I'll now hand the conference to Mr. Michael Knaap, CEO and Managing Director. Please go ahead.
Thank you, Cole, and good morning, everyone, and thank you for joining us today for our results presentation for FY 2024. As always, with me, I have Malik Jainudeen, our CFO, who will be taking us through some of the detail of the financials. By way of introduction, Monash IVF is a market leader in providing reproductive care in our core assisted reproductive services, diagnostics, genetics, and pathology services, with a large network of 50 IVF and women's ultrasound clinics and service centers across Australia and Southeast Asia. Our experienced and capable team now includes 167 doctors and in excess of 900 scientific nursing, counseling, and support staff, and I would like to take this opportunity to thank every one of our team for their unrelenting patient-first mindset. I'd now like to touch on the key financial highlights for the half on slide 3.
We reported a net loss after tax of AUD 5.9 million, following all parties agreeing to the settlement of an niPGT-A class action. That resulted in an estimated AUD 32.6 million loss after-tax impact. When considering non-recurring significant items, and the best representation of our financial result was the underlying performance, which confirms the positive momentum we continue to have in the business. Our underlying profits were in line with guidance provided in February, delivering an underlying NPAT of AUD 29.9 million, and a revenue increase of 19.4% versus the previous period. Our underlying EBITDA increased 17.5% to AUD 62.8 million, and our EBITDA margin was steady at 25%.
We had a strong operating cash flow conversion of 104%, and with an optimistic outlook, we were able to declare a fully franked final dividend of 10.5%. Sorry, that's AUD 0.025. To address the class action outcome on slide four, and following mediation has been taking place over the last couple of days, the parties have agreed to settle the class action subject to execution of a deed of settlement and court approval. The agreed settlement amount is AUD 56 million pre-tax, inclusive of interest, costs, and all plaintiff legal fees. Based on the settlement amount of AUD 56 million, approximately AUD 19.9 million is advised to be funded by our insurer, and the remaining sum of AUD 36.1 million will be paid from our cash reserves and current debt facilities.
The settlement was reached without any admission of liability from Monash IVF, and our financial exposure presented in our financial accounts is as outlined in the slide. The key point being that AUD 32.6 million post-tax loss reflects the outcome of the class action in our financials. We have commenced proceedings in the Federal Court of Australia against our insurer to seek a declaration on the construction of the terms of the policy to confirm that total insurance proceeds available under our insurance policy, over and above the advised cover. We and the insurer are currently under mediation to resolve the matter.
The final point I'd like to make is that this has been a very challenging and emotional period for all parties, with the mediation and resultant agreed settlement providing financial certainty and allowing all the parties to move towards closure. As we move towards slide 5, to touch on our key operational highlights. All our businesses, including Domestic ARS, Ultrasound, and International, delivered robust growth during the financial year 2024, with the second half 2024 rebound in International, providing a strong tailwind as we head into FY 2025. Of critical importance, we have continued to drive better outcomes for our patients, with clinical success rates improving another 1.5% over the last year.
In Australia, we had a further growth in our ARS market share of 1.5%, with an increase in stimulated cycles of 10%, well above the industry growth of 2.5%. Our Ultrasound business continued to gain momentum, delivering scan growth of 3.9% in the financial year 2024, which replicates the growth that we saw in the prior year. Our patient pipeline is steady, with new patient registrations up 6.1% on the PCP for the full financial year. We continue to see the benefits of the strength of our doctor partnerships and being a destination of choice for specialists, welcoming another 12 fertility specialists through organic recruitment and a further 8 upon the completion of the Fertility North acquisition.
Our WA expansion is progressing well, with PIVET Medical Centre acquisition completing its first full year and Fertility North all performing to expectations. Our clinical infrastructure and expansion projects have continued to progress well, planning strong presence in every mainland capital city, with day hospital expansion allowing greater diversity and strength of revenue. Internationally, and specifically in Southeast Asia, our stimulated cycles increased 19.9% versus the previous period, with the International segment underlying EBIT increasing by 62.1%. There was strong momentum coming through in the second half of FY 2024, and a continued strong patient pipeline indicating growth as we commence FY 2025. We have a current platform of five clinics in the region, and we continue to be focused on executing on the pipeline of opportunities in Southeast Asia, as we also expand in Singapore to accommodate future growth.
Moving on to slide six, I want to touch on the compelling underlying structural tailwinds in our industry to support volume growth into the future. The Australian IVF market grew in FY 2024 at 2.4% versus the PCP, and the five-year CAGR for industry growth is 4.4%, highlighting the strength and resilience of our industry throughout challenging economic times. Additional drivers of demand include advanced maternal age, improving pregnancy rates, favorable government funding remaining strong. However, prolonged cost of living pressures could slow demand for elective egg freezing only, which is more discretionary in nature. New demand drivers with new services, growing patient segments, and new channels indicate that over time, the industry growth trajectory could trend towards 3%-5%, with new demand drivers supplementing traditional drivers.
