Fertility specialists Monash IVF (ASX: MVF) appears to have found fertile ground for growth, as it locks in the acquisition of Perth-based IVF and fertility clinic Fertility North. Fertility North services Perth’s northern suburbs, helping MVF attract new clientele.
Monash IVF will acquire 80% of Fertility North through an initial upfront cash payment estimated at $12 million. Fertility North currently generates around $9 million in annual revenue, and it is expected to contribute to an approximately 4% increase in Monash IVF’s Net Profit After Tax (NPAT) based on Monash IVF’s FY23 Adjusted NPAT, with its reported FY23 NPAT being $22 million.
Additional payments, contingent on meeting specific financial goals, may be made over one to three years. Monash IVF retains the option to acquire the remaining 20% of Fertility North, but this can occur no sooner than three years from the completion of the acquisition.
Monash IVF CEO and Managing Director Michael Knaap said, “We are very excited to be expanding our presence in the fast-growing Perth market through the acquisition of Fertility North. We believe the businesses of Fertility North and our existing Monash IVF business in Perth are complementary to each other, servicing different catchment areas, with Fertility North servicing Perth’s northern suburbs and Monash IVF West Leederville (formerly PIVET Medical Centre) servicing central and southern Perth.”
He added, “The transaction structure mutually aligns Monash IVF and Fertility North to grow the Fertility North business and rewards Fertility North’s shareholders for delivering on its growth targets.”
Founded in 2002 by fertility specialists Dr Vince Chapple (Medical Director) and Dr Jay Natalwala (Clinical Director) in Perth, Fertility North operates from an advanced clinic at Joondalup Health Campus. The clinic encompasses consultation, laboratory facilities, and access to a co-located day surgery. The acquisition of Fertility North will bring eight additional fertility specialists to the Monash IVF Group.
Plus, acquiring Fertility North allows Monash IVF to tap into Perth’s rapidly expanding northern growth corridor, which boasts a growing market. Fertility North’s clinicians and staff focus aligns with the overarching goal of offering patients the best chances for a healthy pregnancy, a commitment reflected in Fertility North’s success rates.
Fertility North co-founder Dr Jay Natalwala commented, “Joining forces with Monash IVF represents the culmination of over 20 years of dedication to building one of Perth’s leading IVF clinics. We could not have achieved this milestone without the amazing team we have built, and we look forward to continuing to support our patients and community as part of the larger Monash IVF Group”.
In FY23, Monash IVF saw its success rates rise by 6.1% compared to 2019. It recorded a revenue of $213.6 million and saw new patient registrations increase by 12% on FY22. The Company made two domestic acquisitions in the period, a nod towards its expansion strategy.
The Fertility North acquisition is contingent upon meeting specific conditions, notably approval from the Australian Competition and Consumer Commission (ACCC). The acquisition is set to be completed in the third quarter of FY24.
Funding for the acquisition, covering the initial purchase price and potential subsequent earn-out payments, is anticipated to come from Monash IVF’s operational cash flows and/or accessible debt facilities.
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