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This is a difficult problem. More people are accessing fertile treatments as the tendency to start a family gathers a pace later on. However, listed companies in sector tend to suffer from poor performance.
For example, stocks in Australia’s Monash IVF have fallen by more than 60% since it was listed 10 years ago. Swedish Vitrolife stocks have reduced its value by a fifth over the past year. The fertile stock of zincine listed in Hong Kong is worth a third of its initial public offering price six years ago.
Three issues plague the industry. First, for some, there is a risk of exaggeration, especially in the medical field. Monash IVF lost a third of its market value in a day earlier this month after apologizing for its second most recent blunder.
Second, demographic trends do not always translate properly into the growth of companies that follow them. According to the latest World Health Organization figures, at a time, one in six people are affected by infertility, but only a few have financial support seeking treatment. In the US, it costs up to $25,000 per cycle, and some of them may be required. Only a quarter of employers covering the cost of IVF treatment for employees report.
Finally, high costs for clinics and staff eat up a large portion of the revenue. For example, the increase in costs at Monash IVF last year included an average wage increase of 4-6% and an increase in the rising costs of new clinic infrastructure. This should change as clinics and other IVF providers utilize artificial intelligence and other technologies to reduce their workload. For example, Vitrolife’s AI software can evaluate embryos 10 times faster than standard manual assessments. Technology also helps reduce human error.
All of this makes life difficult for fertile businesses and for private equities who are buying clinics just like veterinary practices. The low performance of the listed group makes it difficult to exit via initial public sales, and trade buyers become thinner on the ground. Instead, private equity companies are increasingly turning their fertility care assets over each other. These include the acquisition of the women’s healthcare group Theramex by Carlyle from CVC Capital Partners.
Meanwhile, insurance coverage providers suffer from the curse of the concentrated client list best shown by Progyny registered in the US. This year, we lost our “critical clients” in 2023, accounting for 13% of our revenue. We look forward to stock prices of listed companies until the challenges that plague the sector is overcome.
louise.lucas@ft.com
