CVS Group H2 Earnings Call Highlights

Key Points

• CVS Group reported solid full-year growth: Revenue increased 5.9% to £712.8 million, adjusted EBITDA rose 5.1% to £141.5 million, and adjusted EPS climbed 6.9% to 85.6 pence. The company expects to perform in line with market expectations after weather and weak consumer confidence hurt U.K. demand late in the year.
• Australia remains a key expansion driver. CVS completed six Australian acquisitions during the year and has already announced further deals in the new financial year, while also agreeing to acquire a two-site U.K. practice for £15 million.
• The balance sheet and shareholder returns remain active: Net borrowings were £199.6 million, with leverage at 1.63 times EBITDA, while the company recommended a 9-pence final dividend and plans to complete a separate £50 million share buyback.

CVS Group LON: CVSG reported higher revenue, adjusted EBITDA and adjusted earnings per share for the year ended June 30, 2026, while highlighting softer U.K. companion-animal demand late in the year and continued expansion in Australia.

Revenue rose 5.9% to £712.8 million, supported by acquisitions and 2.1% like-for-like revenue growth. Adjusted EBITDA increased 5.1% to £141.5 million, while the adjusted EBITDA margin was maintained at 19.9%. Adjusted earnings per share rose 6.9% to 85.6 pence.

Chief Executive Officer Richard Fairman said trading was affected during the final quarter by weak U.K. consumer confidence and periods of exceptionally hot weather at the end of May and June. He said some clients were less willing to travel by car with pets, leading routine appointments to be deferred and some procedures to be canceled.

Fairman said the effect continued into July, though more recent trading had returned to levels seen before the heatwaves. The company said it had made a “solid start” to the new financial year and expects to perform in line with market expectations.

Investment and balance sheet

CVS refinanced its banking facilities in May, securing committed facilities of £350 million through May 2030, with an option to extend by a further year to May 2031. Chief Financial Officer Robin Alfonso said the refinancing improved the group’s terms and flexibility.

Net bank borrowings stood at £199.6 million at year-end, and leverage increased to 1.63 times EBITDA, reflecting acquisitions and share buyback programs. The company said leverage remained within its stated threshold of two times bank debt to EBITDA.

Operating cash conversion was 70.6%, above the company’s target of at least 70%, while free cash flow fell 4.2% to £69.2 million. Alfonso said the decline reflected adverse working-capital movements associated with changes in buying relationships, as well as the timing of research and development expenditure receipts.

CVS invested £45.4 million in Australia during the year, including a small minority-interest buyout, and spent £36.4 million on capital expenditure. The company expects annual capital expenditure to decline to about £30 million, while maintenance spending is expected to remain at a similar or slightly higher level over the next several years.

The board recommended a final dividend of 9 pence per share. CVS also completed a £20 million share buyback associated with its move to the main market in January and expects to complete a separate £50 million buyback announced in May within the next couple of months.

Australia expansion and acquisition pipeline

CVS completed six Australian acquisitions comprising 14 sites during the financial year, for initial consideration of £43.3 million. Australia generated A$79.1 million in revenue, representing just over 11% of group revenue, while its operations, excluding central overheads, contributed about £20 million of group EBITDA, according to Fairman.

The company said it has completed two Australian acquisitions so far in the new financial year, covering four sites. It has also signed contracts for two further Australian transactions: a three-site practice in South Australia and a single-site practice in Western Australia.

Chief Veterinary Officer Paul Higgs said CVS has about a 2% share of practices in Australia and sees substantial room for further consolidation. He said the company has typically paid around six times EBITDA for Australian acquisitions.

In the U.K., CVS said it has signed contracts to acquire a two-site practice employing nine full-time-equivalent vets. Higgs said the consideration is £15 million and the deal is at an accretive EBITDA multiple. The company said it expects the transaction to complete in the coming weeks and has a growing pipeline of additional opportunities.

Divisional trends and client initiatives

The veterinary practices division posted revenue growth of 5.2% and adjusted EBITDA growth of 4.3%. Alfonso said the division was most exposed to higher wage inflation, employer National Insurance contributions, the weaker economic backdrop and weather-related disruption.

Laboratories revenue increased 11.5% to £35 million, while adjusted EBITDA in the unit rose 25.6%, aided by revenue growth and operating leverage. The online retail business reported revenue growth of 11.1%, following website upgrades, expanded payment options, subscription functionality, next-day delivery and increased marketing activity.

CVS launched its Healthy Pet Club Advanced membership offering on July 1 after a trial during the prior financial year. The product includes the preventative-care benefits of the core Healthy Pet Club plan along with unlimited consultations for an additional monthly fee. Higgs said about 14,500 clients had joined the new plan since launch.

Although overall Healthy Pet Club membership declined slightly during the year, revenue from membership fees increased to £95.5 million. The company is also expanding digital capabilities, including online booking, digital membership sign-up, two-way client messaging and an AI scribe tool for consultations.

Fairman said CVS is broadly comfortable with remedies arising from the U.K. Competition and Markets Authority process, which concluded following publication of remedies and fees orders. The group is implementing the requirements and has adopted joint CVS Vets branding across its U.K. companion-animal practices, which it said will support national marketing and customer relationship management campaigns.

About CVS Group (LON:CVSG)

CVS Group is a leading provider of veterinary services, operating in the UK and Australia, listed on the Main Market of the London Stock Exchange. CVS is focused on providing high-quality clinical services to its clients and their animals, with outstanding and dedicated clinical teams and support colleagues at the core of its strategy. The Group operates from over 475 veterinary practices across its two territories, including specialist referral hospitals and dedicated out-of-hours sites. Alongside the core Veterinary Practices division, CVS operates Laboratories (providing diagnostic services to CVS and third-parties) and an online retail business ("Animed Direct"). The Group employs c.8,900 personnel, including c.2,400 veterinary surgeons and c.3,300 nurses.

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