Patients take embryos to rival companies, investors dump shares from embattled Monash IVF
Some of Australia’s biggest investment funds have been burned by the latest bungle by ASX-listed fertility giant Monash IVF, whose prospects look increasingly dim as patients take their embryos elsewhere.
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Some of Australia’s biggest investment funds have been burned by the latest bungle by ASX-listed fertility giant Monash IVF, whose prospects look increasingly dim as patients take their embryos elsewhere.
In a week of record gains for the wider ASX, nearly 70 million MVF shares were dumped on Tuesday, sending the price tumbling 27 per cent to end the day at 54.5c – the lowest since the Covid-riddled January of 2020.
The latest plunge followed news of a “clinic incident” on June 5, when a patient’s own embryo was incorrectly transferred to a patient, when their treatment plan specified that they received an embryo from their partner.
That error was the second revealed in three months, coming in the wake of a horrifying bungle which saw a Brisbane patient give birth to another couple’s baby.
Monash has said that embryo mix-up was the result of “human error” and has commissioned an independent inquiry.
After news of the incident broke on April 10, shares sunk almost 50 per cent in a week, including a 35 per cent one-day collapse that wiped an estimated $150m from its market capitalisation.
That mixup – over a baby born in 2023 – was only made public after questions from the Herald Sun in April this year.
Quizzed by the ASX on why it neglected to inform the market of the “distressing” event at the time, MVF said it did not expect it to have a material impact on the share value and that it believed it would be covered by insurance.
On May 20 the company revised its expected profit for the current financial year down from $30-31m to $27.5m, saying operating conditions had worsened nationwide and that patients were taking their records and “human material” to other providers in the wake of the bungle.
By noon on Wednesday, MVF’s share price had recovered by 13 per cent to a still-dank 62c.
This time last year, they were trading at $1.35 and the company was finalising an executive pay schedule that saw managing director Michael Knapp paid more than $1.2m in salary and bonuses for the 2024 financial year.
Knapp has been in the role since 2019 but joined Monash as chief financial officer in 2015.
According to the annual report, current CFO Malik Jainudeen received total remuneration of $583,848 while chief operating officer Hamish Hamilton took home $608,353.
Shareholders – which include major funds HSBC and J P Morgan – received 4.7c per share in franked dividends last financial year and had another 5.1c this year.
Among the big names burned was Washington H. Soul Pattinson and Company, aka Soul Patts, which spent more than $10.6m on MVF shares – for between 79c and $1.09 – with the final tranche bought the same day news broke of the first embryo bungle.
Major super fund Unisuper escaped much of the April carnage by a whisker, selling down 2.5 million shares in the company on April 9 – the day before the news broke.
It had only become a substantial shareholder on April 4.
Monash’s bad news and botchings have not been restricted to its clinics – this week the company also admitted to underpaying 347 staff over the last seven years.
Last year, MVF agreed to pay $56m to settle a class action with more than 700 patients whose healthy embryos may have been destroyed during bungled genetic screening tests.
Just under $20m of the payout was covered by insurance, with the company scraping the other $36m together from loans and cash reserves, pushing the company into an overall net loss of $6.5m last financial year.
The multimillion-dollar payout was inclusive of costs and Monash IVF has made no admission of liability as part of the settlement.
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Originally published as Patients take embryos to rival companies, investors dump shares from embattled Monash IVF
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