So in summary, while the attractive industry fundamentals continue to support growth, growing patient segments and new services are also expected to be key growth drivers into the future. If you take a look at slide 7 to focus on the broader ARS Australian market, where demand for services in Australia continues at historically high levels. The left-hand graph shows half-yearly growth in stimulated cycles. FY 2024 industry stimulated cycles achieved growth of 2.4%, following solid industry growth in stimulated cycles of 5.1% in the first half of FY 2024. The market declined largely in the second half, which was compared to a very strong PCP.
Although there can be some short-term volatility evident in industry volumes, the industry is sustainable, is sustainably well above pre-pandemic levels, and our diversification of revenue across Domestic ARS in all mainland capital cities, Ultrasound and Southeast Asia limits our impact from short-term volatility in particular markets. The right-hand graph is the number of Australian cycles per year, noting the step change in volume in FY 2021 and maintaining volumes in FY 2022 and 2023, with further growth in FY 2024. Looking at slide 7 on market shares. Our stimulated cycle activity performed better than industry as we continue to grow market share in FY 2024, which has now occurred over a sustained period of four years. Our market share in Australia grew by 1.5% to 21.7% during FY 2024, as we accelerated the momentum gained from the previous years.
We had market share gains in Victoria, Queensland, and New South Wales, and some slight decline in South Australia. However, pleasingly, the South Australian patient pipeline has improved, and we started to see market share gains in the second half of FY 2024, providing some good momentum into FY 2025. We're also happy with our introduction into WA through the PIVET and Fertility North acquisitions, which are tracking well and providing us with a meaningful market share in what is a new market for us. Contribution from new fertility specialists attracted in previous and current years, effective marketing campaigns, and the acquisition of Fertility North will all contribute to anticipated market share growth into FY 2025.
As you can see from the graph on the bottom right, we have sustainably built market share by 3.8% over the last four years, with further market share gains expected for the reasons previously outlined. I would now like to welcome our CFO, Malik Jainudeen, to take us through the financial results for the year.
Good morning, everyone, and thank you for listening again. So Michael's spoken about the past year in length, and I'm sure we can take questions later, but I'll just focus on the underlying NPAT results, and just want to note that it is the highest earnings Monash IVF has delivered since listing just over 10 years ago. If we're looking at slide ten, I'll take you through the buildup of our revenue for the year. Another great results in the context of our ability to build revenue year on year. If you dive into the detail, revenue grew by 20%, and 7% of it came from the domestic IVF business, excluding acquisitions, 5% price average increases, and 2% from market share and industry growth.
Acquisitions contributed a further 6%, which included a full year impact from PIVET, which we had for 12 months compared to one month last year, and Fertility North for 4 months compared to obviously not having Fertility North the year prior. International business had a great second half after a fairly weak first half. Again, looking in the detail, revenue in the second half was 24% higher than the first half on the back of improvements in both Singapore and KL. Noting Singapore increased cycles in the second half by 80% compared to the first half, and KL increased by 8% in the second half versus the first half. Ultrasound contributed around circa 1.5% of revenue growth, or AUD 3 million, as you know, again, we noted at the half year.
The Melbourne business fully recovered, the Sydney business is fully recovered, and we delivered really good outcomes in the Ultrasound business in FY 2024 compared to FY 2023. Further revenue growth of around AUD 9 million from our new day hospitals, genetics business, and some of the other revenue streams. Just noting that the Gold Coast Hospital recently opened, we had for about eight months during the year, and then another day hospital in Melbourne for five months as well. So in summary, you know, we generated 12% growth in the domestic businesses, being both IVF and Ultrasound, excluding acquisitions, 2% from Asia, and another 6% from acquisitions. Over to the next slide, which is just a quick EBITDA bridge. Again, pleasing outcomes.
We were able to grow underlying EBITDA by 18% to just under AUD 63 million. Domestic IVF business, including acquisitions, generated additional EBITDA of AUD 64 million or 13%. Just commenting on the cost base, it has stabilized during the year. Probably the first half still had circa CPI type increases of 7% or 8% across most lines, particularly property. Utilities were at much higher levels, but again, a small part of our cost base. Labor was around 4%-6% during the year, and most of the other lines have really stabilized in the second half. Then going into FY 2025, again, we've increased prices on the first of July across all markets, anywhere between 4%-6%, with an average of 5%.
That's, you know, the principle of that is very much to just cover the cost base. But I think we can see some stability coming through, which is really important. International business EBITDA increased by 0.8%, again, driven on the back of improvements in revenue in Singapore and KL. You know, KL had a fairly weak first half. I did call out that the pipeline was really strong going into the second half, and, you know, I think that's the performance in the second half is very much a result of that strong pipeline, and early indications that FY 2025 is positive. Ultrasound business, as I said, revenue was much improved, and on the back of that, EBITDA, the Ultrasound business grew by AUD 2 million.
