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Virtus hit by a fall in demand for IVF

Melissa Jenkins  |  22 Aug 2017Text size  Decrease  Increase  |  

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MELBOURNE - [AAP] Fertility services provider Virtus Health's (ASX: VRT) annual profit has fallen 15 per cent as less women undergo treatment in the eastern states.

The company said volume in the overall assisted reproductive services (ARS) market dropped 0.4 per cent in the year to June 30, even though new, low-cost providers in Queensland drove strong volume growth in that state.

Virtus was also impacted by the performance of its Victorian premium service, which had been losing market share before a restructure of its operations and improvement of its regional clinics.

Net profit in the 2016/17 financial year of $28.1 million was down from $32.9 million in the previous year.

Virtus shares were down 40 cents, or 7.1 per cent, at $5.26 at 1125 AEST.

Chief executive Sue Channon said Virtus has the flexibility to respond to market conditions, has invested in diagnostics and technology and maintains a clear strategy to drive international expansion.

"While the service changes in the domestic market might look challenging, the reality for us is that this is playing right into our strategy and strong competitive position," she said.

"We are the only ARS provider that can participate across premium and low cost and we have leveraged the fertility, genetics and general pathology testing to support further growth in this portfolio."

Earnings in the company's diagnostic services operations rose by more than one third from the prior year due to new applications of genetic testing and screening in reproductive medicine.

The company's operations in Ireland, Singapore and Denmark also achieved earnings growth.

Chief financial officer Glenn Powers said he expected the company's low-cost services to drive an improvement in performance.

"The market is fundamentally still growing," he said.

"Although the nature of the market has changed there are more patients in our market; there may be more lower-cost patients but that's the sort of thing that we feel at Virtus that we can address."

FALL IN IVF VOLUMES HITS VIRTUS HEALTH:

* Full year net profit down 14.6pct to $28.1m

* Revenue down 1.8 pct to $256.5m

* Final dividend down 3 cents to 12 cents, fully franked

 

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