Monash IVF recovers after doctor exodus

Monash IVF posts 15pc in half-year profit to $9.1m as it stabilises its business in the wake of a doctor exodus.

Monash IVF specialists.

Monash IVF has delivered a 15 per cent drop in half-year net profit to $9.1m, marginally above guidance, as it stabilises its business in the wake of a doctor exodus.

Five fertility specialists left Monash IVF in the half, wiping up to $2.5m off net profit in the six months to December 31.

Collectively, the group of doctors directly referred about 400 stimulated cycles for the year ended 30 June 2019 generating revenues of approximately $5.9m. It comes after Melbourne’s dubbed “fertility queen” Lynn Burmeister left the group in early 2017.

But the chief executive Michael Knaap said on Friday that it had stabilised the business and its “foundation was set for future”.

He said fundamentals remained strong as the company attracted new specialists and investment for future growth.

“All 24 Victorian fertility specialists are now contracted with more than 96 per cent of specialists contracted across the group,” Mr Knapp said.

“Foundations are strong with 13 specialists currently in our fertility specialist traineeship program providing a strong pipeline for growth and succession planning.”

Revenue was flat at $77.05m, meeting consensus estimates.

Monash IVF performed 3872 stimulated cycles in the half, down 1.5 per cent on the same time the previous year. Frozen embryos were flat at 2836.

The company will pay an interim dividend of 2.1c a share on April 3, versus 3c on the prior corresponding period.

It comes as competitor Virtus Health reported flat revenue and a slight increase in profit amid increased competition in the low-cost IVF market.

Virtus revenue firmed 1 per cent to $142.1m, while net profit rose 3.7 per cent to $15.5m for the six months to December 31.

Chief executive Sue Channon - who will step down at the end of the month after 16 years with Virtus - said the company had shown resilience in a tough market, particularly in the low cost segment, which accounts for 30.2 per cent of Virtus’ business.

“We outperformed the market growth in Australia at 2.7 per cent as opposed to 1.2 per cent,” she said.

“It’s been a challenging market, with the impact of the low cost competitors coming into the market - although in saying that we were the first to bring low cost services into Australia.”

Virtus will pay an interim dividend of 12c a share on April 16.

As a result, the company’s net profit after tax before non-regular items for the six month period ending December 31, 2019 is now expected to be in the range of $8.5m to $9.0m.

The company now estimates FY20 NPAT before non-regular items for the year ended June 30, 2020 will be in the range of $18.0m to $19.0m.