I would now like to hand the conference over to Mr. Michael Knaap, Managing Director and CEO. Please go ahead.
Thank you, Cameron, good morning to everyone, and thank you for joining us today for Monash IVF Group's Results Presentation for FY23. With me, as always, is our CFO, Malik Jainudeen, who will be taking us through some of the financials a little bit later. Monash IVF is a market leader in providing reproductive care in our core assisted reproductive services, diagnostics, genetics, and pathology services, with an expanding network of now 50 IVF and women's ultrasound clinics and service centers across Australia and Southeast Asia. Our experienced and capable team now includes 153 doctors and in excess of 850 scientific, nursing, counseling, and support staff. I would like to take this opportunity to thank every one of our team for their unrelenting patient-first mindset.
This focus and commitment of our people is the reason we have such an optimistic outlook for the future. I would now like to touch on the key points in the executive summary on Slide 3 of the presentation. Our underlying profits were in line with guidance provided in February, delivering an underlying NPAT of AUD 25.5 million, representing 14.7% growth on the previous corresponding period, and a revenue increase of 11.1% versus the PCP. Furthermore, of critical importance, we have continued to drive better outcomes for our patients, with clinical success rates improving another whole 1% in calendar year 2022, with a further 0.7% improvement in the early part of calendar year 2023.
In Australia, we had a further growth in our ARS market share and an increase in stimulated cycles of 5.6%, well above the slight industry decline of 1.1% in the year. Our overall ARS, EBITDA, increased by 13.2%, which, given the overall market decline and inflationary environment, was a very solid result. Our ultrasound business continued to gain momentum, delivering scan growth of 12.7% in the second half of FY23. Our IRS patient pipeline is very strong, with NPRs, or New Patient Registrations, up 12% for the full financial year versus the PCP. More recently, in the second half of FY23, it was 23% up on the PCP.
We continue to see the benefits of the strength of our doctor partnerships and being a destination of choice for specialists, as we welcomed another 25 fertility specialists into the Monash IVF Group family. Our recent acquisition of ART Associates Queensland continues to perform above expectation, and the PIVET acquisition is now complete. Our clinical infrastructure and expansion projects have progressed well with the Gold Coast, Darwin, and Penrith now complete, and we will take full tenancy of the Cremorne Melbourne site in the second quarter of FY24. Internationally, and specifically in Southeast Asia, our stimulated cycles increased 19.9% versus the previous corresponding period. The international segment, EBITDA, decreased by 18.2%, following the initial losses in Singapore, whereby the volume ramp-up has been a little slower than expected.
Our other clinics in Southeast Asia demonstrated growth. With our current platform of 5 clinics in the region, we continue to be focused on executing on the pipeline of opportunities in Southeast Asia, whilst also optimizing our existing clinics. I wanted to touch on the compelling underlying structural tailwinds in our industry to support volume growth into the future, as we look at Slide 4. The Australian IVF market grew above historical averages in the second half of FY23 at 5.6%. Within that period, our New Patient Registrations, as I said, were up 23%. All our indicators are that we have a resilient industry throughout challenging economic times. Yes, we firmly believe that IVF services are non-discretionary. There are many fundamental drivers of growth in our industry.
Firstly, advancement in maternal age is a long-term trend as people have delayed starting a family, which continues to increase infertility rates. This is demonstrated by the maternal birth age increasing 2 years over the last 20 years, and our average maternal age at Monash IVF is 37. Secondly, we have favorable and stable, if not increasing, government funding for our industry. Thirdly, new patient segments and new services are adding an additional layer of growth in our industry. To touch on those new and growing segments, I'd just like to outline them. Firstly, there's 11% of the Australian population identifies as LGBTQI+, and the number of same-sex couples living together in Australia has increased by 68% over the 5 years to 2021.
This patient segment generally need IVF and donors to build their families. There is also increased awareness of egg freezing and new patient acquisition channels in sport and corporate that will continue to drive growth in egg freezing. In the genetic sphere, introduction of Medicare rebate for carrier screening in November 2023, is expected to result in almost all individuals planning a family to undertake this test to prevent disease in their child. Abnormal results from carrier screen testing will result in increased IVF, as it is the only way to filter out the disease risk. In summary, whilst the attractive industry fundamentals continue to support growth, growing patient segments and new services are also expected to be key growth drivers going forward.
We now look at Slide 5 to focus on the broader ARS Australian market, where demand for services in Australia continues at historical high levels and significantly above pre-pandemic levels. The left-hand graph shows half-yearly growth in stimulated cycles. In the second half of 2023, industry-stimulated cycles returned to growth of 5.6%, and the FY23 volumes remained 22.3% above the FY19 pre-pandemic levels. As outlined previously, many factors have all contributed to a return to growth, and they will be significant contributors to growth into the future. Although there is some short-term volatility evident in recent industry volumes, our recent patient pipeline indicate that our market outlook for growth in FY24 is very favorable.
