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Jordyn Hewer had a plan: Go to veterinary school, get a decade of experience under his belt and then buy his own practice.

The first two steps went off without a hitch. He graduated from the University of Montreal’s veterinary school in 2011. He spent the next 10 years working as a small-animal veterinarian in private practices and shelters in Quebec and Ontario.

But it’s when he got to the third step – buying his own practice – that he ran into a serious problem. In the intervening years, the whole industry had changed.

Major corporate players had entered Canada’s veterinary industry, including VetStrategy – backed by U.S. private-equity firm Berkshire Partners, and recently merged with European pet-care chain IVC Evidensia – and VCA Canada, owned by international confectionery giant Mars Inc. The corporate chains were buying up independent veterinary practices, sparking bidding wars that saw the price of vet practices balloon from three or four times annual gross earnings to 10, 20, even 30 times that at the beginning of this year.

The buyouts meant multimillion-dollar paydays for veterinarians who already owned a practice. But for ambitious young professionals like Dr. Hewer, there was no way to compete. Even if he could somehow secure the funding to buy a practice at the prices they were now going for, he would be saddled with a mountain of debt he would struggle to pay off.

“It’s ridiculous,” said Dr. Hewer, who chose to leave the industry to work for a pet-food manufacturer. “When you translate that to how much debt that represents and how much you would need to pay that back in, let’s say, a five- to 10-year period, the numbers never add up.”

Fuelled by international private equity funds, consolidating firms have been on a tear in other health-professional fields as well, buying up practices in fields such as veterinary medicine, dental care, optometry and pharmacies and assembling them into chains. Practitioners who sell to corporate owners typically get back-office support through the firm’s technology and staff, help with marketing, and reduced management responsibilities. The buyers, meanwhile, get businesses with steady streams of revenue, and profits that can be boosted by centralizing equipment and administrative functions, and ordering supplies in bulk. In the vast majority of cases, the old branding remains intact after a purchase happens, so patients and customers have no idea their once-independent practice has been taken over by corporate ownership.

Consolidation within these fields is still relatively low in Canada, but it is building fast – in less than a decade, nearly a quarter of vet practices have been bought by corporate owners.

“I’ve never seen anything like it,” said Douglas Jack, a leading veterinary lawyer at Borden Ladner Gervais LLP. “I’ve been practicing law for 37 years. It just became a frenzy among the consolidators.”

The recent acquisitions are part of a wave of increased activity from private-equity firms across the globe, as they search for new fields to generate

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2 min read

The first two years of the 2020s has been all about COVID-19, and the pandemic has affected healthcare stocks in ways that will likely carry on for years to come.

By mid-November 2021, roughly 254 million coronavirus cases had been identified worldwide causing more than 5.1 million deaths. However, nearly 7.6 billion people around the world had received at least one dose of a COVID-19 vaccine, equating to 52.4% of the global population, according to research firm Our World in Data.

Given how the Delta variant of COVID-19, which is more than twice as contagious as the original virus, wreaked havoc in mid-2021, scientists are now worried that there will be more offshoots of the coronavirus that are even more transmissible.

As a result, new vaccines will continue to be developed to fight these new virus strains – keeping COVID-19 and vaccine news front and center in 2022 and putting some healthcare stocks in the driver’s seat when it comes to growth.

Here, we explore 13 of the best healthcare stocks to buy for 2022. Some of these picks are at the forefront of developing COVID-19 products and vaccines, while others have business models that are designed to do well in most market conditions.

Data is as of Nov. 17. Analysts’ ratings courtesy of S&P Global Market Intelligence. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price.

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UnitedHealth Group

  • Market value: $422.8 billion 
  • Dividend yield: 1.3%
  • Analysts’ ratings: 17 Strong Buy, 5 Buy, 3 Hold, 1 Sell, 0 Strong Sell

In October, UnitedHealth Group (UNH, $448.95) announced that it would launch NavigateNOW, a new health plan focused on virtual healthcare. It is available to select employers in nine U.S. markets, including Pittsburgh, Minneapolis and Houston. It will be 15% cheaper than traditional benefit plans while still providing in-person visits in addition to virtual care.

These efforts at expanded virtual care will likely help boost UnitedHealth’s top line, though it’s already seeing impressive growth. UNH’s most recent quarterly report included an 11% increase in revenues to $72.3 billion. Its UnitedHealthcare (healthcare benefits) and Optum (healthcare services) units both experienced year-over-year double-digit percentage sales growth during the quarter. UnitedHealthcare accounts for 58% of total revenues, with Optum generating the other 42%.

The insurance giant had adjusted earnings per share (EPS) of $4.52 during the third quarter, up 28.8% from the year earlier. It generated $7.6 billion in cash flow from operations, a healthy 180% of net income. UnitedHealth Group’s net margin in the quarter was 5.6%, 70 basis points (a basis point is one-one hundredth of a percentage point) higher than a year ago.

The health insurer’s medical care ratio (MCR) – the medical expenses paid out divided by total collected premiums – in the third quarter was 83.0%, 110 basis points less than a year ago. The lower the MCR ratio, the better.

UNH also paid out $1.4 billion in dividends to shareholders during the third quarter while buying back $1.1

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