Warren, Blumenthal cite PESP in letter on veterinary care acquisition

In a letter to JAB Holding Company sent August 6, 2024, Senators Elizabeth Warren (D-MA) and Richard Blumenthal (D-CT) slammed the firm for its role in the rapid consolidation of veterinary care in the United States.[1] JAB Holding Company is a Luxembourg-based private equity firm[2] that has been acquiring veterinary care practices and [3] pet insurance companies[4] since 2019.[5]

According to Warren and Blumenthal, JAB Holding “has spent billions on buying up veterinary practices and then looting the profits while reducing quality of care, increasing prices for pet owners, and making working conditions even harder for veterinarians.”[6]

The senators’ letter, which cites PESP’s Senior Coordinator Michael Fenne’s research on private equity’s role in the consolidation of veterinary medicine,[7] was featured in Rolling Stone and Boston Globe.

The letter describes private equity’s growing presence in pet care, highlighting that,

“From 2017 to 2023, private equity firms spent over $51 billion on merger and acquisition deals in the veterinary sector. Private equity firms like JAB are now the biggest buyers of veterinary clinics and own nearly one-third of the veterinary clinic marketplace.”[8]

The Senators also highlight antitrust enforcement and potential regulatory issues at JAB Holding, in particular:

“JAB has received significant regulatory scrutiny for the scale and speed with which it has acquired veterinary practices and other pet-related companies. The FTC has twice ordered JAB to divest clinics in concentrated regional markets. JAB is now required to obtain prior approval from the FTC before acquiring specialty or emergency veterinary clinics in those regional markets. In addition to rolling up competing veterinary practices, JAB also owns numerous pet insurance brands. This vertical integration may empower JAB to preference its own insurance brands at its clinics. JAB’s decision to sell separately-branded insurance policies also gives customers a false illusion of choosing among separately-owned pet insurance companies. Similarly, as JAB acquires more veterinary practices while retaining those practices’ original branding, customers may continue to believe their veterinary practice is locally owned. Some pet owners notice the difference only after they are charged more than usual at their routine visits.”[9]

The Senators have requested that JAB Holding Company provide responses to a series of questions by August 21, 2024. The questions are intended to help the Senators better “understand the impact that the acquisition sprees of JAB and other private equity firms have had on veterinary practices across the country.”[10]

One day after the Senators wrote to JAB Holding Company, Reuters reported that private equity firm Banks Group will be acquiring pet health company, PetIQ, in a $1.5 billion take-private deal expected to close in late 2024.[11] According to data provider PitchBook, 2024 has already seen at least 58 private equity deals in the US alone involving veterinary medicine providers and pet care companies.[12]

Resources

[1] “Warren, Blumenthal Slam Private Equity Company for Consolidating Veterinary Care, Raising Costs for Pet Owners | U.S. Senator Elizabeth Warren of Massachusetts,” August 6, 2024. https://www.warren.senate.gov/newsroom/press-releases/warren-blumenthal-slam-private-equity-company-for-consolidating-veterinary-care-raising-costs-for-pet-owners.

[2] Pg. 12 of “JAB Holding Company – Annual Report 2023.” JAB Holding Company. Accessed August 13, 2024. https://www.jabholco.com/documents/2/JAB_Holding_Company_S.ar.l-Annual_Report-2023.pdf.

[3] “JAB Holding Company | Petcare.” Accessed August 13, 2024. https://www.jabholco.com/petcare.

[4] “JAB Holding Company | Pet Insurance.” Accessed August 13, 2024. https://www.jabholco.com/pethealth.

[5] “JAB Holding Company | Long Term Investments | Privately Held Group.” Accessed August 13, 2024. https://www.jabholco.com/.

[6] “Warren, Blumenthal Slam Private Equity Company for Consolidating Veterinary Care, Raising Costs for Pet Owners | U.S. Senator Elizabeth Warren of Massachusetts,” August 6, 2024. https://www.warren.senate.gov/newsroom/press-releases/warren-blumenthal-slam-private-equity-company-for-consolidating-veterinary-care-raising-costs-for-pet-owners.

[7] See pgs. 1,3, and 4 of Warren, Elizabeth, and Richard Blumenthal. “Warren, Blumenthal Letter to JAB Holdings Re Veterinary Clinics,” August 6, 2024. https://www.warren.senate.gov/imo/media/doc/warren_blumenthal_letter_to_jab_holdings_re_veterinary_clinics.pdf.

[8] Pgs. 1-2 of Warren, Elizabeth, and Richard Blumenthal. “Warren, Blumenthal Letter to JAB Holdings Re Veterinary Clinics,” August 6, 2024. https://www.warren.senate.gov/imo/media/doc/warren_blumenthal_letter_to_jab_holdings_re_veterinary_clinics.pdf.

[9] Pg. 2 of Warren, Elizabeth, and Richard Blumenthal. “Warren, Blumenthal Letter to JAB Holdings Re Veterinary Clinics,” August 6, 2024. https://www.warren.senate.gov/imo/media/doc/warren_blumenthal_letter_to_jab_holdings_re_veterinary_clinics.pdf.

[10] Pg. 4 of Warren, Elizabeth, and Richard Blumenthal. “Warren, Blumenthal Letter to JAB Holdings Re Veterinary Clinics,” August 6, 2024. https://www.warren.senate.gov/imo/media/doc/warren_blumenthal_letter_to_jab_holdings_re_veterinary_clinics.pdf.

[11]Reuters. “Pet Health Provider PetIQ to Go Private in $1.5 Bln Deal with Bansk Group | Reuters.” August 7, 2024. https://www.reuters.com/markets/deals/bansk-group-buy-petiq-15-billion-2024-08-07/.

[12] PitchBook deals search for 1-01-2024 though 8-13-2024 for US-based private equity buyouts, add-ons, take privates, and growth investments.