The right-hand graph is the number of Australian cycles per year, noting the step change in volume in FY21, and maintaining volumes in FY22 and FY23, with an expectation that FY24 will deliver growth. Traditional demand drivers and increased awareness and availability for donor services and egg freezing are expected to underpin market growth of at least 2%-3% going forward. Over time, we expect this growth trajectory could trend towards 3%-5%, as genetic testing becomes more widespread in the community, leading to significant referrals to IVF. Having a clear picture of the Australian IVF volumes, I would just like to cover off on more detail around the market shares on Slide 6.
Our stimulated cycle activity performed better than industry, as we continue to grow market share in the financial year 2023, which has now occurred over a sustained period of 3 years. Our market share in key markets grew by 1.4%- 22.7% during FY23. Of note is that the market share gains in the second half of 2023 were particularly strong, up 2.2%- 23.9%. This highlights the momentum we have going into financial year 2024. We experienced market share gains in South Australia and Queensland. It was flat in New South Wales and a slight decline in Victoria.
Pleasingly, the Victorian New Patient Registrations were strong in the second half of FY23, up 17% versus the previous corresponding period. The H2 of 2023 market share in Victoria was stronger than the first half, indicating a momentum shift with improvement anticipated during the next financial year. The contribution from new fertility specialists attracted in previous years, effective marketing campaigns, and the acquisition of ART Associates Queensland, all contributed to market share growth in the last financial year. As you can see from the graph on the lower right-hand side, we have sustainably built market share over the last three years. Pleasingly, further market share gains are expected in FY24, following the full year contribution of ART Associates Queensland and the PIVET acquisition, the benefit of the new fertility specialists, and the conversion of our strong new patient pipeline.
I would now like to welcome our CFO, Malik Jainudeen, to take us through the financial results for the year.
Thank you, Michael, and good morning to everyone, and thank you for listening. If you turn over to Slide 8, you'll see a graph, or a waterfall on the build-up of our revenue in the first half. We're quite proud of this result, you know, a great result considering the circumstances, whereby there was difficulty in the environment around pandemic and influenza in Q1. Hopefully, it's the last time we talk about the pandemic impacting our business. Revenue increased by 11%, but if you break down first half versus second half, second half showed real improvement, with revenue increasing by 22% compared to last year, and after the first half, growing by 2% on the prior year.
The second half was also 8% higher than the first half, which provides some indication that the current macro environment is not materially impacting patients' willingness to afford and access fertility treatment. Just looking at the waterfall, the bubble on the left shows an AUD 2.2 million decline in revenue that was purely on the back of the industry decline that Michael spoke about, that declined by 1.1% compared to last year. If you remember, in the first half, it declined by 6.6%. What's important is, if we talk about the second half, industry grew by 5.6%, which highlights the resilience of the industry, as Michael spoke about.
A 1% decline in the industry has about a 100 cycle impact on our business, which reflects the AUD 2 odd million impact on the revenue line. What was pleasing was that we were able to offset this short-term industry volatility from gains in market share and our ability to increase prices. As Michael said, market share increased by 1.4%, which delivered AUD 3 million in organic revenue growth and a further AUD 7.2 million revenue growth from acquisitions from primarily the ART Associates acquisition. Our existing and new doctors in Brisbane are doing a great job, as Michael said, Queensland market share is well up on last year.
We added a further AUD 5.4 million in revenue, primarily from our ability to put our prices up across all services and in all markets by 3%-5%, and this went a long way to offsetting cost-based inflation pressures in our business. Our international business contributed a further AUD 2.6 million in revenue, as KL grew by close to 3% in its stimulated cycles, and the new Singapore IVF clinic performed 150 on stimulated cycles for the year. Our ultrasound business had its challenges in the first quarter, as we talked about 6 months ago. Particularly in Melbourne, which suffered from a shortage in specialized sonographers. In the first half, that had an impact on our capacity. If I talk about the second half, we rectified that issue.
You'll see later in the pack that Melbourne scans grew by 28% in the second half compared to last year. The Sydney business grew compared to last year, and that's what's driven the AUD 2 million increase in ultrasound revenue that contributed to our growth during the year. Just turning over to Slide 9 now. That illustrates the EBITDA waterfall. Again, a reasonable, pleasing outcome, you know, with EBITDA growing by 11%, revenue growing by 11%, and you'll see that we've maintained our margins at 25% compared to last year.
