC clinics to 38 nationwide, capping off a 6-month spree.

From now, NVC founding CEO and managing director Tomas Steenackers (pictured with NVC chairperson Susan Forrester) hopes to acquire at least 1 clinic every 2 months.

Sales were on target at $19 million, and there was a 16.3 per cent earnings before interest, taxes, depreciation and amortisation margin that exceeded expectations.

Steenackers says the company experienced a statutory loss of $300,000 for the period and an underlying net profit after tax of $1.8 million.

He says this reflects the short ownership period of clinics as well as the one-off costs associated with acquisitions and an oversubscribed IPO, the latter of which raised $29.9 million.

Systems are a cornerstone of the company's cleanskin 'no brand' strategy, where the local vet isn't physically changed after acquisition, rather it's integrated into a backend system that controls HR, marketing and finance.

This differs from NVC's largest competitor, Greencross (ASX: GXL), where Steenackers and fellow NVC founders hail from.

"I think the quality of our management is speaking volumes now," says Steenackers.

"When you compare to competitors, you can see that our EBIT and EBITDA is a bit stronger than the other big players in the industry which shows what we are trying to do in the vet space is working.

"The important thing for us is focusing on professional services, support and admin, and not dictating or controlling the agenda.

"Many of our vets have been business owners for 50 years, so we find it a bit outrageous to come in and tell them to change their style. It worked for a reason."

Steenackers says the ASX-listed business, where management is set apart by professional vet expertise, is also turning its eye to niche complex procedures that may otherwise be referred to outside the traditional vet.

This aligns with its focus on professional services where 'retail will never be the priority'.

Fittingly, NVC launched a 'Best for Pet' program across eight clinics in late October, which is markedly different any of its competitor programs. 

NVC has signed up more than 1900 members to 'Best for Pet' to date.

For $430 per year, or $100 upfront and $30 per month, 'Best for Pet' gives access to services such as unlimited free consultations, 10 per cent off professional services and 10 per cent off retail.

"When we launched 'Healthy Pets Plus' at Greencross in 2012, we had a 15 per cent conversion rate in the first year. In three months, at NVC we already had 9 per cent," says Steenackers.

"The nurses deliver the program and we've simplified if for them because they don't typically like selling. It's simplified to the point so recognising the great value comes naturally to the nurse.

"It also encourages our clientele to be less reactive, more proactive about their pet's health."

At the end of last year, NVC's closing cash at bank was $5.6 million, and $9.3 million was still available in the debt facility.

The company will this week finish building its 700sqm dedicated training facility at Ormeau, where the first training session will be delivered to its staff at the end of March and one session per month will be scheduled thereon.

"This will always be practical training we don't believe attention is that great in seminars and lectures," says Steenackers.

"When you combine our professional training aspect with our amount of clinics, we are going to grow as much as Greencross has.

"There's a model for both. Theirs is a lot more about colocation of retail stores and clinics than professional services, and I think that's what the TPG guys are more interested in as they worked with Petbarn in its early days.

"We don't have any competitors competing with us neck and neck." 

 


Author: Laura Daquino Connect via: Twitter LinkedIn

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