The value of shares in CVS Group Ltd has slumped after the group announced that earnings in 2019 are likely to come in below market expectations.

Earlier this week share price was 425.8p, down from 652.5p at the end of January, and down over 60% from the 1160p/share seen in July 2018.

CVS Group owns over 500 veterinary practices in the UK, Ireland and the Netherlands, and has recently acquired a number of large animal practices west of the Bann in NI.

However, the appetite for new acquisitions appears to be cooling, despite having terms agreed in principle to take on further businesses.

While CVS initially concentrated on small animal practices, in the last two years it has diversified into farm and equine practices

“The board is re-evaluating all acquisitions and particularly the multiples it is willing to pay for,” said the company in a statement last week.

The statement also made clear that margins have come under pressure due to an increased mix of farm-based practices, for which returns are lower.

While CVS initially concentrated on small animal practices, in the last two years it has diversified into farm and equine practices.

Also the industry-wide shortage of vets means that the group is heavily reliant on locum cover, which tends to cost more.

It means early performance of these new acquisitions has been “disappointing” and is “falling short of our expectations”, states CVS.

The company also said that performance has been adversely affected by the poor support of pharmaceutical companies, and that it would continue to push for more “transparent and appropriate pricing”.

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