Just over to the next slide, which is the profit and loss. It's regurgitation of the previous two slides with a bit more detail. Revenue up 20%. I'll just— sorry, underlying EBITDA up 18%, NPAT up by close to 18% as well. Margins maintained at 25% compared to last year, and there were a couple of drags in that. Again, just the commencement of the day hospitals, as we've noted previously, as it ramps up, is having a negative impact on EBITDA margins. I call out those elevated levels of marketing as we invest into the future, and we've been pretty prudent to build our cybersecurity measures, considering the current environment as well, which do come at a cost.
Ultimately, you look at the core business, and stripping out most of the things I said that were on the downside, really good results in the core business. Continuing to invest into the future. Our new revenue streams have grown, which I called out earlier, and we're continuing to build on the service delivery model that we have, particularly in our IVF business. Just calling out depreciation, amortization up by AUD 3 million. That's not, you know, a big chunk of it is on the back of the day hospitals in Melbourne and the Gold Coast, as well as the full year result, pre-tax at a reported level, at a AUD 1.6 million negative impact, non-cash from lease accounting.
If you have a look at the reconciliation on page 28, from statutory, sorry, from reported to underlying earnings, you'll see that in there. Interest expense up by AUD 1.4 million. Average debt is higher, and I'll touch on that in a sec, the BBSY was around 4% higher than it was last year. Over to the next slide, just on cash flow. Really pleased again to, you know, report that conversion of EBITDA to pre-tax cash flows was at 104%, compared to 100% on the prior year. So again, quality of earnings is solid. CapEx was AUD 22 million. Call out the completion of the day hospitals, which is the primary driver of those numbers.
Three new ultrasound clinics, which were replacement clinics with greater capacity and ongoing improvements, enhancements to our laboratories with equipment such as EmbryoScopes, which are largely rolled out to all our large sites, should drive efficiencies down the track. You know, the infrastructure program, you know, Michael's been talking about that for about three years. We're at the back end of it. We really just have Brisbane left to finish, which should be late FY 2025. So you should see CapEx toned down a little bit compared to what I've said earlier about FY 2024.
Also call out that we're looking to build a new patient management system that's really to drive efficiencies and improve patient experience over the coming years, and we'll talk about that a little bit more, maybe in six months' time, as we progress that project. Just over to the next page, just the balance sheet. Again, balance sheet remains strong. Net leverage ratio is at 0.9x . You know, on the back of the class action, and if you were to simulate how that would roll into forecast cash flows, the leverage ratio will still be sitting well under 1.5x from the end of June. But obviously, I'll comment on that a little bit more in six months' time as it plays out.
This facility was extended in February for a further three years to February 2027. The capacity went from 50 million to now 90 million. So it's again at reasonable levels. We've still got credibility to raise capital for more growth initiatives into the future. Just to note, Fertility North acquisition increased goodwill by AUD 18 million. It also has AUD 5.5 million of earn-out conditions attached to that transaction. Just to note that we bought 80% of that business. Both the vendors and the buyer, being us, have put and call options to purchase the remaining 20% of the business, which will be no earlier than March 2027. But you will see a liability for those put and call options sitting in our books. All right, back to Michael.
Thanks, Malik. We'll move to slide 16 and start to work through some of the Australian IVF operational performances, and I'll start with the essential pillar of our doctor partnerships. Our success in recruiting new doctors reflects the compelling doctor value proposition and the attraction of joining a group of highly engaged doctors across Fertility and Ultrasound. We continue to collaborate with existing and prospective clinicians to ensure the doctor value proposition is tailored to their individual needs and promotes long-term career progression. We continue to gather momentum in our doctor recruitment through acquisition and direct recruitment, having welcomed a total of 81 new clinicians over the last six years, with 45 being added in the most recent two years.
These results can only be achieved when you have a highly engaged doctor group being advocates for Monash IVF as a result of the experience and service quality that they and their patients are recipients of. Our focus remains on attracting and onboarding new and experienced fertility specialists in areas where we are underrepresented or where opportunities exist to complement our diverse geographical footprint. The specialist target must have a suitable cultural fit, outstanding clinical competencies, and a strong industry reputation. Moving to the next slide on scientific leadership, slide 17. We have a continued unrelenting focus on investing in building scientific capability to ensure we are giving our patients best possible outcomes and differentiating our value proposition to patients and to doctors.
