'Baptism by fire': Virtus Health CEO takes reins as IVF sector faces COVID-19 challenge

Kate Munnings was supposed to be on holidays until the start of May. Instead, she took the reins as the new chief executive of IVF provider Virtus Health ahead of schedule just as the sector confronts one of the toughest challenges in its short history.

The former chief operating officer at Ramsay Health Care brought forward her start date at the ASX-listed Virtus provider by a month after a call from its chairman last month "outlining some of the challenges coming our way" due to the coronavirus pandemic. "I said, 'look, this is silly, I'll start on Monday'," she said.

Kate Munnings said Virtus made it through IVF restrictions with the belief things would soon be back to business as usual. Credit: Dominic Lorrimer.

"It was a baptism by fire. I’m a relationships person, so normally I would like to start a role like this listening and learning and really understanding… but instead, I’ve really had to draw on experiences I have had in the past," she said.

In-vitro fertilisation and fertility treatments are big business in Australia, worth at least $600 million a year and growing. Virtus, along with fellow ASX-listed competitor Monash IVF, is an important piece of that puzzle.

But the sector has been forced to press pause due to Covid-19, with shutdowns of elective surgeries forcing operators and eager patients to delay time-sensitive and costly treatments.

The Virtus share price sank on news of Australia's elective surgery shutdown. It sat at $1.56 at the end of March, a 70 per cent drop on where it was 12 months ago.

The company, which turned over more than $280 million last year, had to make some tough decisions. In mid-April, it told investors it would stand down the majority of its staff in Australia and Europe and senior executives and the board would have salaries sliced by 20 per cent until June.

The interim dividend was deferred.

"The first thing I did was give myself a pay cut. I think that's important, from a leadership perspective — I'd rather we all take some pain and keep as many staff on as possible," Ms Munnings said.

Virtus has taken advantage of the JobKeeper program, though Ms Munnings said now that IVF procedures have resumed in Australia, there was only a period of around two weeks where work was at a complete standstill.

She said she was determined to operate as though restrictions would be lifted sooner than commentators predicted, to ensure that the business would be ready to snap back into action quickly.

"A lot of people believed and the PM was saying, ‘six months’, but i just never believed that elective surgery could be suspended for that length of time.

"Everything we did, we did it with restart in mind because I always believed it was going to be sooner than expected."

Meanwhile, fellow fertility treatment provider Monash IVF had turned to investors with plans for an $80 million capital raise.

When asked about possible capital raisings Virtus might undertake, Ms Munnings said that caution had to be taken when considering whether fundraising was appropriate going forward.

"The challenge with raising equity is that the stock prices are at a discount anyway. So you discount off the discount. It's really trying to balance the expectations and needs during this period and how quickly the recovery will be," she said.

One of the biggest challenges facing the sector during this slowdown period is communicating with families who were planning treatments. While procedures have now resumed in Australia, other Virtus Health markets including Singapore, the UK and Ireland are still facing some restrictions.

Ms Munnings, who began her career as a nurse, said the impact on those customers affected by the shutdowns was significant.

"I’ve worked with mental health, and AIDS, and other traumas. And the psychological trauma of someone going through fertility support should not be underestimated," she said.

“The thing that has surprised me about the commentary around IVF is that the market often looks at it as discretionary. And I don’t think it’s discretionary at all… It’s not something you choose to do. It’s something you need to do."

The sudden rise of telehealth in the sector during has tried to address some of the disconnect for patients.

Digital health experts say the impacts of this could actually help lower the cost of IVF procedures in the longer term.

"I think the IVF sector has to adapt to digital technologies, in the sense of how it engages with families and patients. I think ultimately, it will allow them to reduce the cost of what they do," said chief executive of the Digital Health Cooperative Research Centre, Dr Victor Pantano.

Ms Munnings sits on the board of the centre, which is a federal government-backed operation to test digital health solutions in Australia.

Dr Pantano said having worked with her during her tenure at Ramsay, he believes Ms Munning's clear decision making means she's well equipped to face this trend and steer Virtus through the challenging market conditions.

"I think she’s very strong and decisive – at the same time, she’s quite empathetic," he said.

Ms Munnings said communication and clear decision making will be top priorities going forward.

"The importance of staying calm cannot be underestimated."