Results: Virtus Health share price plummets on profit fall

The Virtus Health Ltd (ASX: VRT) share price has fallen more than 5% this morning after the company reported a 7.6% decline in net profit after tax (NPAT).

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The Virtus Health Ltd (ASX: VRT) share price has fallen more than 6% in morning trade after the company reported a 7.6% decline in net profit after tax (NPAT).

What did Virtus announce this morning?

The Virtus share price was hammered lower in early trade as profitability fell, despite the Aussie healthcare group reporting a 6.1% revenue increase to $280.1 million.

Virtus’ earnings before interest, tax, depreciation and amortisation (EBITDA) fell 2.3% on the prior corresponding period (pcp) to $63.5 million as net profit attributable to shareholders fell 7.6% to $28.4 million.

In line with the company’s profits, basic and diluted earnings per share (EPS) fell 7.6% and 7.9% throughout the year, coming in at 35.37 cps and 34.97 cps, respectively.

In a positive for the Aussie reproductive services provider, international operations grew to 21% of group revenue during the year and management reported a 12 cps fully-franked dividend for FY19.

Virtus reported a 9.3% increase in International segment EBITDA, with its Ireland clinics seeing revenue climb by $1.4 million and Singapore increasing EBITDA by $0.2 million over the pcp.

Some of the biggest drags cited by the group were technology and infrastructure investment, targeted expansion in the Australian lower margin segments, and a slower than expected performance in its international operations.

The company’s Day Hospitals segment result was also softer for the year, with EBITDA falling by $1.5 million in FY19 due to relocation costs and disruption to non-IVF activities.

How has the Virtus share price performed in 2019?

Including this morning’s early move, the Virtus share price has climbed 3% higher following a weaker start to the year. However, since the start of June the Virtus share price has surged 17% higher and is currently trading at 12x earnings.

While this morning’s result showed challenges for Virtus’ profitability, the strong international expansion and solid revenue growth have provided signs that further upside isn’t out of the question in the short to medium-term.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Virtus Health Limited. 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 Scott Phillips.

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