The chart at the bottom left of this slide represents the continuous improvement in our clinical pregnancy rates across our group, with clinical pregnancy rates in 2024 to date increasing by a very significant 7.9% as compared to the calendar year 2018. There's strong incremental improvement in every single year. That's really powerful, as that is eight more babies per 100 treatments, and we're extremely proud of this progression. It is worthwhile calling out some of the initiatives that will drive further improvements to our success rates into the future. We will continue to partner innovative organizations to advance new technologies. A few examples of this are a wearable fertility tracker, a sperm selection device, and rolling out single-step embryo culture across our group.
Furthermore, our partnership with Monash University has resulted in the awarding of a AUD 15 million mitochondrial donation grant to launch this technology in Australia, with the cornerstone clinical trial being run through Monash IVF. Partnerships and technologies, backed up by ongoing research focus through our various research bodies, will ensure we continue to evolve and improve our success rates and the patient experience as our history demonstrates. Taking a look at slide 18, as we look at clinical infrastructure and our investment in various state-of-the-art facilities across fertility, day surgery, and ultrasound. The completion of the new Brisbane flagship site in FY 2025 will be the culmination of our major infrastructure transformation that has created 4 flagship sites, including day surgeries in major cities.
We've continued to invest in our long-term future through new and upgraded clinic infrastructure as a commitment to driving improvement to our patient and doctor experience, while also representing the confidence we have in the future growth. During FY 2024, we've completed new clinics in Cremorne, Victoria, Gold Coast, while expanding capacity in our Sydney CBD clinic and refreshing the PIVET site in Perth. So furthermore, we have completed two new women's ultrasound clinics in Sydney at St Leonards and Northern Beaches, and refurbished one in Kogarah, while adding additional capacity. As we enter the tail of our significant recent investment in infrastructure, we will drive market share gains and provide a premium best-in-class experience for our patients and clinicians. As we take a look at our genetics opportunity, which is on slide 19, we are absolutely well-positioned to capitalize on this growth opportunity.
In-industry growth in genetic carrier screening testing has been robust since the introduction of the Medicare rebate, which occurred in November 2023. It will certainly be a future and important driver of market growth for the IVF sector. We expect in our genetic offerings, we're partnering with a global leader in genetics. Through growth in our own internal carrier screen testing and the rapid uptake of the three gene carrier screen tests, witnessed through the Medicare data since introduction, the timing is perfect to capitalize on this dynamic. Our own monthly genetic carrier screening volumes have increased more than 200% since introduction of Medicare rebate in November. With uptake gaining momentum faster than expected, there is also a higher than expected portion of patients that are upgrading to expanded carrier screening.
With all these results sticking to expectation, we are extremely confident that the increased penetration of carrier screening will translate to incremental IVF growth, albeit there will be a time lag of approximately one to two years to convert to the actual IVF treatment. We continue to be uniquely placed to capitalize on this opportunity, and the Medicare data indicating patient and industry awareness and uptake has accelerated rapidly since Medicare funding, further confirming our strategic decision to invest in this service. Moving to slide 20, to update you on our day surgery strategy. We now have four day surgeries in Australia, in Melbourne, Sydney, Adelaide, and Gold Coast, with both Gold Coast and Melbourne being new additions in this financial year. A fifth day surgery in Brisbane will open by end of calendar year 2025. The objectives are clear.
Firstly, to provide a seamless, high-quality day surgery experience for patients and clinicians to support our premium IVF offering, and secondly, to attract new specialties to day surgeries in to increase theater utilization, with supported by baseline IVF treatments. We see this as a positive revenue and earnings driver into the future as we improve capacity utilization over time. As we take a look at slide 21, our substantial strategic marketing investment and campaigns are driving market share gains in both traditional and emerging patient segments, which continues to support significant market share growth. We have launched innovative specialized campaigns whilst also growing our community engagement through our Athletes Alliance partnership. We now have two sport ambassadors officially helping normalize the fertility conversation in sport. Moving on to our people.
Our organization and the leaders within have achieved an all-time high engagement level of 67%, and for the last four years we have been recognized with a culture of success, with consecutive year-on-year improvement. Our commitment to the diversity and development of our people through a long-term training strategy and many other people initiatives are reasons why we are considered an employer of choice in our industry. Taking a quick look at women's imaging on slide 22, which is continuing to trend on a positive trajectory into FY 2025. The Ultrasound business experienced scan growth of 3.9% in the financial year, which demonstrates sustainable growth in recent years across Sydney and Melbourne regions. With supply issues resolved through recruitment, a strong culture, and investment in capacity to support growing demands, we are looking forward to carrying that momentum into FY 2025.
Pleasingly, the commercial benefits have followed with EBITDA growth of AUD 2 million and an EBITDA margin improvement. Looking at our IVF business internationally, on slide 22. Look, the positive signs and momentum we were gaining that we sort of highlighted at the end of the first half 2024 have continued, therefore delivering an extremely strong result in FY 2024, particularly in the second half of 2024. Internationally and specifically in Southeast Asia, our stimulated cycles increased 19.9% versus the PCP, with 38.6% growth in the second half of FY 2024. The growth was led by all clinics, apart from the minority-owned Jakarta clinic. Furthermore, the International segment EBIT increased by 62.1%, with AUD 1.4 million of that growth coming in the second half.
