Monash IVF Group Ltd vs. Virtus Health Ltd: Which is the better buy?

Investors in the listed IVF sector now have the results of both major providers to analyse after Monash IVF Group Ltd (ASX: MVF) released its interim profit results this morning.

For the six months ending December 31 Monash has reported a 31.6% jump in revenue, a 26.8% gain in earnings before interest and tax (EBIT) and a 25.3% increase in earnings per share (EPS) to 5.95 cents. Monash’s board has also declared a 23.1% increase in the interim dividend to 4 cents per share (cps). Net debt stood at $93.2 million at balance date.

In contrast, peer Virtus Health Ltd (ASX: VRT) which reported earlier in the week saw a 15.4% rise in revenue to $132.2 million, an 8.1% rise in EBIT to $30.6 million and a 6.9% increase in EPS to 22.13 cents. Net debt was $133.2 million and a 7.7% increase in the interim dividend to 14 cps was declared.

When it comes to operations, the relatively mature state of the domestic market coupled with the entrance of new competition from Primary Health Care Limited (ASX: PRY) means that many investors are focussed on the overseas expansion opportunities of these two firms.

Virtus’ major overseas exposure is to Ireland where it has a significant market position already; it also has a small business in Singapore where it undertook 124 cycles during the half year.

Meanwhile, Monash has a business in Malaysia which undertook 567 patient treatments during the half.

Virtus is obviously more advanced in its international expansion plans which can arguably make the business more appealing and deserving of a higher valuation. However on the numbers, Monash remains relatively cheaper than Virtus and investors also have the added benefit of a definitive outlook statement by Monash that stated “we anticipate that the reported NPAT for FY16 will be in the range of 25% to 30% up on the previous corresponding period.”

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Motley Fool contributor Tim McArthur owns shares in Monash IVF Group Ltd and Virtus Health Ltd. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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