Review: The Ralph Veterinary Referral Centre EIS

44% of UK households have pets, with 1.3 million dogs and 1.5 million cats in the South East alone.

These pets may, at times, need to be referred to receive specialist care or treatment. There are, however, fewer than 20 full-service referral centres in the UK and only four of these offer 24/7, 365 referral Emergency and Critical Care (ECC) services.

The Ralph aims to fill this gap and become the UK's second largest referral ECC service.

Highlights

  • £3 million target EIS raise to open new top-tier specialist veterinary referral centre
  • Growing referral market as veterinary care becomes more specialist
  • Very profitable industry – strong gross and EBITDA margins forecast (not guaranteed)
  • Active M&A in the sector with large consolidators looking for good targets
  • Experienced management team
  • Target returns of 2.3x (pre tax relief) 3.3x (post tax relief) money invested – not guaranteed
  • Advance Assurance received
  • Target exit after year 3 (not guaranteed)
  • Pay no initial charge through Wealth Club
  • Minimum investment £10,000

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Watch a video interview with Shailen Jasani, founder and CEO:

The opportunity

The Ralph Veterinary Referral Centre plc (“The Ralph”) is a new company set up to develop an independent state-of-the-art multidisciplinary small animal referral hospital in Marlow, Buckinghamshire. It will offer Emergency (‘A&E’) and Critical Care (‘ICU’) services (“ECC”) 24/7, 365 days per year alongside key clinical services such as orthopaedics and surgery. Within an hour’s drive there are approximately 450 independent vet practices all of which might need to refer patients to specialist hospitals like The Ralph. This is the hospital’s primary catchment area but referrals are also expected to come from further afield.

As veterinary healthcare advances, vets are undertaking more post-graduate training and tend to focus on a smaller number of species and clinical areas. So, in the case of a serious or persistent condition, your vet might refer the pet to a specialist with key expertise in that particular area. The process works in the same way as in human medicine, when your GP might choose to refer you to a consultant at a hospital.

However, while there are specialist centres all over the country, there are fewer than 20 top-tier centres, namely full-service hospitals that can offer the range of services The Ralph plans to offer. Only four of these offer 24/7, 365 referral ECC service. 

The companion animal sector is very attractive and offers the potential for long-term growth. Two top-tier specialist centres have recently been acquired for a double-digit EBIDTA multiple.

The Ralph’s vision is to offer the best level of care to patients, referring vets and pet owners as well as managing the business commercially and providing an enriching and supportive place of work for all staff. You may not realise this, but the suicide rate among vets is nearly four times the national average and double that of doctors or dentists.

The business

Once set up, The Ralph aims to provide top-quality 24/7, 365 days a year veterinary care for pets in need of specialist investigation and treatment. From launch The Ralph aims to offer the UK’s second largest referral ECC service. Alongside ECC, it will offer other key clinical services such as orthopaedics, soft tissue surgery, internal medicine, neurology and neurosurgery. It will also offer Primary Care Out-of-Hours cover to local vet practices on an opt-in basis.

UK pet owners are increasingly conscious of their pets’ health. Along with humanisation of pets, medical advancements have increased the range of treatments available, driving specialisation and accelerating the growth of the referral model. It is estimated that 94% of primary care practices have referred at least one case to a specialist in the last 12 months. 

The Ralph is a referral business, which means patients will be referred by veterinary professionals in the catchment area (not by pet owners themselves) and approximately 85% of the work is expected to be complex/expensive insurance cases. 

The principle behind referrals is simple. The pet is seen by its usual primary care vet. If they consider specialist care or investigation needed, they will refer the pet to a specialist centre with the appropriate skills. The vet sends the notes and patient records to the specialist centre. The pet owner, or insurance provider, will pay the specialist centre. Vets refer cases because they want the animal to receive the best care, and their customer, the pet owner, to be happy. Location of the hospital and reputation of the clinicians are key to the referral decision.

In addition, The Ralph has permission to offer a share-based referral incentive scheme (approved by the Royal College of Veterinary Surgeons and HMRC) whereby referring vets could participate in shares in The Ralph. 

For elective work, the patient’s condition will be assessed and estimated costs will be discussed with owners before any treatment or investigations start. For uninsured animals, clients will be asked for a deposit of 50% of the estimated cost prior to their pet being hospitalised. The full balance is required at the time of discharge. For insured animals, clients are asked to bring a claim form to their first appointment, along with policy documents and the initial claim made with the referring vets. 