Our established clinic platform with scientific, clinical, and nursing capabilities will enable us to leverage future growth in the region. In KL, our stimulated cycles grew by 3%, with 13.8% growth in the second half of FY 2024. They have the strongest patient pipeline that we have seen since pre-COVID, with our new patient consults grew 21% in the second half of FY 2024, on the back of 15% in the first half of FY 2024, indicating continuing growth momentum into FY 2025. Johor Bahru continues to perform strongly, and the strategic link to Singapore is anticipated to continue to build, as the ease of access and modes of transport between the cities are improving. In Singapore, our stimulated cycle volume improved by 100% in FY 2024, with doctor recruitment and commitment contributing to the growth.
The current monthly volume run rates are tracking above expectations, contributing to an expansion through a new clinic in Singapore to further build capacity and create a destination of choice for doctors and patients. The Bali clinic is earnings positive and is growing consistently on a low base. We are focused on driving volume and demand creation through business development and marketing, which is having a positive impact on the patient pipeline. We remain committed to the Southeast Asian region and to further build our clinic's footprint through a pipeline of partnership opportunities whilst optimizing our existing clinics. Looking at slide 25, our Vision 2026 strategic roadmap. Obviously, we'll be looking to extend that in the very near future, but many of you will be familiar with our Vision 2026 roadmap, as it continues to remain very consistent regarding our objectives and aspirations.
We have made significant progress on all strategic pillars, and all our outcome metrics continued to trend favorably throughout FY 2024, and this is off the back of compelling improvement in the previous four years. This is quite an achievement and demonstrates the significant progress and momentum we have to ensure we achieve our Vision 2026 objectives. However, there is still much more to achieve. Our Vision 2026 strategic roadmap will continue to enable everyone to understand the priorities, actions, and decisions required to achieve success and deliver profitable growth well beyond 2026. Moving on to the all-important outlook slide on slide 26. We are anticipating revenue and underlying NPAT growth in FY 2025 compared to FY 2024, notwithstanding flat new patient registrations, which exclude acquisitions in the second half of FY 2024 versus the second half of FY 2023.
Growth can be achieved noting the following key drivers: We will have a full year contribution from Fertility North acquisition, which completed in March 2024. We will generate a contribution from new fertility specialists that joined Monash IVF during the previous two years, and we will continue to focus on attracting new fertility specialists to join the group in FY 2025. We will have increased contribution from recently opened day surgeries as theater utilization will continue to ramp up, and we will gain contributions from recent investment in emerging growth drivers, including genetics and increased donor activity. We plan to continue growth in our women's imaging business through recent capacity expansion, and we will generate ongoing growth in our International business, including the particular momentum we have in Singapore and Kuala Lumpur at the moment.
We also have an ongoing focus on margin improvement through an optimization and efficiency program, as well as progressing enhancements to patient management systems. We plan to update you all on our first half in FY 2025 financial performance at the Annual General Meeting in November 2024, so that's the formal part of the meeting over, and happy to move to questions.
Thank you. And if you would like to ask a question, please press star then one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then two. If you are on a speakerphone, please pick up your handset to ask a question. And our first question today will come from Jonathon Higgins with Unified Capital Partners. Go ahead.
Hi, guys. Thanks for taking my question today, or a couple of questions actually, and appreciate the strong set of FY 2024 results, obviously the difficulties with the class action. So just from me, looking at the outlook statement, usually you give us guidance at this point. Usually, I know you do that at the AGM, but I mean, most of the data points we're looking at there look sort of reasonably positive for sort of growth into FY 2025. I was wondering if you could just break out a few of those things, noting that when I look in the accounts, I think we can see Fertility North looks like it didn't bring a public pro forma of when you bought the acquisition. You know, Asian, International, EBIT, it's turned around very strongly in the second half.
The sort of things that are also in the NPAT, plus, you know, I imagine you get some price rises, if you could explore a couple of those dynamics for us, please.
Yeah. Hey, hey, Jonathon. Yeah, you know, clearly there will be contribution for the full year from Fertility North a nd a few other things that you called out. So, you know, there's a clear pathway to growth. You know, we just didn't make a decision or the board didn't make a decision to provide any more guidance at this stage, and, you know, we'll, I'm sure we'll provide some color at the AGM in November.
Okay, and maybe just a couple more from me. On the class action, I mean, you know, to probably have it behind us, irrespective and probably, I think it's probably a slightly larger number than potentially what we're expecting. But, you know, does having the class action behind you sort of provide any sort of clean air in strategic in the line?
