By Emma Koehn
The boss of ASX-listed Monash IVF says he would be happy to talk to potential suitors as investors eye the growing fertility sector but that he was happy with the stability and momentum of the company since emerging from COVID lockdowns.
Monash competitor Virtus has been the subject of a bidding war for the past seven months. Monash chief executive Michael Knaap said the company “would have the chat” with firms that approached with takeover offers but that the company’s stability of ownership had been a plus for recruitment.
Demand for IVF services remains strong but providers acknowledge COVID cases are causing widespread interruptions to services. Credit: Istock
“We are the steady ship ... and that consistency is really important when you are looking for people to join your organisation,” he said.
Knaap said demand for services was high but that COVID case numbers were playing havoc with scheduled fertility treatments. He said the company was fighting a “daily battle” to ensure staff were available to deliver treatments for clients, while the transition to “COVID normal” means many women are having to defer treatments due to being infected with the virus.
Monash IVF chief executive Michael Knaap.
“[In the past two years] we were in a ‘prevention and restriction’ environment. The swing now is to being COVID-infected. When you are infected, it’s a completely different mindset and you can’t come through for procedures,” Mr Knaap told The Sydney Morning Herald and The Age.
“What we are seeing is high cancellation and deferment rates as a result of COVID infection and exposure, at levels that we haven’t seen before.”
The company’s policy is to defer treatments until eight weeks after patients have recovered from the virus.
Back in May, Monash flagged to investors that the disruptions would put a dampener on its full-year financial results, with the company expecting adjusted net profit of $22 million for the year compared with $23.3 million the year prior.
Despite the ongoing disruptions, Knaap said there was plenty of growth potential in Australia’s fertility sector, which has been under close watch recently as private equity giants have battled hard to buy Monash competitor Virtus Health.
The battle between private equity firms BGH Capital and CapVest for Virtus has pushed the Virtus share price up 30.5 per cent over the past 12 months. Monash IVF is up 19.6 per cent over the same period.
Revenue growth opportunities now go beyond traditional IVF procedures. Knaap believes additional services, such as genetic screening of embryos and social egg freezing, are increasingly important revenue drivers.
“More exposure and knowledge of social egg freezing being out there is really important. As sportspeople and actors are out there now [discussing it], we are seeing more uptake,” he said.
Analysts say the fertility treatments sector is attractive despite ongoing disruptions due to the pandemic. “We see Monash well placed to grow market share into FY23,” Macquarie analysts noted last month.
Monash is fighting a class action in Victoria, however, brought by patients over claims that a faulty genetic screening test led to the destruction of healthy embryos.
Knaap said the company would continue to defend the claim, with discovery for the case set to run until the end of this year.
However, he does not believe coverage of the action has had any impact on how prospective patients view the company, given it has grown patient numbers in the months since the case has come to light. “What we are seeing is growth in new patients and new treatments, growth in our market share.”
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