Home Daily Care A Portland company raised $42M to invest in health care for pets – Bangor Daily News

A Portland company raised $42M to invest in health care for pets – Bangor Daily News

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Courtesy of Rarebreed Veterinary

Courtesy of Rarebreed Veterinary

Rarebreed Veterinary Partners co-founders Matt Campbell, Dan Espinal and Sean Miller (left to right) with their dogs at the beach at Kettle Cove in Cape Elizabeth.

Veterinarian Dr. Matt Townsend says the biggest change in how owners view their pets comes down to one question: Where does your pet sleep?

“When I started 25 years ago, people loved their pets, but they usually slept outside or in a dog house,” said Townsend, who owns Hometown Veterinary Care in Fairfield and Garland Road Small Animal Hospital in Winslow. “Most now sleep inside and a large chunk of those sleep in the bed.”

And while more Americans are treating their pets like family, spending $75 billion on them in 2019, he said a trend has pressured veterinarians: consolidation. Large conglomerates, such as VetCor and pet food companies including Mars, which also is known for candy bars, are buying up independent veterinary practices.

Some estimates say more than 50 percent of veterinary practices will be bought by large corporate practices within five years.

“I didn’t want to disappear and sell to a corporate practice,” said Townsend, who struggled to handle the business side of his practice, while having enough time to tend to animal patients.

Townsend found what he considers a good solution when he sold part of his two practices to Rarebreed Veterinary Partners. The company buys a controlling share of veterinary practices and essentially acts as their parent company, running administrative and other operations, including payroll and employee benefits.

“It’s nice to be able to pass that to someone else,” Townsend said.

The practices get access to Rarebreed’s network, giving the small clinics better buying power for pharmaceuticals and better health benefits for employees.

Rarebreed already has 10 practices in its group, eight of them in Maine, and plans to triple its number of practices by the end of the year. The company said Monday that it closed on a $36 million round from private investors last week that will help it do that. Rarebreed raised as much as $42 million since it was founded in October 2018.

Animal health businesses have been growing rapidly. In 2019, Americans spent close to $19 billion on veterinary care, up about 5 percent over 2018 spending, according to the American Pet Products Association. The association attributed a lot of that increase to millennial pet owners.

“And Maine is one of the Top 3 states in ownership of animals,” said Rarebreed co-founder and CEO Dan Espinal, who has had pets all of his life.

Espinal said veterinarians typically find it difficult to practice medicine and run the day-to-day operations of their business.

“We’re focused on taking care of the people who take care of the animals,” he said.

That was good news to Dr. Marc Ouellette, co-owner of Casco Bay Veterinary Hospital in Portland. He and his partner, Dr. Sara Leven, were looking to sell their small business within five years. They discovered Rarebreed and came to an agreement to sell a 75-percent share of Casco Bay to it.

“As a small business there are only so many benefits we could offer,” he said. “Now the staff has the benefits of a larger company.”

Ouellette said the consolidation of veterinary businesses has escalated over the past five years. Like Townsend, he was receiving unsolicited offers to buy his practice at least once a week from large conglomerates.

And like Townsend, Ouellette worried about losing the character of his practice if a large conglomerate bought and rebranded it.

“Rarebreed came in and it operates in the background,” he said. “We’re better than we were in so many ways, and we still are who we are. Clients are seeing the same thing.”

Rarebreed, which Espinal said will post $40 million in revenues by mid-April and be profitable, employs 15 at its Portland headquarters on Danforth Street. It also has 200 employees at its investment practices.

The company plans to complete the purchase of 10 more practices in the next three months, half of them in Maine. By the end of 2020, it plans to have a total of 30 to 35 practices and employ about 700 across those operations.

Espinal said Rarebreed buys a 51 percent or higher majority stake in each practice, leaving room for the veterinarians and staff to also own part of the business. Rarebreed does not charge the practices for business services. Instead it makes money from reinvesting the profits of the veterinary practice to grow it further.

Like other market segments in Maine, veterinarians have found it difficult to hire and retain staff, he said.

Portland is a cluster for animal health companies, also including IDEXX, ImmuCell, Covetrus (formerly Vets First Choice) and Dechra (formerly Putney).

Espinal said that cluster helps in attracting and hiring veterinarians and veterinary technicians who are in high demand nationwide.

Espinal led the corporate development and strategy business at IDEXX. He co-founded Rarebreed with Sean Miller, also a former IDEXX employee who is Rarebreed’s chief operating officer and with Matt Campbell, a local Maine investor.

 



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