MENU

Why the Monash IVF Group Ltd share price fell 7% on today’s results

The Monash IVF Group Ltd (ASX: MVF) share price fell 7% to $1.55 after the company released its full year annual report this morning. Here’s what you need to know:

  • Revenues fell 1% to $155.2 million
  • Net profit after tax (NPAT) rose 3% to $29.6 million
  • Earnings per share grew 3% to 12.6 cents
  • Dividends up 3% to 8.8 cents per share
  • Net debt grew to $92.5 million (gearing of 56%)
  • Monash cycles fell 3.1% while total market cycles fell 0.8%
  • Outlook for broadly flat NPAT in 2018 but potential future growth by acquisition

So what?

It was an average result for Monash, with the number of patient treatments declining after four years of consistent growth. Net profit rose primarily due to lower finance expenses this year, although the company also achieved meaningful cost savings in consumables and clinician fees this year. Underlying market share loss may be better than it appears, with Monash stating their belief that most of the market growth in IVF was in the low-cost market, a market that Monash does not participate in.

Weak growth in total market cycles this year is also thought to be a hangover from strong growth of 6.8% last year.  In the future, Monash expects stimulated cycles to grow at around 3% per annum over the long term, albeit with fluctuations in any given period.

source: Company presentation

On the plus side, Monash continues to expand with new facilities both in Australia and Malaysia, and may become a larger player in these markets over time. Competitor Virtus Health Ltd (ASX: VRT) also saw its shares fall 1.5% this morning as the market digests Monash’s update.

Now what?

Monash carries a fair bit of debt, and its growth outlook is modest. However, the company also has a very modest price tag of ~12x earnings, well below the average for Australian healthcare companies. If demand for IVF proves to be defensive, as looks to be the case, Monash could be a nice performer over the long term.

Here are the best ASX dividend stocks to buy now

If you're looking for solid income from dividend stocks, look no further. The Motley Fool's top dividend analyst, who leads our dividend stock newsletter, Dividend Investor, recently picked what he believes are the best dividend stocks in the market right now.

These dividend cash cows -- paying franked and fully franked dividends -- could be the latest in a list of top stocks Dividend Investor has picked over the years.

Click here to learn how you can get access!

Motley Fool contributor Sean O'Neill has no position in any stocks mentioned. 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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.