If you follow the waterfall, you'll see that the industry had a AUD -1.3 million impact on earnings, but if you look at the bubble to the left of it, you'll see that there's a AUD 1 million benefit from price mix and cost base. Essentially, we've offset much of the industry decline and cost base pressures in our business. Just talking about the cost base again, you will remember that 6 months ago, we talked about labor costs going up by 3%-4% on the back of enterprise agreements in science and nursing, and that those rate increases are going to be pretty consistent over FY24, FY25, and FY26.
Some of the other cost base lines moved at higher rates, particularly consumables and property, with many of those going up by CPI. If I talk about going forward, you know, we do expect some moderation in those increases going into 2024, and we will be putting our prices up to offset that in its entirety, or at least most of it. Market share gains delivered additional AUD 5.3 million of EBITDA, and if you split that, half of that was primarily from the ART Associates acquisition, and the other half from organic results. Overall, a good result for the business. Must say, it could have been stronger if we had a stronger Asia business. We'll talk about that in a little bit.
You know, the Singapore greenfield had its challenges in the second half due to key doctor availability. The turnaround in our ultrasound business delivered a further AUD 1 million increase in EBITDA, with further improvement expected in FY24. Just over to Slide 10. That's just a high-level summary of our P&L. You'll see on that table on the left, 11% increase in revenue, 11% increase in underlying EBITDA, which just illustrates our margins are, are holding pretty strong and tight at 25%. You know, and, and note that, you know, the CPI environment hasn't been easy. We've had higher insurance costs, Q1, much higher cyclically than we'd normally experience. As I said, impact in, in Singapore in the short term in terms of earnings, and also the ultrasound business in Q1.
So if you balance all of that, and if we go into FY24 with some of those tailwinds, you know, we should see some improvements in FY24. You'll see on the right, just contributions from parts of the business. So again, domestic BAU business, really solid, really resilient, contributing 23% of the growth in the year. Acquisition, 60%, ultrasound, 29%, and Asia had a -12% on the business. Reported depreciation, amortization was up by AUD 0.6 million. Noting that includes ramp payments for clinics that are yet to be commissioned or were partly not commissioned during the year.
And, you know, we should see higher depreciation in FY24 as well as we open new clinics, noting that's going to provide us with greater capacity across the country. Interest expense increased by AUD 1.2 million. You'll see that our net debt is higher than last year, so the average debt during the year was higher, and we had a higher BBSY compared to last year, which was up by 3% during the year. If we go to Slide 11, cash flow, again, really good cash flow outcome during the year. You'll see 100% of EBITDA converting to pre-tax cash flows. If you remember from the first half, it was at 89%, so clearly a very strong second half. CapEx for the year was AUD 28 million.
You know, Michael will talk about the infrastructure projects later on. We've now commissioned and opened IVF clinics in Melbourne, Gold Coast, Penrith, Darwin, Bali, and Singapore, you know, at the back of last year. Also completed the new Gold Coast Day Hospital in July 2023. You know, those earnings aren't in the 2023 result. We should see some earnings coming out of that day hospital operation in 2024. The new Melbourne Day Hospital Clinic will be ready in Q2 in Cremorne. In terms of projects that will be continued into FY24. Again, Michael will talk about Brisbane, Sunshine, the Melbourne DSU. That should, you know, complete the bulk of our infrastructure program that we started a couple of years ago.
If we, if we think about also, you know, you may see it in the directors' report, we talk a little bit about transformation of our new patient management system. We've just started that journey on the back end of FY23, and, you know, we see that as a real enabler for efficiencies in our business, better patient experience, and Michael and I will probably talk about it a little bit more next year as we build that new product that will improve our business. If we think about CapEx for next year, we're looking at around AUD 20 million. You know, that's on the back of the infrastructure projects that we need to complete, is primarily driving that. Just closing out on cash flow, AUD 13 million in acquisition payments. No surprises there.
That's on that's for the ART Associates and PIVET acquisitions. If we go over to Slide 12, just a summary of our balance sheet. No real changes compared to 6 months ago or 12 months ago. Still in a really strong position. Net Leverage Ratio at 0.7x . You know, if we look forward over the next 12 months, I think it'll be hovering around 1 times in the short term, considering some of the projects that we still need to complete. Net debt, AUD 31 million, expected to increase a further AUD 15-odd million in the next 12 months, again, on the back of the projects that we will complete in the next 12 months.
In closing, our existing debt facility is due to mature in December 2024, but we do intend to look to refinance that in the next 6-odd months. I'll turn you back to Michael.
