CVS Group shares surge over 10% after FY25 EBITDA beats estimates

Investing.com -- CVS Group shares rose more than 10% on Tuesday after the veterinary services provider reported FY25 adjusted EBITDA of £134.6 million, slightly above the consensus estimate of £131 million. 

Like-for-like sales increased 0.2%, below the company’s previously stated target of 4%-8%. Adjusted earnings per share fell 3.8% to 80.1p, weighed down by higher depreciation, amortization, finance, and tax expenses. 

Jefferies noted that underlying margins were roughly 17.8%, a slight increase year-on-year on an underlying basis, after accounting for a net R&D tax credit of £15.1 million. 

Net debt fell to £131.4 million from £168 million in FY24, while leverage improved to 1.18x, in line with guidance of “below 2.0x,” supported by strong operating cash generation and the disposal of Crematoria. 

Operating cash conversion reached 76.9%, exceeding the target of around 70% and up 6.8% from FY24. 

Healthy Pet Club membership grew to 519,000 as of June 30, compared with 503,000 a year earlier, and the board proposed an 8.5p dividend for FY25, up from 8.0p in FY24.

Performance across the company’s divisions was mixed. Veterinary practices, which account for roughly 89% of group revenues, saw reported revenue rise 6.7%, driven largely by M&A, with like-for-like sales up 1%. 

CVS continued its Australian expansion, completing seven acquisitions comprising 15 sites in FY25 and investing £29.2 million, following 22 deals totaling 28 sites in FY24. 

Two additional acquisitions comprising eight sites were completed in FY26, bringing the total Australian footprint to 31 practices across 51 sites, with further deals planned. 

M&A activity in the UK remains on hold pending the outcome of a Competition and Markets Authority market investigation.

Laboratory revenues fell 0.6%, affected by the loss of a major customer, while volume of cases performed declined 14.4%. 

The online retail business saw an 8.2% drop in revenues, impacted by the cost of living crisis and the launch of a new website.

CVS Group expects the positive momentum in like-for-like sales from the fourth quarter of FY25 to continue into the first quarter of FY26, targeting 4%-8% LFL growth over the medium term. 

The company cited a healthy balance sheet and free cash flow, and anticipates the publication of the CMA provisional decision in mid-October 2025. Performance in FY26 is expected to be in line with market expectations.