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Reproductive care specialist Monash IVF Group (ASX: MVF) has entered into a binding sale agreement to acquire Perth-headquartered PIVET Medical Centre (PIVET) for an initial upfront cost of $9.4 million.
Founded in 1981 by in vitro fertilisation (IVF) pioneer Professor John Yovich, PIVET’s IVF program was instrumental in Western Australia’s first IVF baby being born in 1982. The fertility provider, which expanded into Cairns in 2009, has provided treatments that have helped lead to the birth of more than 8,000 babies to date.
The proposed acquisition follows in the wake of the ongoing protracted sale of fertility health business Virtus Health (ASX: VRT), which has been subject to rival bids from UK private equity firm CapVest and Melbourne-based private equity firm BGH Capital since last December.
With one in six Australian couples experiencing infertility struggles, the Aussie fertility market is estimated to be worth $630 million in 2022, according to research initiated by the Victorian Government in 2018, leading to some of the larger fertility clinics opting for a public listing.
“We continue to see strong interest from couples and individuals wanting to start or build on their family. Across the whole industry, we see strong growth characteristics throughout Australia through expansion in donor services, social egg freezing, and the growth in genetics services for which there has been increased Medicare support,” Monash IVF CEO and managing director Michael Knaap told Business News Australia.
“We are excited by the size of the IVF market in Perth and, in particular, the strength of the PIVET business and the highly capable team of doctors, scientists, administrators and management,” he added.
“We believe that together we will continue to build on the IVF pioneering work that the founder, Professor John Yovich, created and continue to ensure that PIVET is a preferred choice for patients, doctors and highly talented people.”
The acquisition, which is due to be completed during the first quarter of FY23, is expected to be funded through Monash IVF's operating cash flows and/or available debt facilities of $105 million.
Currently generating annual revenues of approximately $8 million, PIVET may be entitled to additional earnouts depending on its performance over a one-to-two-year period following the deal's completion.
It is anticipated that PIVET will increase its NPAT by roughly 4 per cent per annum through investment in technology and infrastructure and by adding to its nine current fertility specialists.
“PIVET is pleased to be joining Monash IVF Group, a pioneering fertility provider with 50 years of experience. Monash IVF Group’s founders laid the groundwork with many world-firsts and unique methodologies that were then applied by PIVET,” a spokesperson from PIVET confirmed .
“We are excited to become part of Monash IVF Group and to enhance our service delivery to Western Australia and Queensland patients.”
Knaap says PIVET’s strong local management team provides a compatible culture with Monash IVF, an important consideration for the acquisition.
“The PIVET team will continue to create an excellent patient experience and bring the latest research and technology to enable families to have the best possible chance to have a healthy baby in WA,” he said.
Richmond-based Monash IVF is a leading fertility service and one of the largest providers of assisted reproductive services in Australia and Malaysia. The planned acquisition would allow it to enter a new domestic market in Perth and complement its existing IVF clinics in Northern Queensland.
The Australian division operates from 12 permanent fertility clinics, six satellite clinics, six ultrasound clinics, two specialised diagnostics laboratories and a one-day hospital.
Monash IVF released a trading update in May confirming its January to April sales have been negatively impacted as patients defer treatment due to COVID-19. All patients with COVID can delay treatment for eight weeks post-recovery, creating a pent-up demand for its services.
“The current environment is a little unpredictable in the short term given the prevalence of COVID infections; however, the industry fundamentals and inbound patient interest are extremely strong looking into the future,” Knaap said.
The business reported overall revenue of $101 million, with an NPAT of $13.4 million during 1H22, up 11.7 per cent from 1H21, following an increasing demand for its services compared to the previous year.
Shares in Monash IVF (ASX: MVF) have increased by 5.69 per cent to $1.11 as of 3.13 pm AEST on the back of the announcement.
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