Monash IVF fertile ground for potential suitors

A microscope view of an egg being fertilised through IVF.

The Australian IVF industry appears to be once again in the spotlight for suitors with an offshore buyer understood to be circling Monash IVF.

It’s been a busy year for parties interested in getting into the Australian IVF scene.

Liverpool Partners purchased Genea in June only as CapVest waved the white flag in the battle to buy the listed IVF provider Virtus, clearing the way for Australian private equity firm BGH Capital to take control for $8.15 per share, or close to $700m.

Most expect it an offshore private equity firm would be looking at Monash with groups such as EQT, Kohlberg Kravis Roberts and TPG Capital all showing interest in healthcare at various stages.

Private equity firms are attracted to the earnings growth profile of IVF providers as more women delay motherhood.

The median age of women having children has increased by about two years since 2000, while 25 per cent of births are to women over 35 years.

According to the Australia and New Zealand Assisted Reproduction Database, more than 27 per cent of IVF services in 2019 were undertaken by women over the age of 40, and 37 per cent in women aged 35-39.

Monash has been in the crosshairs of suitors before. It listed in 2014 with a $427.5m market value after a $315.9m raising as part of a move by private equity firm Ironbridge to sell out of the operation.

Its equity value was close to $600m in 2016 but the company is now worth $374m, with shares closing on Wednesday at 94c.

In research released this week, analysts from Macquarie said that Monash had been making market share gains for the first quarter of the 2023 financial year despite domestic IVF cycle growth tracking below expectations for the six months to December.

But this was partly offset by higher revenue growth per cycle.

Yet international cycles rebounded, with growth well ahead of forecasts.

The analysts said they believed Monash was well placed to keep growing market share.

Its acquisition of Perth IVF business PIVET is expected to be completed in the third quarter of this financial year.

In an update to the market, Monash said it expected net profit to be more greatly weighted towards the second half of the financial year due to contribution from acquisitions, with guidance largely in line with forecasts.

The management highlighted a strong rebound at its Kuala Lumpur IVF clinic, with July to October up 31.2 per cent compared with the previous corresponding period.

Morgans analysts described the half-year guidance of $12.5m net profit and the reaffirmation of full year guidance as solid.

They said Australian cycle volumes were tracking above industry levels, and the company continued to gain a share in key markets, driven by organic growth and the attraction of new fertility specialists.