17 June 2013
ByAppeared in BioNews 709
The first IVF business to be listed on the stock market enjoyed a buoyant first day of trading on the Australian exchange. Shares in Virtus Health closed 8.5 percent above their starting price, which was already set at the top end of an indicative range.
Virtus is a major player in Australia's £300 million reproductive health industry with around 35 percent of all IVF cycles in the country being performed in its 33 clinics. Accordingly, the company's Initial Public Offering (IPO) was one of the largest on the Australian market in recent years.
Shares started trading at A$6.01 (£3.68) on 11 June, above the set price of A$5.68 (£3.48) given by Sydney-based Quadrant Private Equity, a principal investor in the company. The stock closed at A$6.21 (£3.80) meaning the company was now worth A$485 million (£297 million). The high demand led Quadrant to let go of its own shares in the company.
Last year, Virtus listed net profits of A$24.7 million (£15.1 million) and is expecting to slightly improve on that this year. Its forecasts predict further growth in profits to A$31.4 million (£19.2 million) next year.
Virtus' chairman, Peter Macourt, discussed the company's predicted growth in a statement prior to the float. He said that Virtus 'operates in a growing market where demand for assisted reproductive services is underpinned by long-term demographic and social trends'.
'These trends include a growing female population, increasing maternal age of first pregnancy and increasing use of assisted reproductive services as social acceptance, awareness and accessibility of these services have increased'.
Currently, Australian women can claim a certain amount for IVF cycles back from their Medicare health insurance system and between 42 and 59 percent of costs are funded by the state. Virtus has acknowledged that a change in this arrangement might affect the company's growth.
For some commentators the arrival of Virtus has been a breath of fresh air to a sluggish Australian market. 'It's a very good start and the volume's there', Melbourne-based IG Markets strategist Evan Lucas told Reuters. 'It's certainly going to make the IPO market quite a happy little place to be'.