One of Australia’s largest IVF providers has suffered an almost 18 per cent fall in first-half profit as demand for IVF treatments in Australia sinks.
Virtus Health reported a 17.6 per cent fall in first-half profit to $14.7 million, citing lower market activity and weakness in Victoria, with revenue for the six months to December 31 down 0.7 per cent to $131.4 million.
While the assisted reproductive services (ARS) market contracted six per cent in the half-year, Virtus’ fresh cycle activity in Australia dropped by 7.2 per cent on a like-for-like basis
However Virtus chief executive Sue Channon said revenue had improved in its diagnostics business, where revenue for pre-genetic screening services (PGS) rose 37.9 per cent.
“Those services have become a lot cheaper to patients as the technology improves so we are seeing more and more patients accessing those services,” Ms Channon said.
PGS identifies abnormalities and helps isolate the best embryo to improve success rates for patients, Ms Channon said, which in turn helps push demand for IVF services.
“If they (patients) know there is an opportunity to improve their outcomes, they will ask the doctor for those services,” she said.
Sydney-based Virtus owns fertility clinics across Queensland, Victoria, NSW and Tasmania, as well as a clinic in Singapore, a number of centres in Ireland and a recently acquired clinic in Denmark.
The company’s overseas operations reported continued growth with segment EBITDA increasing 11.7 per cent, or $2.6 million overall, helped by earnings growth in Ireland, Singapore’s improved performance and the acquisition of Denmark’s Aagaard Fertility Clinic in November last year.
Ms Channon said the company is pursuing further opportunities in Scandinavia, which will help alleviate pressure in domestic markets.
“The strategy was to diversify the business so that if we do have these periods which we have seen in the past of variability, we have another market in which we are operating to mitigate the downturn,” Ms Channon said.
Virtus shares fell 1.9 per cent on Tuesday as the company warned continued weak cycle volumes could have a material impact on its full year financial results.
The company said it was anticipating pressure in Queensland as a result of increased low-cost competition.
Despite the fall in profit, Ms Channon said demographic drivers, such as older first time mums, remain strong.
While she could not anticipate future growth, she said Virtus would be well-placed to treat patients when demand does return.
Virtus shares were down 10 cents, or 1.9 per cent, to $5.20 at 1527 AEDT.
VIRTUS HALF-YEAR RESULTS:
* Net profit down 17.6 per cent to $14.7 million
* Revenue down 0.7 per cent to $131.4 million
* Fully franked interim dividend of 13 cents, down from 14 cents