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Here’s a conundrum. More people are accessing fertility treatments, as the trend towards starting a family later gathers pace. Yet listed companies in the sector have tended to perform poorly.
Shares in Australia’s Monash IVF, for instance, are down more than 60 per cent since its listing a decade ago. Shares in Sweden’s Vitrolife have shed a fifth of their value in the past year; Hong Kong-listed Jinxin Fertility shares are worth a third of the initial public offering price six years ago.
Three problems beset the industry. First up, for some, is the risk of making blunders, especially concerning in the medical sphere. Monash IVF lost a third of its market value in a day earlier this month, after apologising for its second recent debacle.
Second up, demographic trends don’t always translate neatly into growth for companies chasing them. One in six people are affected by infertility at some point, according to the World Health Organization’s latest numbers, but only a fraction have the financial wherewithal to seek treatment. It costs up to $25,000 per cycle in the US, of which several may be needed. Only a quarter of employers report covering the cost of employees’ IVF treatments.
Lastly, the high cost of clinics and staff eat up a large portion of revenue. Higher costs at Monash IVF last year, for example, included average wage rises of between 4 and 6 per cent and elevated ramp-up costs at new clinic infrastructure. This should change as clinics and other IVF providers harness artificial intelligence and other technologies to reduce the labour load. Vitrolife’s AI software, for example, can assess embryos 10 times faster than is the case with standard manual evaluation. Tech would also help reduce human error.
All of this makes life difficult for fertility companies — and for private equity, which has been buying up clinics much as it did with veterinary practices. The poor performance of listed groups makes exiting via initial public offerings difficult, and trade buyers are thin on the ground. Instead, private equity firms are increasingly flipping fertility care assets to each other. These include PAI Partners and Carlyle’s acquisition of women’s healthcare group Theramex from CVC Capital Partners.
Insurance coverage providers, meanwhile, suffer the curse of concentrated client lists, best illustrated by US-listed Progyny, which this year lost a “significant client” accounting for 13 per cent of revenue in 2023. Until the challenges besetting the sector are overcome, expect the share prices of the listed companies — just like the birth rate in many countries — to keep shrinking.
