Unfortunately for its shareholders, the Monash IVF Group Ltd (ASX: MVF) share price is having a terrible end to the week.
In afternoon trade the fertility treatment company's shares are down almost 17.5% to $1.28.
What happened?
This afternoon Monash IVF released its annual general meeting presentation containing an update on its performance year-to-date and its expectations for the first-half.
According to the release, the Australian stimulated cycles market increased by 4.3% in the first quarter, predominately in the low-cost IVF sector.
Unfortunately, as the company has chosen not to participate in this market for strategic reasons it means that the company has seen its market share decline by 2.5% in the first-quarter. This represents a 6.6% decline in its Australian stimulated cycles.
It is largely because of this that Monash IVF expects to report a 20% decline in first-half net profit after tax. The company has decided against providing any full-year guidance at this stage, but expects to provide it when it announces its half-year results.
Should you buy the dip?
I would stay clear of Monash IVF despite how cheap it looks today.
As I mentioned at the start of last month, it isn't just this year when earnings are expected to decline. The company has previously warned that the exit of one of its key doctors could impact its FY 2019 results significantly.
Dr Lynn Burmeister's exit has the potential to cause a high single-digit percentage decline in net profit after tax in FY 2019 when her non-compete period expires according to management.
This really is the last thing the company needs when its stimulated cycles are on the decline.
While Virtus Health Ltd (ASX: VRT) could prove to be a better option, I would suggest that investors focus on other healthcare industries due to the impact that Primary Health Care Limited (ASX: PRY) has had since offering low-cost bulk billed treatments.
