Monash IVF Group Ltd (ASX: MVF) released its FY19 report this morning, and shareholders may be in for more pain after the announcement last week that sent the share price down 26%.
About Monash IVF
Monash IVF Group is a leading provider of assisted reproductive services. Basically, they assist couples who wish to have children but for one reason or another, have difficulty in conceiving a child naturally. Technology has come a long way since the first IVF pregnancy back in 1973 and Monash IVF is at the forefront of these developments.
Last Week’s News
Before getting into the FY19 results, it should be noted that Monash released an announcement on 22nd August 2019 that stated five fertility specialists would cease referring patients to Monash in order to establish their own independent clinic. These five doctors directly referred approximately 400 “Stimulated Cycles” in 2019, generating revenue of $5.9 million. This announcement sent the share price down 26.5% on the day.
FY19 Results
Monash reported revenue growth of 0.9% to $152 million in FY19, while underlying EBITDA declined by 0.8% to $37.8 million. Underlying NPAT was down 2.3% to $20.9 million while statutory NPAT was down 7% to $19.9 million.
Underlying earnings per share (EPS) was down 2.2% to 8.9 cents per share, while basic EPS was 8.4 cps, down 7.1%.
The number of stimulated cycles and frozen embryos both declined, down 3% and 5.6% respectively. Monash also lost market share in key markets for both segments, losing 1.7% and 2.4% respectively.
Dividends
Monash declared a fully-franked final dividend of 3 cps, bringing the full-year dividend to 6 cps, the same as in FY18. The dividend will be paid on 11th October 2019.
Analyst Estimates
Bloomberg analyst estimates were $20.9 million for NPAT and 3 cps for the dividend. Monash met both the dividend target and NPAT target when the underlying NPAT figure is used.
FY20 Outlook
The exit of the five doctors mentioned above is expected to have an impact of $1.5 million to $2.5 million on FY20 NPAT. Key initiatives for FY20 will be to recruit new fertility specialists, expand through new clinics and, in the Asia Pacific, through acquisitions and partnerships.
Is The Monash Share Price A Buy?
Most of the results in FY19 were either flat or negative, and with the exit of five doctors who plan to start their own clinic, I wouldn’t be surprised to see Monash continue to lose market share. The company met analyst targets but I’m not a buyer until it reports a return to growth. I’d rather invest in one of the companies mentioned in the free report below.
[ls_content_block id=”18457″ para=”paragraphs”]
Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.
