One of Australia's biggest IVF providers, Virtus Health, says a slowdown in the mining sector in Queensland has resulted in weaker-than-expected growth in demand for its fertility services.
Virtus says that growth in the number of IVF treatment cycles it provided for Australian women in fiscal 2014 was below what it forecast when the company listed on the Australian Securities Exchange in June 2013.
Cycle growth was weaker due to a softer-than-expected demand for IVF services in the second half of the financial year.
NSW generated annual growth in IVF cycles of five per cent, Victoria was up 2.5 per cent, but Queensland fell 0.5 per cent.
Virtus chief executive Sue Channon said Queensland was particularly sluggish.
"We believe it was the economic factors affecting growth in Queensland - certainly, the mining downturn generally," she said.
Growth in IVF services at regional clinics was slow.
April and May were weak due to public holidays and school holidays, and the bounceback that usually follows in June was weaker than expected.
But growth in IVF cycles had picked up in July.
Virtus conducted 14,896 IVF cycles in the 2013/14 financial year, which was slightly below the 15,409 it forecast in its prospectus.
Nonetheless, Virtus' generated growth of 3.9 per cent compared to market growth of 2.9 per cent.
Virtus's market share also rose to 45.5 per cent, from 45 per cent in the prior year.
Virtus said its low-cost IVF service, The Fertility Clinch, was a key driver in the growth of the IVF market because it enabled Virtus to reach a wider range of people who otherwise would be unable to afford IVF.
Virtus was assessing opportunities to expand the number of TFC clinics.
The company is also exploring opportunities to make acquisitions in Australia and overseas.
Virtus has already acquired 70 per cent of Ireland's largest IVF provider, SIMS IVF, and is preparing to open a Virtus-branded clinic in Singapore in late 2014.
In 2013/14, Virtus received one month of revenue contribution from SIMS, at $1.5 million.
Ms Channon said the integration of SIMS was proceeding well and its performance was meeting expectations.
Virtus on Tuesday reported a net profit of $30.9 million for the year ended June 30, tripling its result from the previous year.
Revenue grew 7.9 per cent to $201.2 million, boosted by strong growth in specialised diagnostics and day hospital procedures.
Virtus expects demand for assisted reproductive services to increase as women wait longer to have children.
Ms Channon says the average age of women seeking in vitro fertilisation services at Virtus is 37 years.
The level of fertility falls significantly after women reach 30 years of age.
Shares in Virtus were 22.5 cents lower at $7.785 at 1458 AEST.
VIRTUS
* Net profit of $30.9m, up 205.7 pct from $10.1m in 2012/13
* Revenue of $201.2m, up 7.9 pct from $186.6m
* Fully franked final dividend of 14 cents per share. No final dividend in 2013.
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