Yeah, I think it does. You know, it's been somewhat a burden on all of those that have been involved, and all stakeholders and patients and everyone. Certainly, this gives us some clear air to really, really focus on accelerating our strategy and moving forward and putting this behind us, and making sure that we're working towards Vision 2026 and beyond. I can't say that it hasn't been a distraction, because it has. But, you know, through that, we've been able to achieve outstanding outcomes and results. But also, it frees us up to accelerate our strategy into FY 2025 and beyond. And probably just to touch on a couple of those other points, on those earnings, just to maybe give away a little bit more than Alex.
There is a 5% price rise that's gone through on the first of July. Very much inflation linked, and that's been taken up reasonably well. There is a major improvement in our Asian business. I think you can see through our accounts and work out that there's probably about a AUD 1.4 million improvement on the second half, or maybe a little bit more than that. You know, obviously, we'll get the benefit of that in the first half. The first half in FY 2024 was a little bit average in international. That was ramping up, and we can see that through our patient pipeline.
And the other number, I'd be happy to sort of call out, and Malik might help me with this, the annualized result of the Fertility North acquisition, given its contribution for four months, is looking like adding another—
Yes, we did AUD 1 million of old EBITDA, PIVET for four months, then extrapolate that for the full year is, you know, the type of upside we'll see, at least from that transaction, you know, with everything else that Michael said and what we have, you know, in our intentions to grow the business for the rest of the year.
Awesome. Thanks for taking my question.
Our next question will come from Shane Storey with Wilsons Advisory. Go ahead.
Morning, everyone.
Yeah, hi. When I look at the second half result, sure, just looking at that improvement in EBITDA, I wonder if in aggregate, you've reached a tipping point of delivery there across that portfolio. I mean, if we were to see another double digit sort of revenue growth again in that, in that division, would it be reasonable to think that the margins, you know, be ramping up to emulate what we saw two or three years ago? Thanks.
Yeah. Hey, Shane. Yeah, so I think there's upside in Singapore, quite clearly from our perspective, in terms of margin improvement. You know, we've only seen, as you said, six months of improvement in it, but, you know, we've been around 300 cycles in Singapore. You know, intentions are to, you know, obviously more than double, something like that, medium term. So you're gonna drive leverage on the back of that. You know, if you look at the KL business when we bought it in 2018, that was a business that was doing 350 cycles. And now it's doing close to 1,000.
And it was doing around AUD 1 million of EBITDA, you know, 10 years ago, and at the height of it, just prior to COVID, it got to about AUD 5 million, and back to around AUD 4.5 million now. So, you know, I think we can definitely drive leverage in that market. And, you know, we'll want to get Singapore right first, before any further expansion in the region. But I don't think that decision is far away in terms of whether we do that or not. You know, I think we said that about 6 months ago, that we want to prove a few things up, and Singapore has held that improvement for 6 months now. So we're going to the second half pretty positive about what we can do there.
We've still got Shane, and our biggest advantage is Kuala Lumpur, and we've still got some significant capacity there to drive home some leverage, too.
Thanks. Final one for me, again, probably for Malik. You mentioned the drag on margin from ramping up in some of the new day hospitals. I mean, I don't expect you to put a basis point number on that, but I wonder whether the price increase that you've flagged is probably enough to offset the impact in 2025. Thanks.
Yeah, definitely. So, you know, the strategy on pricing is initially to cover cost base increases, as a principle. With the day hospitals, you know, there is a large ramp-up period for those day hospitals, whether that's efficiency, utilization, or even private health contracts, and your ability to charge patients for treatment. You know, around 40% of our patients in those day hospitals are uninsured. So you've got some flexibility in pricing for that patient group. But, you know, the other 60% are very reliant on private health contracts, and we're still in the process of, you know, locking those away and trying to improve those pricing outcomes for us.
Thanks very much. This is my sequence.
Thanks, Shane.
And our next question will come from David Stanton with Jefferies. Go ahead.
Morning, team. Thank you very much for taking my questions. Hello. Hello, Michael. One to start with, for Malik, if that's okay. Compared to FY 2024, can you sort of give us some color on what you're expecting for D&A and depreciation in particular, and interest expense, given sort of the pickup in 2024? Should we be expecting that into 2025, please?
Yes. So the pickup obviously real, but a good proxy is what the second half look like on both of those lines. If I talk about D&A first, you know, we pretty much had a full six-month period of day hospitals in there. So you know, that it'll probably be stable in that context. You know, so if you're modeling kind of roll, you know, that depreciation and amortization figures from the second half. In terms of interest, yeah, I think the, you know, we're paying around 6.5% or so of interest with BBSY loan margin. The debt at the moment is about AUD 60 million. And on the back of the class action, there'll obviously an uptick in that.
