Virtus down again as IVF race to the bottom continues apace
Health & Biotech
Baby maker Virtus Health has admitted that low cost IVF providers are having an impact on its market share in Australia.
The company said Queensland and Tasmania, which provided all of the domestic growth in cycle volume last year, were responsible for an overall 3.4 per cent decline.
The company blamed low cost competition in Queensland and new competition in Tasmania amid a “declining market” that dipped by 0.7 per cent across the industry.
Last year, chief executive Sue Channon denied the low cost operators were a problem.
“Low-cost cycles at Virtus are about 15 per cent of our customers. But some people are just not suitable for low-cost,” Ms Channon told Stockhead after the 2017 results.
In fiscal 2018, Virtus’ (ASX:VRT) market share nationally and in the eastern states where it operates both fell.
But the Victorian and NSW arms recovered after a bad 2017, and the company clawed back some market share in Queensland after revising its pricing in the second half.
Bulk biller Primary Health Care (ASX:PRY) said cycle volumes and IVF revenue were both up 30 per cent in fiscal 2018, and it is planning further expansions in the coming 12 months.
Primary is using IVF and other specialist services to offset declines in other parts of its business, but they reported flat earnings in the competitive Sydney and Melbourne markets.
This year, Virtus reported a profit rise of 9.4 per cent to $30.8 million, and revenue rising 2.2 per cent to $262.1 million.
Both profit and revenue dipped last year.
The rise was due to two factors: the continued success of Virtus’ diagnostics arm which provides genetic testing and screening, and its push into Denmark, Singapore, the UK and Ireland.
Diagnostics revenue rose 3.6 per cent, compared to 9.1 per cent in 2017.
But international operations reported revenue growth of 17.6 per cent to $44 million.
Virtus has six international clinics.
“International revenue now sits at 17 per cent of Virtus’ total revenue, our ambition is for this to reach 30 per cent through organic growth in our international clinics and our continued targeted strategy of international acquisitions in the UK and Europe where they make sense to do so,” Ms Channon said.
Virtus says the underlying demographic drivers pushing people towards reproductive help remain the same: rising maternal age, the impact of underlying medical conditions on fertility, and increasing demand from same sex couples and single women accessing donor sperm.
Virtus shares ticked up 3 per cent on Tuesday morning to $5.59.