Virtus Health Ltd (ASX: VRT) is Australia's largest assisted reproductive provider.
Earlier today, Virtus announced that it will be expanding into the UK.
The IVF company has exchanged contracts for the acquisition of 90% of the ordinary share capital of Complete Fertility Limited based at the Princess Anne Hospital in Southampton for a 'cash free debt free' consideration of approximately £5 million ($8.8 million) at a multiple of approximately seven times normalised FY17 earnings before interest, tax, depreciation and amortisation (EBITDA).
The 'cash free debt free' consideration is funded from existing cash and debt resources.
The transaction also includes an agreement for Complete Fertility to acquire the business and assets relating to fertility services by the University Hospital Southampton NHS Foundation Trust.
Virtus Health CEO, Sue Channon, said "The UK is a target market for Virtus and this acquisition adds to Virtus' international growth strategy reaffirming our vision for diversification and expansion of the Virtus model in carefully selected international markets."
"CFL is highly regarded in the UK providing fertility treatments to NHS and private patients and its clinicians are at the forefront of research and development in the area of assisted reproductive services".
Virtus said that CFL performed 420 fresh IVF cycles in the year ended 31 March 2017 and has achieved further growth during the nine months to December 2017.
The centre is located on the south coast of the Britain and has around 50% of the regional market share. Virtus believes it offers significant opportunity for future growth.
Foolish takeaway
Virtus expect that this acquisition will be earnings per share (EPS) accretive in FY19. This seems like a clever acquisition and will give Virtus a foothold into the large UK market. It's currently trading at 14x FY18's estimated earnings with a grossed-up dividend yield of 6.77%.
I think Virtus offers investors an attractive long-term growth opportunity at the current price and is worth further research.
