Monash IVF (MVF) says the IVF market is recovering

Companies and indices mentioned:

Monash IVF (ASX: MVF) shares are down 1% despite announcing that it is seeing a recovery in the IVF market.

What is 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.

What did the company announce?

Monash IVF said that there has been pent up patient demand after IVF treatments restarted on 27 April 2020. Compared to the prior corresponding period and pre-COVID-19 levels, the company has seen strong growth.

From 18 May 2020 to 30 June 2020 the company has seen stimulated cycle growth of 25%. There has been growth across all key markets in Australia. The company is also pleased by positive early signs from the new patient pipeline returning to normal levels.

The company’s women’s ultrasound business remained open during April, May and June. Ultrasound can volumes were down around 5% compared to a year ago. However, strict infection control and hygiene measures has increased costs.

Internationally, the Malaysian IVF business is still being impacted by restrictions, though these were eased on 9 June 2020. Trading conditions are improving, but still yet to return to pre COVID-19 levels.

At 30 June 2020 the company is expecting net debt to be less than $10 million after its recent $80 million capital raising. The company will pay its deferred HY20 dividend on 2 October 2020.

The company expects the second half of FY20 to show adjusted profit of $4.6 million, down 55% because of COVID-19. Therefore, the company is expecting adjusted FY20 net profit to be $14 million.

I’m glad to see that the company is recovering, but I’m not sure if I’d invest in it. Cheap IVF competition is rising and an Australian recession could dent medium term IVF demand.

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Disclosure: At the time of writing, Jaz doesn’t own shares in any of the businesses mentioned. 

Jaz Harrison

Jaz Harrison

Jaz is a keen investor who loves to thoroughly poke holes in an investment idea before it has a chance of making it into her portfolio. Jaz invests for the long-term and doesn't sweat the small stuff. She strongly believes that empowering people with knowledge is the best way for them to take charge of their finances, which is exactly the approach she takes with her own money and investments.