Virtus Health shares tumble following coronavirus business update

The Virtus Health Ltd (ASX: VRT) share price has fallen lower today, following a business update that was given in light of the escalating coronavirus crisis in Australia and internationally.

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The Virtus Health Ltd (ASX: VRT) share price is falling lower today, following a business update that was given in light of the escalating coronavirus crisis in Australia and internationally.

At the time of writing, Virtus Health shares are down 5%, fairly much in line with the S&P/ASX 200 Index (ASX: XJO) which has fallen 5.7%.

Virtus Health is Australia and Ireland’s largest Assisted Reproductive Services (ARS) provider, with a presence in the UK, Denmark and Singapore.

Virtus’ international business currently represents around 21% of the company’s overall revenues.

What did Virtus Health announce?

Virtus Health announced today that the extent of the impact that the coronavirus outbreak will have on its business during the final quarter of FY 2020 is unknown at this stage. However, the healthcare provider did note that its earnings up to February this year have been in line with its previous earnings expectations.

In Australia, Virtus Health’s IVF operations are continuing as normal, as they currently still fall within the guidelines provided by the Fertility Society of Australia. The company did note, however, that for the two weeks ending March 18, there has been a reduction in the number of one day IVF appointments by patients.

With regards to Diagnostics and Day Hospital activity in Australia, Virtus Health commented that current demand remains in line with prior expectations. However, it is preparing for a decline in demand in IVF activity here locally from April onwards.

In Singapore, IVF operations continue within local government guidelines, although an overall reduction in the number of recent IVF patient appointments has been evident.

While Virtus Health’s clinics remain open in Europe for existing IVF patients, the company did note that its clinics are no longer treating new patients and there will be clinic closures in the first half of April.

How Virtus Health is mitigating the risk to its business

Virtus Health is actively pursuing strategies to minimise the risk to its future revenues and cash flows, including the secondment of its European staff to public health services. The company also hopes to benefit from some European government support initiatives.

Virtus Health commented that it continues to review the situation on a daily basis and is taking advice from government authorities.

Group CEO Kate Munnings said: “The COVID-19 pandemic and its impact on our community and our business is evolving rapidly. Short-term forecasting for the business units is challenging given the material uncertainties in predicting the duration of the impact and the timing of the expected recovery from COVID-19.”

Due to the rapidly changing circumstances, Kate Munnings commenced as Group CEO on March 23, earlier than previously indicated.

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Motley Fool contributor Phil Harpur 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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