The hospital will be based in Marlow, to the west of London in the M4-M40 corridor, which The Ralph considers ideal as the nearest competing top-tier centre is 45 minutes’ drive away. 

Having carried out research and viewed several properties over the course of more than a year, an agreement to lease has now been agreed on a property. It is in the target area and affords enough space for the long term. The Ralph has already secured planning permission for change of use to a Veterinary Hospital and for carrying out the planned works from Wycombe District Council. The management negotiated the equivalent of a 17-month rent-free period. 

ACD Projects, a highly regarded specialist in bespoke veterinary design and building management, has been appointed to undertake the fit out of The Ralph hospital. ACD Projects’ recent work include the build and project management of a new oncology and soft tissue centre for Noel Fitzpatrick as well as various projects for the Animal Health Trust. 

The work is expected to take around 20 weeks, so allowing for a little slippage, the Company is aiming to be ready to trade by October 2018. 

Forecasts and target return

The Ralph is now aiming to raise £3 million to complete the internal fit out works of its leasehold building and provide working capital. The hospital should be fully operational by October 2018. 

It targets returns of 2.3x money invested pre tax relief and 3.3x post tax relief and an exit after three years. Neither the returns nor the exit and its timing are guaranteed.

To read more details and see all the financials, please download the Information Memorandum and our research report

The management

Shailen Jasani (Founder and CEO) is a well known emergency specialist vet. After graduating from Cambridge in 1999 he worked as a vet in Emergency and Critical Care. For six of the last 15 years, he was at the Queen Mother Hospital for Animals, Royal Veterinary College, in various capacities, including Senior Faculty clinician. He also worked as a clinical trainer, supervisor and mentor for Vets Now Limited, overseeing multiple primary care emergency clinics.

He has been planning The Ralph since 2014. He experienced first-hand the growth of the veterinary referral market but also saw its shortcomings. In his opinion, there were not enough animal hospitals that were operated commercially and combined clinical excellence with great service and a focus on workplace culture.

Shailen has teamed up with Iqbal Dhanji, a Coopers & Lybrand (now PwC) trained accountant, former banker and angel investors. Iqbal has spent much of the last ten years building up and selling a number of dental practices – in many ways a similar type of operation – with his wife who is a dentist.

The Ralph has also already recruited a Practice Manager and an experienced Chief Operating Officer who has worked in practice management since the early 2000s and currently manages a veterinary hospital. Both will resign from their current jobs ready for The Ralph’s opening in October 2018.

At launch there should be 14 specialists and clinicians, 25 nurses and six receptionists. Together with complementary and support staff, the total headcount at launch is expected to be about 65 and grow to 82 by year 3. 

Exit strategy

The Ralph is most likely to provide an exit to EIS shareholders by refinancing. A trade sale is an alternative exit route. Acquisitions of referral centres by large corporates and private equity firms show there is clear confidence in the continued growth of the veterinary sector. There may be opportunities to open additional referral centres in the UK. Target exit is after year 3 but the timescales are by no means certain.

What to consider

This is a high-risk investment: capital is at risk. Please ensure you read the report and the Information Memorandum carefully. You should not invest money you cannot afford to lose. Returns are not guaranteed. The value of tax benefits depends on circumstances and tax rules can change.

Our view

This is an opportunity to invest in a new specialist animal hospital managed by a highly regarded vet with clear passion for animal care and the working environment of his staff. The leasehold building is secured and its location appears to be perfect for M40/M4 catchment. This primary catchment area includes a large number of potential referring practices and the nearest top tier competitor is 45-minutes’ drive away.

Humanisation of pets has contributed to the growth in the sector and requirement for specialisation. More treatments are available and new conditions (such as those related to obesity) are on the increase. The continued growth of pet insurance underpins the revenue model for The Ralph. With only a few top-tier centres in the UK, it would appear demand outstrips supply, creating an opportunity for a skilled and experienced management team to grow a successful business. 

Profit margins and cash generation are strong in the sector as seen with peer group companies leading to double digit valuations on exit. For experienced investors who are comfortable with the significant risks, in our view The Ralph has the potential to deliver highly attractive returns.  


Wealth Club aims to highlight investments we believe have merit, but you should form your own view. You should decide based on the provider's documents and ensure you have read and fully understand them before investing. This review is a marketing communication. It is not advice or a personal or research recommendation to buy the investment mentioned. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination. 

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The Ralph Veterinary Referral Centre EIS

Read more on the business, the opportunity and the financials

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