2 Healthcare Stocks With Recent Updates: MVF, MXC

  • Jul 11, 2019 AEST
  • Team Kalkine
2 Healthcare Stocks With Recent Updates: MVF, MXC

The below-mentioned healthcare stocks have announced significant updates today (i.e., 11th July 2019). Let’s take a look at these stocks and their updates.

Monash IVF Group (ASX: MVF)

A leading provider of assisted reproductive services and specialist in women’s imaging and diagnostic services in Australia and Malaysia, Monash IVF Group (ASX: MVF) has announced the acquisition of Fertility Solutions, a Queensland-based provider of fertility service, which has two clinics located in Buderim (on the Sunshine Coast) and Bundaberg. This acquisition is in line with the company’s strategic priority of establishing a more balanced business portfolio across Australia.

In an announcement made on 11th July 2019, the company confirmed that it is acquiring certain assets, liabilities and contracts of Fertility Solutions for a total value of $2.1 million on a debt free basis with the potential of additional earn out payments over a four-year period to 30th June 2023. The initial purchase price and subsequent earn out payments will be funded through the company’s cash flow.

With over 300 stimulated cycles per annum and revenues of circa $3 million, this acquisition is bringing in great value for the company. In parallel, the acquisition is expanding the company’s existing Queensland presence by adding two additional clinics in the Sunshine Coast and Bundaberg, the regions which are not currently served by the Monash.

It is expected that this acquisition will be earnings accretive in FY2020. The acquisition is expected to be completed in Q1 FY2020, subject to certain conditions precedent.

With regards to the company’s long-term performance, it can also be said that Monash IVF Group has a track record of a solid performance against the five year Stimulated Cycle industry CAGR of 1.7%, however, FY18 and 1H19 have been impacted by the departure of a Specialist.

Stimulated Cycles and Revenues Summary (Source: Company Reports)

In the first half of FY19, the company reported a decline of 19.8% in statutory net profit after tax (NPAT) and before noncontrolling interests to $9.7 million whilst group revenues were in line with pcp at $77.2 million. In Australia, the company’s revenues declined by $1.4 million to $71.6 million compared to 1H18 due to a 3.6% decline in Stimulated Cycles as a result of strong growth in NSW, QLD and SA, which is offset by the volume decline from a Specialist departure in September 2017. In the international segment, the company reported strong growth from demand and its revenues increased by $1.6 million to $5.5 million as compared to pcp driven by Stimulated Cycle growth of 25.4% to 518 whilst Frozen Embryo Transfers increased by 43.7% to 480.

Overview of H1 FY19

  • NPAT exceeded guidance provided at the AGM, which is 11.3% below pcp before one-off non-recurring items.
  • Premium Service Business Stimulated Cycles increased by 7.0%, excluding the impact from departed Specialist (15.6% combined growth in NSW, QLD and SA).
  • Operating Priorities are ahead of plan and beginning to deliver sustainable growth in the future.
  • ARS International growth continues as Stimulated Cycles grew by 25.4% on pcp.
  • 1H19 Financial Result was impacted by Q1 volume decline compared to pcp due to the departure of a Fertility Specialist in September 2017.
  • Long-term funding secured as the Syndicated Debt Facility is extended to January 2022.
  • Strong pre-tax cash conversion of EBITDA to operating cash flows of 100.3% compared to 85.0% in pcp.
  • Continue to focus on the Premium Service strategic growth intent.
  • FY19 profit guidance re-confirmed to return to full year NPAT growth, excluding one-off nonrecurring items.
  • CEO recruitment process is well advanced with an appointment expected by the end of this Financial Year.

On the stock performance front, the company’s stock has provided a negative return of 44.56% for the six months as on 10th July 2019. At market close on 11th July 2019, the company’s stock was trading at a price of $1.390, with a market cap of circa $328.92 million.

MGC Pharmaceuticals Ltd (ASX: MXC)

An EU pharmaceutical licensed company, MGC Pharmaceuticals Ltd (ASX: MXC) reported a substantial increase in sales and revenues during 2019 June quarter. As per Co-founder and Managing Director of MGC Pharma, Roby Zomer, this was a fantastic quarter for the company as it was able to deliver material results from its core pharma business strategy. The company received $763k in additional revenues in June quarter.

During the quarter, the company delivered its Seed-to-Pharmacy business strategy, with operations now consisting of the Research and Development (R&D) and Manufacturing and Distribution divisions.

Following the release of the quarterly results, MGC Pharmaceuticals Ltd’s stock increased by 1.923% during the intraday trade.

As per the company’s report, the company’s R&D division is going to facilitate the production of cost-effective medicines in collaboration with leading international research institutions. Research and Development division is advancing programs in partnership with the renowned academic institutions internationally, including the Royal Melbourne Institute of Technology (RMIT) and the University of Notre Dame Australia (UNDA).

During the June quarter, the company has received the following licences:

  • United Kingdom Controlled Drug Import Licence received for the importation of CannEpil™ into the UK
  • Therapeutic Goods Administration (TGA) granted MGC Pharma permission to import additional products MXP100, MXC1:1 and MXC7:1 into Australia for supply either in a clinical trial, under the Special Access Scheme or by Authorised Prescribers
  • Cannabis Cultivation Research Licence granted to MGC Pharma from the Office of Drug Control (ODC) authorising the company and RMIT to cultivate cannabis for use in research at its state-of-the-art research facility in Melbourne, Australia.

During the quarter, the company signed an impressive five Pharma distribution agreements allowing patients to globally access MGC Pharma’s phytocannabinoid medicinal products.

Distribution agreements were signed with the following partners:

  • Health House International Pty Ltd and Cannvalate Pty Ltd - two leading Australian medicinal cannabis distribution and logistics specialists
  • Grow Biotech PLC and IPS Specials providing direct, official access into UK medical cannabis market with the first shipment having landed in the UK in May
  • ONIX Empreendimentos e Participações providing access to the Brazilian market utilising an innovative digital platform CANTERA that enables MGC Pharma to ship products direct to patients
  • Mexacare GmbH for the distribution of MGC Pharma’s phytocannabinoid based products in Germany, Austria and Switzerland
  • MGC Pharma also terminated its supply agreement with NUBU NZ during the quarter, due to NUBU NZ not meeting contractual terms of the agreement.

For three months ended 30th June quarter, the company reported net cash used in operating activities of $1,627k, taking the year-to-date total for 12 months to $6,675k. During the quarter, the company spent $536k on research and development activities and $504k on administration and corporate costs. The cash and cash equivalents at the end of June quarter were $2,355k. In the September quarter, the company is expecting to spend around $500k on research and development, $470k on administration and corporate costs and $500k on product manufacturing and operating costs. Overall, the company expects net cash outflows of $1,771k in the September quarter.

On the stock performance front, the company’s stock has provided a negative return of 18.18% for six months as on 10th July 2019. At market close on 11th July 2019, the company’s stock was trading at a price of $0.053, with a market capitalisation of circa $63.1 million.


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