Earnings season for 1Q22 is now behind us with the top animal health companies reporting continued strong sales growth. Excluding the impact of exchange, the scorecard for some in the largest companies for the first quarter is as follows: Zoetis (+9%), Merck Animal Health (+9%), IDEXX (+8%), Heska (+7%), Covetrus (+6%), MWI (+4%), and Elanco (+2%). The strong growth was largely driven by the companion animal segment.
As we move further into 2022, there are signs that growth rates may be moderating. Recent reports indicate clinic visits may be flat to slightly negative in 1Q22. This is not surprising as the industry saw a surge coming out of the pandemic in 2021. The overall economic condition of the country is another area of concern with inflation surging. Some data suggests that the US economy is likely heading toward a recession. The last time we faced a recession in 2008-2010, vet visits declined by 2-3% annually as consumers juggled pet healthcare with other household spending.
The rest of 2022 will be a delicate balancing act for the industry with rising input costs and wage pressures relative to decisions to increase end-user prices to maintain profitability. We know that the veterinary industry is not recession proof, but it is rather recession resistant – people still eat and still take care of their pets.