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NSW, Vic drive profit growth for Virtus

Trevor Chappell  |  20 Feb 2018Text size  Decrease  Increase  |  
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MELBOURNE - [AAP] Fertility clinic owner Virtus Health (ASX: VRT) expects its volumes in Australia to pick up as the impact of a rival's entrance into the Queensland market subsides.

Strength in the NSW and Victoria fertility markets, growth in its diagnostics and international activities and cost reductions contributed to the company's net profit growth of 13 per cent in the six months to December, to $16.6 million.

Although overall cycle volumes in the Australian states in which Virtus operates rose 6.1 per cent in that period, Virtus's cycle activity fell 0.5 per cent.

The company said its volume growth in NSW and Victoria exceeded the overall state market growth, but that improvement was offset by a weaker performance in Queensland and Tasmania, which are more price-sensitive markets.

"In the Queensland market, we did have the entry of a bulk-bill provider (Primary Health Care) which has just changed the whole dynamics of the market," Virtus chief executive Sue Channon said on Tuesday.

"We did see that in NSW and Victoria when the bulk-bill provider came into those markets, and what we've seen in NSW and Victoria is that they are equalising now and are performing very well.

"Our expectation is that we will see something similar in the Queensland market as the market settles as we go forward."

Virtus chief financial officer Glenn Powers said it would probably take another year to see how the Queensland market settles down.

Ms Channon said Virtus had been able to beat market growth in NSW and Victoria partly because the company's investment in genetic diagnostics enables the treatment of a broader range of patients.

Volumes at Virtus's business in Singapore improved in the first half, and the business generated earnings after a loss a year earlier.

Ms Channon said Singapore was a market very much driven by word-of-mouth from doctors and patients, and Virtus was starting to benefit from its reputation and high success rate.

Ms Channon said cycle volumes were 6.1 per cent lower in Ireland, partly because referrals in the first quarter were weaker than expected.

In Denmark, Virtus's fertility clinic was almost fully integrated into the Virtus model and had performed positively.

"It (Denmark) is an attractive market for us, and we will look at other opportunities in the Danish market," Ms Channon said.

Shares in Virtus were up 22 cents, or 4.2 per cent, at $5.49 at 1335 AEDT.

VIRTUS HEALTH LIFTS HALF YEAR PROFIT

* Net profit up 12.6pc to $16.6m

* Revenue up 1.8pc to $133.8m

* Interim dividend up one cent to 14 cents, fully franked 

 

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© 2020 Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

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