You know, keeping all things equal, you know, I think that the marginal cost being that 6.5% should be pretty steady for the rest of the year. The only real variable is gonna be then what debt looks like for the rest of the year. As we called out, as part of the settlement, you know, we still have to—b ecause this is new news over the last couple of days. But, you know, where we take debt on the back of that, you know, I think is going to be well under 1.5x by the time we get to 30 June, so there's still plenty of capacity available in the facility.
Understood. Thank you. And I guess back to Michael, wouldn't want to miss you out. In terms of the market, the Australian market growth rates, you know, we did see a lowering of growth rates in the second half of FY 2024 across the market, as you pointed out. And we've also seen, I guess, particularly in some areas in Australia, you know, a decline in discretionary spend. You know, are the two linked to each other? Does one follow the other, in your view?
No, I think having a family and having children is certainly non-discretionary, David, and I've tried to emphasize that along the journey. Probably the one segment that is a little bit more discretionary in our portfolio of services, and that's egg freezing. Because generally, they might have a bit more time on their side and they can be a little bit more considered, and generally it's only one income funding it through. That's probably the discretionary element of our services. Anything else, fluctuations might occur within a very, very small timeframe. As we all know, the longer you wait, the more difficult it is to have a healthy baby.
Understood. So to that end then, should we be thinking about an Australian market growth rate in ARS of about 2%-3%, you know, within that 2%-3% band that you've called out previously?
Yeah. Yeah, I think for this year, that's probably a reasonable assumption, but I think longer term, as you start to get tractions from the genetic carrier screening program and the industry benefits through managing that disease risk through IVF, yeah, I think you'll see that start to accelerate more towards 5%.
Understood. And final, final question from me. How much is egg freezing of your revenue within Australia?
Yeah. So, you know, IVF is about 80% of our revenue, so around 20% of it is egg freezing- related. You need to dissect that between what is medical versus elective and what is driving the patient's decision-making to seek egg freezing. You know, so if it is purely elective, you know, call it an insurance policy, not the right words, but, you know, picture it that way. You know, it's probably around 4% of the 20% is that patient group. You know, so we think the 4%. You know, you know how Michael said before that there is a group of, or an element of egg freezing that is discretionary? You know, we think it's limited to that 4% of the 20% that I'm talking about.
Probably be around 18% or 18% or 17% of our sort of overall IVF revenue.
Understood. Thank you.
And our next question will come from Tom Godfrey with Ord Minnett. Go ahead.
Good morning, Michael and Malik. Thanks for taking my call. Can you hear me okay?
Yeah.
Yes. Thank you, Tom. Welcome.
Morning, guys. So I just wanted to follow on from Dr. Stanton's question, just around market growth and sort of moderation in the second half. Are you seeing variability across your various sort of patient age cohorts or geographic regions? Any sort of color around sort of where demand's sitting across the business?
Yeah, look, it's natural to see variations in geographical sort of response, and it can fluctuate month to month, and it's heavily dependent on the timing of Medicare and so forth. But I think, you know, Adelaide's probably a different market to the Eastern Seaboard, and Queensland is probably a different market to Sydney and Melbourne, and they're never completely aligned in regards to market growth prospects. As far as age profile, I think it's been pretty steady for the last few years at around that thirty-seven years old for first-time treatment for females. So we've seen no obvious change in that in the traditional IVF.
And Tom, if you you know, in the Medicare data, it's published by state. If you look at Q4 by state, Victoria was probably the weakest. You know, I think it was down by about 10% in Q4, off the top of my head. So you're gonna get variability by state, you know, which is pretty normal. But the Victoria business was the clear standing out.
Got you. And just on the age cohort, it's not a situation, I know you guys sort of over-index older patients anyway, but it's not a situation where the weakness is sort of more isolated to the younger cohort, that could affect treatment for a period of time?
We're not seeing that, Tom. You know, the average age is still at 37. Is you know, the group under 32, for example, behaving differently? I wouldn't say that it is at the moment. You know, I think a little bit more time we need to play out, but we've got visibility of the pipeline of, what, 9 months out let's say, through new patient registrations, and it's not behaving, you know, materially different at this stage in terms of conversion.
Got it. No, that's clear. And I was just gonna sneak in as well, just sort of what you're seeing in July and August, whether there's an improvement in the operational backdrop? Pretty consistent.
It's pretty consistent. You would've, we haven't seen the Medicare numbers, but you know, our comps in July and what's looking like being August are fairly comparable to how the fourth quarter played out.
Got it. I think Medicare dropped this morning, and it sounds like you guys are ahead of it, at a high level. The only other one I had, Michael, maybe one for you, just around, the genetic carrier screening volumes. It sort of feels like settled the last few months around 9,000 a month. That still feels like a pretty modest penetration rate versus Aussie live births a year. I suppose I just wanted to understand, like, what do you think drives that penetration rate higher over time?
