Australian fertility giant enters UK market

Australia’s largest assisted reproductive services business, Virtus Health, is entering the UK market with the acquisition of Complete Fertility Limited (CFL) from University Hospital Southampton NHS Foundation Trust and its joint venture partners for c.£5m.

Under the deal, the Australian-listed company will acquire 90% of CFL’s ordinary share capital for a ‘cash free debt free’ consideration representing around seven times normalised EBITDA for the full year 2017. The final sum will be dependent on the on the value of certain assets and liabilities at completion.

Based at the Princess Anne Hospital Southampton, CFL was established in 2011 as a joint venture between the trust, two fertility specialists and an embryologist working in the fertility centre. It provides a comprehensive range of fertility treatments, including time lapse imaging of embryos and innovative procedures including ovarian tissue cryopreservation and in-vivo embryo culture.

Virtus Health, which expects the deal to be earnings accretive in 2019, said ‘a significant proportion’ of the acquisition price would go to acquiring the business and assets from the trust, with the balance payable to three vendors; two of which will remain with the business and hold a combined shareholding of 10%.

Virtus Health CEO Sue Channon said: ‘The UK is a target market for Virtus and this acquisition adds to Virtus’ international growth strategy, reaffirming our vision for diversification and expansion of the Virtus model in carefully selected international markets. The UK market meets the Virtus expansion criteria for being well regulated with excellent scientific capability.’

CFL will continue to operate from its premises at Princess Anne Hospital with its existing managing team led by founding directors Professor Ying Cheong and Julia Paget. It is expected to maintain close links with UHS and will work with Virtus Health’s European management team to grow the business.

Virtus is one of the largest assisted reproduction providers in its home market with facilities in New South Wales, Queensland, Victoria and Tasmania. In addition, it operates a clinic in Singapore and three purpose-built clinics in Ireland.

‘We are excited to welcome the dedicated team at Complete Fertility to the Virtus family and we look forward to supporting their ongoing research and development aspirations. Virtus will continue to seek value accretive opportunities to expand our network with leading IVF businesses in our target regions of Europe and Asia,’ added Channon.

Virtus Health recently announced revenues of $133.8m for the first half ended 31 December 2017. Despite ‘weaker’ results from its Irish business, it reported a 9.7% increase in EBITDA to $34.8m and said international activity remained key to its growth and diversification strategy.

Like other segments of UK healthcare, there is growing interest in the fertility market from overseas providers. Last year, one of the Gulf’s leading hospital providers, London-listed NMC Health indicated it has plans to expand its fertility business in the UK.