Virtus share price holds steady despite 30% earnings fall

Shareholders are staying loyal with a looming acquisition.

A doctor in a white coat sits at her computer with finger on mouth thinking about something in her office with medical equipment in the background.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Virtus share price is trading flat at $8.15 on Friday 
  • EBITDA for the first 10 months of its financial year is down 30% amid disruptions to the business 
  • Management highlighted the ongoing acquisition process as a distraction 

The Virtus Health Ltd (ASX: VRT) share price is firmly nested at its previous closing price today. Typically, that would be a non-event not worth reporting on. However, today it is striking considering what the fertility treatment company reported.

Today, shareholders are scanning through Virtus' FY22 April year-to-date trading update. Interestingly, the market is barely batting an eye at the company's performance despite posting some weaker numbers.

As we head into the afternoon, Virtus shares are staying flat at $8.15 apiece. Meanwhile, the broader S&P/ASX 200 Index (ASX: XJO) is strutting through Friday's session in style, sporting a 1.6% rise.

Acquisition process creates distraction

Virtus shareholders are holding the line on Friday after the company released its latest trading update. The announcement concerns the business performance for the first 10 months through to 30 April 2022.

Firstly, the good news — Virtus highlighted its belief that the underlying demand for assisted reproductive services continues.

Furthermore, the company's IVF market share in Australia avoided erosion. Virtus pointed towards data available from Medicare that illustrates that the reproductive specialist performed slightly more IVF fresh cycles in relative terms compared to the rest of the market.

However, there was some disappointing news for shareholders contained in today's update. For instance, a few key metrics for the business all showed a decline for the 10-month period compared to the prior corresponding period. These included:

Surprisingly, the Virtus share price is largely unaffected by these numbers today. Though, the company provided a caveat, stating:

As seasonality typically sees May and June contribute more strongly to profitability, the 10 months to 30 April does not necessarily represent the profile for the full year earnings.

In addition, Virtus CEO Kate Munnings said:

The team at Virtus, including fertility specialists, scientists, clinical and administration staff, have worked incredibly hard over the past 10 months to help people become parents during challenging market conditions. Despite the additional pressure of the Acquisition Process, our strategic initiatives, including our Precision Fertility™ Digital Platform have progressed well during FY22 and they will lay the foundation for scalable growth of Virtus Health.

What's the outlook?

The outlook supplied for the fourth quarter, and for FY22, was relatively vague. According to Virtus, the risk of more COVID-19-related disruptions are still a concern. The byproduct of this is larger month-to-month variances than historically seen.

In turn, the company is taking steps to manage these outsized variances moving forward.

Virtus Health share price snapshot

The Virtus share price has been grinding higher in 2022 as BGH Capital and CapVest duke it out to acquire the company. Pleasingly, shareholders have watched on as shares have ascended nearly 21% year-to-date.

Despite the contest, Virtus is still trading on a price-to-earnings (P/E) ratio of ~24 times. This is compared to the healthcare industry average valuation of 25 times.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Healthcare Shares

Cropped shot of an attractive young female scientist working on her computer in the laboratory.
Healthcare Shares

CSL share price leaping higher amid $1.9 billion funding news

ASX 200 investors are bidding up the CSL share price on Wednesday.

Read more »

Two happy scientists analysing test results.
Healthcare Shares

Mesoblast share price rockets 36% on breaking FDA news

ASX investors are sending the Mesoblast share price soaring following promising FDA news.

Read more »

a doctor in white coat and stethoscope stands in front of a building holding an electronic device in his hands.
Healthcare Shares

Guess which ASX 200 healthcare share is jumping 7% on a guidance update

This healthcare share is performing better than expected in FY 2024.

Read more »

a biomedical researcher sits at his desk with his hand on his chin, thinking and giving a small smile with a microscope next to him and an array of test tubes and beackers behind him on shelves in a well-lit bright office.
Earnings Results

Chemist Warehouse merger target Sigma reports 149% FY24 profit jump

This could be the last set of results from Sigma as we know it if its merger is approved.

Read more »

Cropped shot of an attractive young female scientist working on her computer in the laboratory.
Healthcare Shares

1 ASX healthcare stock that looks severely undervalued

I think this stock looks too cheap to miss.

Read more »

Stethoscope with a piggy bank and hundred dollar notes.
Healthcare Shares

Own Medibank shares? Here's why it's a rewarding day for you

Shareholders are getting a healthy boost today.

Read more »

Health professional looking at a laptop.
Healthcare Shares

Are CSL shares a must-buy in March?

Let's see what analysts are saying about this high-quality company.

Read more »

A woman jumps for joy with a rocket drawn on the wall behind her.
Healthcare Shares

This ASX healthcare stock is up 72% on FDA news and 'historic moment'

Huge gains are been recorded by this stock on Tuesday. But why?

Read more »