Tale of 2 IVF Stocks - Monash IVF Group, Virtus Health

  • Nov 20, 2019 AEDT
  • Team Kalkine
Tale of 2 IVF Stocks - Monash IVF Group, Virtus Health

In vitro fertilization (IVF) is the process to treat infertility and other genetic issues with artificial fertilization. Now a days the process of artificial fertilization has become a preferred and most efficient assisted reproductive technology (ART), which offers solutions to the couples and single parents. In recent years investor are looking for new ways to make good money in the health care industry and have hit upon an age-old problem- that of infertility.

In Australia, commonwealth government support the access to ART or IVF for families who cannot otherwise have children and since 1990, the government also has publicly funded assisted reproductive technology services under the Medicare Benefits Scheme. The current government removed the restrictions on the access to Medicare-funded IVF in 2000, which was affected by the previous government. The government is more concerned about providing quality health services to Australians at an affordable price.

Lets’ zoom the lens on ASX listed health care stocks (MVF and VRT), which are engaged in providing these services.

Monash IVF Group Limited (ASX: MVF)

ASX listed health care company, Monash IVF Group Limited (ASX: MVF) is engaged in the development of assisted reproductive technologies (ART) and tertiary level prenatal diagnostics. The company also provides a complete range of specialist diagnostic obstetric and gynaecological ultrasound and fertility treatments to its patient.

According to one announcement on 18 November 2019 the company unveiled about anticipated financial year net profit after tax before non-regular items for the year (ending 30 June 2020) and for the six-months period (ending 31 December 2019)

  • The company’s NPAT before non-regular items is now expected to be in the range of $8.5 million to $9.0 million for the six-months period ending 31 December 2019.
  • MVF now estimates the fiscal year 2020 NPAT before non-regular items would be in the range of $18.0 million to $19.0 million (for the year ended 30 June 2020)

Key initiatives continuing include-

  • Monash IVF domestic footprint expansion demonstrated through the recent Fertility Solutions acquisition in Queensland; this acquisition was made on 16 September 2019.
  • MVF is focusing on the recruitment of new fertility specialists and would also confirm a new established Fertility Specialist recruited in Sydney.
  • The company is committed to building a new CBD fertility clinic in Sydney as a flagship offering in NSW, which would start in Q4FY20.
  • Monash IVF Group will enhance its best in class patient experience, and scientific leadership and hence, the company will be focused towards growing the full-service business.
  • The company will progress in its Asia Pacific expansion strategy by partnerships and acquisitions.

Key highlights FY2019- (Year Ended 30 June 2019)

  • The company generated group revenue of $152.0 million for the fiscal year 2019.
  • The EBITDA for FY2019 was $37.2 million.
  • For the financial year 2019, the company has cash and cash equivalents of $4.3 million, up by 11.1%.
  • Net operating cash flows (post-tax) for FY2019 were $33.1 million, increased by 27.7%.
  • The free cash flow of the company increased by $7.3 million (37.2%) to $26.6 million, which is due to higher operating cash generation.
  • The Pre-tax conversion of EBITDA to operating cash flows improved to 107.1% as compared to 93.3% in the previous corresponding period (pcp).
  • The company’s financing activities include $13.1 million dividends (fully franked) and $9.0 net debt repayments during the year.

Source: Company’s Report

Annual General Meeting (AGM)-

According to another ASX announcement MVF would conduct its annual general meeting on Thursday 28 November 2019 at Melbourne Australia. The key agenda items for this AGM are-

  • Consideration of Monash IVF Group Financial Reports
  • Consideration of Remuneration Report
  • Re-election of Directors
  • Approval of long-term incentive grant of performance rights to the CEO under the FY2020 executive long-term incentive plan

Stock Performance-

The company’s stock was trading at $1.055 on 20 November 2019 (AEST 12:47 PM), up by 0.476 per cent, with a market capitalisation of $247.58 million. The stock has delivered a return of 6.60 per cent on a year to date basis. The annual dividend yield of the MVF stock stands at 5.71%.

Virtus Health Ltd (ASX: VRT)

An ASX listed health care company Virtus Health Ltd (ASX: VRT) is headquartered in Sydney, Australia and engaged in providing various fertility care, specialist pathology and day hospital services. In Australia, Virtus Health Ltd is currently the largest in-vitro fertilization provider and operates in operates around 125 of the world’s leading fertility specialists. The company provides its day hospital services in Queensland, Tasmania, New South Wales, Denmark, Ireland, the United Kingdom and Singapore.

According to one recent ASX announcement on 6 November 2019 the company mentioned about the withdrawal of Item 4 from its annual general meeting (AGM), item 4 relates to the grant of performance rights to Sue Channon under VRT’s Executive Option Plan and Specialist Option Plan. Sue Channon will step down as CEO in February 2020.

Virtus Health Limited also mentioned that withdrawal of this item would not affect the validity of the proxy form attached to the 2019 Notice of AGM or any proxy votes already submitted.

Annual General Meeting (AGM)

According to another ASX announcement the company would conduct its annual general meeting on Wednesday 20 November 2019 at Hilton Sydney. The business agenda items for this meeting are-

  • Consideration of Financial Statements and Reports
  • Adoption of Remuneration Report
  • Re-election and Election of Directors
  • Grant of Performance Rights to Sue Channon, Chief Executive Officer
  • Approval to issue securities under the Virtus Health Limited Executive Option Plan and Specialist Option Plan

Key highlights for FY2019 (year ended 30 June 2019)

  • The company generated a group revenue of $280.1 million for FY2019, which is an increase of 6.1%.
  • The Group EBITDA of Virtus for FY2019 was $63.5 million, down by 2.3%.
  • The segment EBITDA was $71.1 million, a decrease by 6.57%.
  • EBITDA for the Australian segment decreased by 8.6% to $61.1 million.
  • EBITDA for the International segment increased by 9.3% to $10.1 million.
  • The company’s Net profit after tax (NPAT) attributable to equity holders was $28.4 million, a decline of 7.6%.

Stock Performance-

The company’s stock was trading at $4.210 on 20 November 2019 (AEST 12:49 PM), up by 1.691 per cent, with a market capitalisation of $332.81 million. The stock has delivered a negative return of 6.33 per cent on a year to date basis.


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