Competition from cheaper IVF services in Queensland and Tasmania bit into Virtus Health’s market share as the total number of women starting new cycles in the first-half of 2018 dipped by 0.5 per cent.

Falling demand is an issue Virtus (ASX:VRT) has been facing for the past 18 months. It reported a 3.7 per cent drop in the number of women starting new cycles for the 2016 fiscal year as well.

But chief Sue Channon says business in Victoria and NSW recovered after a similar dip due to low-cost competitors entering the market.

Cycles rose 8 per cent in NSW and 1.2 per cent Victoria. Overall market growth in the half-year was 0.3 per cent.

The company expects growth in demand for IVF to continue at a rate of 2-3 per cent, as it has for the last five years.

Virtus shares have not performed following a rapid decline that began in August 2016.

Overall, Virtus’s market share dipped slightly from 40.9 per cent to 40 percent compared to the prior corresponding period in 2016, due to competition from bulk-billers in Queensland and Tasmania.

Primary Health (ASX:PRY) is one of the biggest bulk-billing competitors. In that company’s half year results it said IVF was one of the growth areas that offset declines elsewhere in the business.

“The IVF business model is already disrupting its sector. IVF will be opening its fourth clinic in Perth this year. Primary has appointed a new Head of IVF and sees opportunities for future growth including larger laboratories, more clinics and more targeted marketing,” Primary Health said in its results last week.

Ms Channon says consistent assisted reproductive services in Australia combined with a rise in diagnostics and the markets in Singapore and Denmark were behind the uptick in revenue, EBITDA and profit.

Revenue rose 1.8 per cent, earnings before interest, tax depreciation and amortisation (EBITDA) rose 9.7 per cent, and profit was up 10.9 per cent from $15.6 million to $17.3 million.

Specialist diagnostic revenue rose by 5.8 per cent.

Although in Ireland cycle volumes dropped by 6.1 per cent, Virtus said volumes for Singapore and Denmark rose, but not by how much.

Australian EBITDA increased by 6.3 per cent to $36 million, while that from international sites collectively rose 74.4 per cent to $4.6 million.

Virtus shares were 1.99 per cent higher by midday to $5.38.

Featured Companies

You might be interested in