The shares of Virtus Health (ASX:VRT), one of Australia’s IVF providers, fell as much as 13 per cent on Tuesday, after the release of the company’s 2019 financial figures revealed a shrinking profit.

Profit after tax was $29m, a 9 per cent slide on the prior year, but it wasn’t due to a drop in sales: revenue for the year rose 6 per cent to $280m.

Sue Channon, CEO of Virtus, said the company was in “good health” despite the hit to the bottom line.

However, analysts said the result “disappointed the market”.

“The underlying result was well below our forecasts and consensus,” the Morgans healthcare analyst team said.  “We have made a number of significant downward revisions to our forecasts resulting in a lower valuation and reduced our target to $4.67.”

“The business is in a good place and a strong position, we remain the market leader in Australia and Ireland,” Channon told Stockhead.

“However, additional costs relating to technology and infrastructure investment, targeted expansion in the Australian lower margin segments, and a slower than expected performance in international operations impacted the full-year result.

“But we will get those things right, and the revenue demonstrates our confidence, and the sector has seen a lot of growth.”

The results were similar to the company’s half-year figures, where revenue rose slightly and profit fell.

Channon said at the time that it was due to the “short term” cost impacts of infrastructure developments and growth initiatives, while Virtus’ bottom line had been affected by low-cost providers in the past.

“FY19 set the foundation for improving productivity and, ultimately, advancing market share,” Channon told investors.

“We are confident the investments made will facilitate business development opportunities and growth through our competitive service offerings in FY20.”

The company’s focus for the coming financial year is “delivering earnings growth in the face of a changing market”.

“We will defend and build services in our premium business, grow our low price volume services in Australia, grow diagnostic revenue in Australia, grow non-IVF day hospital revenue in Australia and expand our international revenue, initially through organic activities and acquisitions in targeted international markets.”

VRT shares closed at $4.60 on Tuesday.

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