Yeah, look, the awareness is really, really important. And that comes from all elements that contribute to that particular volume in obstetricians and gynecologists, GPs, patient awareness. It's building really quick. Like, we're really buoyed by initial take-up, and remembering that is only for three gene carrier screening. So there's more volume that's not transparent in the Medicare numbers for full panel of carrier screening, which in our case is over four hundred diseases that are assessed. So about fifty, or thereabout, of our total test volume is, because we provide the test internally, on the extended carrier screen tests, which isn't visible. So if you take that into consideration on the baseline numbers, they're an exceptional start to early volumes and a good indicator for, you know, some further penetration into the future.
Got you. Thanks for taking my questions.
Thanks, Tom.
And our next question will come from Rachael Harwood with Macquarie. Go ahead.
Hi, Malik and Michael. Thanks for taking my questions. Just a couple from me. Might just follow up on Tom's question just around average age, significant growth in success rate, 40.5% today results. Do you think this might support an older age cohort going forward, you know, maybe over forties, might have a go just with the significant increase in that success rate?
So it was a little bit rugged, Rachael, listening to that. But we've. Is your question, are we expecting much change in the age profile, given our current age profile average is 37 years old? Yeah, well, so to try and answer that question without capturing it all, is that no, we don't see any sustainable movement in profile of our patients or any change of behaviors for the elder patients, if that's what the question is. So it it's very consistent. The conversion rates, as Malik pointed out, are also very consistent.
That's great. Just a second question, just around that International business, you bounded really strongly, particularly in that second half. Just going forward, do you expect to kind of focus on recruitment of specialists, or is it really just a focus on building that volume with existing specialists?
It's probably multi-tiered. Absolutely optimizing and building the current fertility doctors that we have in that particular region, and also complementing them with new doctors and credible doctors to utilize in our clinics. Not only our existing clinics, but also in other prospect clinics in other regions where we can't currently facilitating, but you know, focused on Southeast Asia. So yeah, both tiers we are working on pretty tightly.
That's great. Thanks for taking my questions.
Awesome. Thanks, Rachael.
And our next question will come from Craig Wong-Pan with RBC. Go ahead.
Thanks. Just, I just wanted to clarify, the 5% price increase that was mentioned, is that just Australia or is that across Australia and International?
That's Australia specifically, for average of 5%, Craig. KL didn't move on price, essentially, but they've got higher activity coming through their higher price products. So you're sort of seeing an increase in average price. And it's material, you know, if you look at KL in isolation, it's increasing the average price per treatment by close to 10%. So it's still early days in terms of where that business is. You know, as I said, the last six months has seen an improvement in that business, so we aren't moving prices at this stage.
Okay. And then there was a comment made that cost inflation has stabilized. Could you give us some numbers around what inflation you're seeing now?
So if we talk wages first, as I've said before, wage price agreements are very much locked in at around 4%, you know, add super to that, let's say, and a little bit of benefit in terms of entitlements, you know, you're sitting at 4.5% to 5%. Property with some— I think we've just about cycled through all the properties increasing in line with the CPI number of 7%-8%. You know, we're probably now looking at sort of 4%-5%, with CPI increases in property over the next six months is the assumption. On the other lines, consumables, not seeing any noise.
You know, with just general suppliers across other lines, not too much noise, but as I said, labor's 45%-50% of our cost base, Craig, so, you know, we think it's reasonably controlled from here.
Okay. And then just on the day surgeries, that kind of drag that you experienced in FY 2024, can you quantify what that was? And there was a comment made about there's a bit of a ramp-up phase. I mean, how long do you expect those to continue to be a drag, and when do they become profitable?
So if I refer to the Gold Coast, you know, I think margins will improve in FY 2025, no doubt about it. You know, it'll take about. It has taken about, say, six months for that to occur. So I'd say in FY 2025, there's absolute benefit coming through the Gold Coast. Melbourne, we've only had one of the two theaters open. You know, and that one theater is still reasonably utilized. But, you know, probably stick at, you know, breakeven, let's say, in Melbourne. But coming back to the Gold Coast, it is now profitable, so we will see marginal benefits through the day hospital businesses as a collective in FY 2025.
And then last question, just on CapEx. Just to clarify, was the comments there that FY 2025 will come a bit down from FY 2024 levels, but then FY 2026 is more the sort of business as usual CapEx?
Yeah, at this stage, FY 2025 is down on FY 2024, and yet to determine FY 2026, but I'd imagine it would come down from FY 2025.
Okay, great. Thank you.
This will conclude our question and answer session. I'd like to turn the conference back over to Mr. Knaap for any closing remarks.
Thank you, Cole. Well, thank you all for your interest in Monash IVF. We all really appreciate it, and we look forward to seeing many of you over the oncoming week. Thank you. Bye.
That does conclude our conference for today. Thank you for participating, and you may now disconnect your line.