A Morgan Stanley survey shows that U.S. vet practices are growing sales by raising prices as they contend with fewer visits - a formula that analysts say is unsustainable

A dog walks in a hydrotherapy tank at an animal hospital in Washington. A survey found that pet owners are waiting longer before getting treatment.

U.S. veterinarians see a tougher stretch ahead for the pet-care industry, against a backdrop of higher prices, fewer appointments, corporate consolidation and new signs of a shrinking pet population, a new survey by Morgan Stanley analysts found.

The survey, which tallied responses from 75 U.S. veterinarians, found that patient visits fell 1.9% in the second quarter relative to a year earlier, a bit worse than the 1.8% dip seen in the first quarter. Sales ticked 0.3% higher, but much of that was due to price increases. The analysts said that trend was "not a sustainable algorithm."

They added that 13% of those veterinarians now cite a declining pet population as a worry. That figure was up from earlier surveys and, while still small, this marked the "first time it has shown up meaningfully" among concerns.

Survey respondents told the firm that demand for vet services was still strong, and that more people have been using pet insurance to cover their pets. Millennial and Gen Z customers, one respondent said, were spending more money on their pets than older generations.

However, others said that corporate consolidation and private-equity ownership in the industry had pushed prices beyond many pet owners' reach.

"We are outpricing ourselves and people have to choose feeding themselves/their family vs. taking their pet to the vet," one respondent said.

"Owning a pet has become a luxury," said another.

Other respondents said that pet owners are waiting longer before seeking treatment, meaning the cases doctors see are more severe, and more customers are skimping on payments at general practitioners to save money for treatments often offered by specialists. Many clinics remain understaffed, and vets are switching to lower-cost generic prescriptions, the analysts found.

The analysts published the findings as shares of big pet-care companies like online pet-suppliers retailer Chewy $(CHWY)$ and retail chain Petco Health & Wellness $(WOOF)$ remain under pressure. Over the past year, Chewy's stock is down 42%, while Petco's is down 38%. Those companies have tried to lean into higher-end products and services, which wealthier shoppers are likelier to pay for, since other consumers have become more selective.

Last year, BofA analysts, citing KMPG, said that around 30% of U.S. vet clinics were owned by private-equity firms, and another 20% were owned by corporations. They also said at that time that pets taken in during the pandemic adoption boom were getting older, likely creating more demand for Chewy, which has started to run more veterinary clinics.

Chewy said in March it expects pet ownership to continue rising, even as shoppers grapple with inflation. Also that month, Petco said it would try to sell more fresh food, use its store brands to roll out new products more quickly, expand its hospital business and sell more kinds of pets in stores. Management called out tarantulas as "a newer pet trend" in the U.S.

The Morgan Stanley analysts on Wednesday also noted that larger companies like Chewy, Petco, Walmart $(WMT)$ and PetMed Express (PETS) have also stepped up their pet-prescription businesses, posing another form of competition to independent clinics.

The analysts said that the veterinarians they surveyed filled 11% of prescriptions through Chewy, with companies like PetMed and Vetsource accounting for a smaller share.

"However, paradigm shifts, expedited by the pandemic, along with the proliferation of new online pharmacy concepts alongside the endorsement of key manufacturer relationships in recent years, will likely drive continued pressure on contributions from traditional pharmaceutical sales at the practice level over time," the analysts said.

-Bill Peters

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July 22, 2026 15:56 ET (19:56 GMT)

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