Monash IVF joins M&A arms race with entry into Perth IVF market via acquisition

IVF – they are the three hottest letters across corporate Australia at the moment with major interest from private equity firms around the world keen for a slice of the IVF market where many of the industry’s pioneers and leading scientists were born. 

Through a combination of wider acceptability and openness of IVF discussions amongst women, and the pandemic, IVF cycle numbers in Australia are thriving which has prompted the M&A spur, headlined by the bidding war for Virtus Health (ASX: VRT). 

But diligently cycling, extracting and fertilising their way through an overload in demand has been Monash IVF (ASX: MVF) which has just bolstered their resources and reach through the acquisition of PIVET Medical Centre, an IVF business with clinics in Western Australia and Queensland with 9 fertility experts between them. 

Founded by highly respected industry leader Professor John Yovich, PIVEO delivered the first IVF baby born in Western Australia, back in 1982. 

“PIVET is a quality organisation with a proud pioneering history, which provides an excellent geographic and cultural fit with Monash IVF,” said Monash IVF Managing Director Michael Knaap. 

“Monash IVF currently has no presence in the attractive Perth market and the acquisition provides further geographic diversification for Monash IVF as we continue to increase our clinical footprint across Australia and South East Asia.” 

Upfront consideration on a debt-free basis for PIVET will be $9.4 million with additional earn outs payable to the vendors should performance targets be met over the next 2 years. 

PIVET generates approximately $8m in annual revenue with their profits not disclosed. However, Monash IVF expectations are that PIVET’s net profit after tax will increase by 4% post-acquisition. 

While Monash IVF has a large footprint across Australia’s east coast and South East Asia, the acquisition represents their first entry into Western Australia where PIVET is a market leader. PIVET also owns Cairns Fertility Centre which will complement Monash IVF’s existing fertility services in the Sunshine State. 

The acquisition of PIVET comes at a busy time within Australia’s IVF industry where Virtus Health and Monash occupy the two leading positions in the fertility market. Sitting behind them is privately-held Genea which yesterday confirmed its Board had recommend a $202 million takeover from private equity firm Liverpool Partners. 

For the half year ended 31 December 2021, Monash IVF reported an 11.2% increase in revenue to $101m and 11.7% increase in adjusted NPAT to $13.4m with a fully-franked 2.2 cents per share interim dividend declared.

As a byproduct of the pandemic, greater portion of women in the workforce that opt to delay family planning, and Australia’s generous medicare rebates on fertility services, the Australian IVF market has become hugely attractive to global private equity firms as evidence by the current M&A activity being undertaken.