Trouble in the Pet Care Boom
Private equity firms have invested more than $60 billion in U.S. pet care over the past decade, betting on steady demand and strong pricing power. But that bet may be hitting a rough patch.
According to a recent Morgan Stanley/AlphaWise survey of 75 veterinary practices, patient volumes fell 1.9 percent in the first quarter—the sharpest decline since the survey began in mid-2021. Even more striking, revenue also slipped by 0.5 percent, marking the first recorded drop.
So, what explains the downturn? The answer seems to be a mix of consumer pushback and economic strain.
U.S. prices for veterinary services have increased by around 60% over the past decade. More than three-quarters of vets said clients are increasingly disputing prices, and reported declines across the board: fewer new patient visits, fewer check-ups for existing pets, less diagnostic testing, and lower demand for discretionary procedures.
However, most vets pointed to the broader macroeconomic environment when asked to explain the drop in visits. But price inflation was a close second, suggesting that sticker shock is beginning to weigh more heavily on pet owners.
The industry's long growth streak may not be over, but the days of unchecked pricing power could be.
