Monash IVF Group Ltd (ASX: MVF) shares are trading slightly lower today after the fertility specialist released its 1H20 results. At the time of writing, Monash IVF shares are going for $0.995 which represents a drop of 1.48%.
How has Monash IVF performed in FY20?
This morning, Monash IVF reported revenue of $77 million and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of $16.8 million. These figures were down 0.2% and 13% respectively on its 1H19 results.
Adjusted earnings before interest and tax (EBIT) came in at $14.2 million, down 15.7%, while adjusted net profit after tax (NPAT) was $9.1 million. This represented a decline in NPAT of 15.3% on the prior corresponding period (pcp) of 1H19 which was marginally above company guidance.
A fully franked interim dividend of 2.1 cents per share was also announced and is to be paid to shareholders on Friday, 3 April.
Monash IVF noted a broadened footprint through its acquisition of Fertility Solutions, a new Penrith clinic and majority holding in Fertility Tasmania. This was noted to reduce the impact of a decline in Victorian volumes.
Stimulated cycles
Monash reported 3,872 stimulated cycles in the half, a decrease of 1.5% on 1H19. This, however, represented cycle growth of 0.5% when excluding specialist departures.
Monash IVF's South Australian segment saw 6.1% growth in its stimulated cycles while further growing its market share. This was on the back of 18.5% volume growth in FY19 and compared to a 4% market decline in cycles for the South Australian market. In Queensland, its full service stimulated cycles grew 3%, maintaining market share, while NSW and Victorian cycles were flat excluding specialist departures.
Putting this together, Monash's stimulated cycles market share dropped 0.5% to 19.6% during the period.
In the Asia Pacific region, the company reported a decline in Malaysian stimulated cycles of 3.1%. This was, however, offset by ancillary income which caused revenue to increase 3.6% from $5.5 million to $5.7 million. Monash IVF also noted that acquisition/partnership opportunities continue to evolve in the region.
Frozen embryos
Australian frozen embryo transfers were up 0.1% with growth achieved in all markets except for Victoria and the Northern Territory. However, despite this marginal growth, Monash IVF still saw its market share drop 1.9% to 20.2%.
Doctor partnerships
Monash reported that all 24 Victorian fertility specialists are now contracted with more than 96% of specialists contracted across the group. Additionally, 13 specialists are currently in its fertility specialist traineeship program. This provides a strong pipeline for growth and successive planning.
Outlook for 2020
Monash IVF re-confirmed profit guidance and anticipates FY20 NPAT before non-regular items for the year to be in the range of $18 million to $19 million.
It noted that the group remains well-positioned to optimise future earnings. This is to be done through strategic and operation momentum gained during 2019.
Initiatives include the expansion of its domestic footprint, recruitment of new fertility specialists, the opening of a new Sydney CBD fertility clinic, continued cost reduction program and its expansion strategy throughout the Asia Pacific region through acquisitions and partnerships.
Monash is also continuing its investment in scientific capability. With this, an alternative and less invasive method and technology for Intracytoplasmic Sperm Injection (ICSI) is being developed.
This technology is expected to be available across Monash clinics in early FY21. The group noted that testing is currently demonstrating a significant increase in egg fertilisation rates and embryos available per patient.
