Fountain Report Excerpts Oct 31, 2023

Fountain Report Excerpts
  1. Veterinary practice valuations in the third quarter have adjusted to the new economic environment, Ackerman Group co-CEO Rich Lester writes in the latest Fountain Report. Hospital valuations have stabilized in the last 15 months at a range of 8-13x EBITDA from the previous highs of 12-18x in late 2021 and early 2022, according to Ackerman Group. The decline was driven by a rapid rise in interest rates. Still, hospital valuations now are still at or above pre-COVID levels. Many consolidators are staying active in the current environment, some buyers that had slowed or stopped are looking to re-engage with the market, and new buyers are emerging.
  1. Retail beef prices in the United States are at record highs, pushing up prices of beef-based products from burgers to steaks and steak tartare, largely due to a shrinking cattle supply as well as higher input costs, CNBC reports. Cattle herds have been reduced to their smallest number in decades as a result of prolonged drought in key cattle ranching states like Texas and Kansas, a Wells Fargo analyst said. “All consumers will be paying more for all beef products for several more years,” Wells Fargo chief agricultural economist Michael Swanson said. In its September livestock report, the USDA forecast that beef production in the second half of 2023 is expected to decline by 180 million pounds. “As cattlemen retain cows to rebuild the herd, there is a much lower supply of cattle to provide beef,” Swanson said.
  1. Two commercial turkey farms in Iowa have been hit by the reemerging highly pathogenic bird flu, causing about 100,000 birds to be killed to prevent the disease from spreading, The Associated Press reports. The Iowa Department of Agriculture reported the infected commercial poultry flocks within weeks of a turkey farm in South Dakota and one in Utah reporting the first outbreaks in the United States since April, raising concerns that more would follow. The USDA shows 12 commercial flocks in South Dakota, Utah and Minnesota have been affected in October, totaling more than 500,000 birds. Bird flu last year cost U.S. poultry producers nearly 59 million birds across 47 states, including egg-laying chickens and turkey and chickens raised for meat, making it the country’s deadliest outbreak ever, according to USDA figures. Iowa was the hardest-hit state last year, with nearly 16 million birds lost.

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