I agree to a point that it was a cracking result. The COVID impact on the calendar year of 2020 could have done massive damage to the IVF industry but didn't due, I'm sure, to the solid work performed by management. In these peculiar times I found it pertinent to review the performance across the 2020 calendar year and compare those outcomes to our last normal financial year of 2019. The revenue for the second half of the 2020 financial year (so Jan to June 2020) provided revenue of $117m. The revenue for the first half of the 2021 year (so July to December of 2020 just reported) provided revenue of $169m. Thus the calendar year 2020 delivered revenue of $286m. The financial year ended 30th June, 2019 (my last normal 12 months) delivered $274m. So I look at the calendar year just finished as providing a revenue increase of $12m or 4%. As best I can work it out, and after adjusting the profit for the Government support of $8m, the EPS across the 2020 calendar year would be about $0.35 or about the same as the 2019 financial year. I can't be sure whether the great six months just reported represents a structural change in the business going forward or whether this six months simply picked up the slack from the first six months and lockdown. I suspect it's more of the latter. The average revenue per cycle for the 2018 financial year was about $14,167. With the pressure from Primary Health Care, the average revenue per cycle for the 2019 financial year was reduced to $13,503 and then down to $13,106 for the 2020 financial year. The average revenue per cycle for the six months just reported lifted to $13,492. I can't tell if this represents a correction to the downward trend or a result of the peculiar circumstances brought on by the business opening after the lockdown. I think it was wise to hold the dividend to normal levels as this business is the canary in the locking down coal mine and caution is a wise move here. The overseas businesses couldn't have become part of the scene if loans hadn't been secured to obtain them but the loan number is marginally higher than I think is wise and a reduction in the debt of $10m was a smart thing to do as was the dividend being held at the normalized rate. If the EPS is running at the rate of around $0.35 (my estimate mentioned earlier), then the P/E ratio is running at about 18 times. IVF cycles in Australia over recent years seems to be increasing by no more than 2%-3% per year which makes a P/E of 18 hard to justify a little but add in the improvement from overseas and I'm pretty comfortable with the current SP. I'm hopeful of slow but steady growth from here but I suspect IVF is a tough gig. Just my thoughts on a pretty solid company producing a pretty solid result.
VRT Price at posting:
$6.32 Sentiment: Hold Disclosure: Held
