Virtus Health (ASX:VRT) share price remains halted after profit boost and acquisition

The ASX-healthcare share delivered its full-year results and announced a major acquisition this morning.

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The Virtus Health Ltd (ASX: VRT) share price remains frozen at the time of writing at the company’s request. Shares will resume trading tomorrow.

The ASX healthcare share’s offerings include fertility, medical day procedure, and medical diagnostic services.

Virtus Health’s share price was put into a trading halt pending the company’s acquisition announcement, which it released today. It also released its full-year results for the 2021 financial year.

First, a look at the acquisition.

The Virtus Health share price frozen on acquisition announcement

Virtus reported that it has entered into a share sale agreement to acquire Adora Fertility and 3 Day Hospitals from Healius Ltd (ASX: HLS) for $45 million.

The company will fund the acquisition with an underwritten $35 million institutional placement along with existing cash reserves. It will issue new shares at a fixed price of $6.80 per share. The Virtus share price closed at $7.19 on Friday.

Management expects the acquisition to be completed in the second quarter of the 2022 financial year. That is, subject to the customary conditions.

Commenting on the deal, Virtus CEO Kate Munnings said:

This acquisition supports our ambition to increase consumer choice by offering diverse models of care across new locations. It also takes our day hospital network to ten facilities and represents our entry into WA.

What did Virtus report for FY21?

What happened during the reporting period for Virtus?

The company’s Australian segment saw revenue increase 24.4% compared to the prior corresponding period (pcp), while EBITDA increased by 30.1%.

Virtus said it was able to make the most of the “buoyancy in market activity” during the financial year. It did this via detailed planning for the restart of elective surgery, with doctors and staff available for the reopening.

The company said a greater focus on home and family during the COVID-19 pandemic saw more new patients commencing with its assisted reproductive services (ARS).

Revenue in the company’s day hospitals increased by 41.4%. That was partly driven by the increase in demand for IVF procedures. However, demand for non-IVF procedures grew to account for 45% of total day hospital revenue.

What did management say?

Commenting on the results, Munnings said:

It was a very strong performance across all our services globally, in the face of the ongoing COVID-19 impacts of border closures, lockdowns and heightened infection control requirements.

The challenges of providing essential services in the current conditions should not be underestimated and the strong results are a testament to all Virtus Health staff and specialists who have worked extremely hard throughout the year.

She added, “What was also pleasing was the growth in revenue across our day hospitals which was driven by improved utilisation, including an increase in non-IVF revenue.”

What’s next for Virtus shares?

Looking ahead, Munnings said:

Our FY21 results have positioned Virtus to invest in future growth including by developing new clinics in Nepean, Copenhagen & Brisbane; enhancing our capability in Fertility Diagnostics & Reproductive Genetics and by developing the Precision Fertility Digital Platform to enable innovation and efficiency.

While its ARS services are currently continuing to operate across all states, the company cautioned that the Delta variant poses a risk that some treatments may need to be deferred.

The Virtus Health share price is up 111% over the past 12 months.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Virtus Health Limited. 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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