Health care provider Virtus Health (ASX:VRT) has revised its earnings guidance on Tuesday. The report released to the ASX said the earnings forecast was changed due to current trading activity and lower than forecasted cycles. In February, the company said its guidance would meet net profit after tax (NPAT) growth in the low to mid-teens before non-recurring items. The company’s profit guidance has been revised down to low to mid-single digit percentage growth in NPAT before non-recurring items.
Virtus listed 4 key factors for the lowered earnings forecast. NSW cycle growth was cited as being insufficient to reach previous growth levels. Although the company has experienced 6 per cent growth in the NSW market in the three months to April, the growth is attributable to bulk bill providers rather than true growth. The Maroubra Clinic suffered storm damage, which also resulted in lower earnings. The storm caused cycle volumes to decrease and it is not expected to return to previous levels until August 2015. Cycle volumes in Singapore Clinics have also been lower than anticipated. In Victoria and Queensland, Virtus has lost a small percentage of market share.
Australia’s largest IVF provider changed its non-recurring items from $2.1m to $2.3m in the report on Tuesday. Analysts have noted that the lowered growth may be due to market cycles. Morgan Stanley economists believe the IVF growth cycle is returning to previous levels. However, Virtus has also lost market share in addition to suffering from slower growth cycles. Shares of Virtus are down $1.29, or 16.91 per cent, at $6.34 per cent around 1:29pm on Tuesday. VRT has fallen 25.82 per cent in the last 12 months and 19.11 per cent so far this year.
Author: Simon Herrmann
Jun 02, 2015
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.