Thank you, Malik. If we can move on to Slide 14, I'd like to start taking you through some of the details of our Australian IRS operational performance. Commence with the obvious essential pillar of our strategy, and that is 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. Our doctor value proposition is heavily geared towards partnering with our doctors to deliver market-leading success rates and a best-in-class patient experience. We continue to gather momentum in our doctor recruitment through acquisitions and direct recruitment, having welcomed 61 new clinicians over the last 5 years, with 25 being added in FY23.
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 they and their patients are recipients of. It is worth noting that our doctor engagement is at record levels and significantly well above industry benchmarks, based on a survey that was completed in the recent months. We are continuing to focus on attracting and onboarding new and experienced fertility specialists with suitable cultural fit, outstanding clinical competencies, and industry reputation. I take you to the clinical infrastructure progress and plans outlined on Slide 15, and there you can see some beautiful pictures of our new clinic in the Gold Coast that we just commissioned in July, early August, that is fully operational at the moment.
We continue to invest in the medium to long-term future through new and upgraded clinic infrastructure. This reflects our commitment to driving improvement to our patient and doctor experience, while also representing the confidence we have in future growth. We have completed new clinics in Cremorne, Victoria, Penrith, Darwin, and Gold Coast, while there is another 4 clinics in various phases of design and construction, including Brisbane, Sunshine, Rockhampton, and an ultrasound clinic in St Leonards. We are very proud of all our new clinics that create a warm, caring, comfortable, and friendly environment. As many of you have seen through the investor day that was held in Cremorne a couple of months ago. That site in Cremorne encompasses a premium, large-scale, full-service fertility clinic with a day hospital and a women's ultrasound services, while also housing corporate shared services.
The clinic brings an extraordinary level of patient, doctor, and employee experience, and if you haven't already seen it, we would be happy to take you on a tour in the near future. If we move on to the recent acquisitions on Slide 16, that were undertaken in FY23, the first being ART Associates in Queensland, which was completed in September 2022, and the integration of nine doctors, whilst transitioning to a new temporary location, went really smoothly. The patient feedback has been really, really positive. We have built our market share in Queensland up to 33.5% in the second half of FY23. Even more pleasing is that the volumes have exceeded initial expectations. Together, we are looking forward to the design and construction of a new Brisbane clinic to fully integrate our services and people in the oncoming 12 months.
PIVET was completed in late May 2023, which really rounds out a true mainland Australia clinic footprint. We are now the only IVF provider in every capital city in mainland Australia, which is a, you know, significant competitive advantage. The PIVET transition is going well, with Dr. Tamara Hunter, who was recruited as a Medical Director, which is complementing the 6 directors that are a part of PIVET. We are absolutely committed to further growing our presence in WA into the future. Take a look at Slide 17, to look at scientific leadership. We have a continued unrelenting focus on investing and building scientific capability to ensure we are giving our patients the best possible outcomes and differentiating our value proposition to patients and doctors.
The chart at the bottom of this Slide represents the continuous improvement in our clinical pregnancy rates across our group, with clinical pregnancies in 2023 to date, increasing by a very significant 6.1% as compared to the calendar year of 2018. There's also been strong incremental improvements in every single year. We have been on this journey of continuous improvement throughout our long heritage, The Monash Way is well embedded across our Group and has driven unified state-of-the-art science, technology, and processes. It's worthwhile calling out some of the initiatives that will drive further improvement to our success rates into the future. We will continue to partner innovative organizations to advance new technologies, such as a safer and softer method of ICSI, which is being rolled out clinically, exclusively to the Monash IVF Group in Australia.
There is also a more effective sperm selection device that we anticipate will be rolled out across our clinics during 2024. Furthermore, we continue to roll out time-lapse technology across our clinic network, resulting in less embryo touch points during the development stage of the embryo, which will also facilitate artificial intelligence in the embryo selection process. 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 well and truly demonstrates. Moving on to Slide 18, as we take a look at the genetics opportunity, where we are very well positioned to capitalize on growth. Growth in carrier screening, following the introduction of Medicare rebate in November 2023, is expected to drive significant incremental IVF industry-stimulated cycles in the oncoming years.
Almost all couples considering pregnancy are expected to have 3-gene carrier screening as a minimum, and this will be a significant feeder into IVF volumes. We're also anticipating that 2%-4% of couples who return an abnormal result from the test, will be referred to IVF to avoid having children with a genetic disease. We are uniquely placed to capitalize on this growth opportunity with a current test in the market, the leading genetic pathologists, a large patient pool, a specialized genetic counselor network, and an integrated service transition model. If you take a look at Slide 19, our substantial strategic marketing investment and campaigns are driving market share gains and strong growth in our patient pipeline leading into FY2024. Our latest campaigns have performed exceptionally well, including the What it takes, together and our egg freezing campaigns.
We're also making significant progress into the corporate and sport channels as new patient recruitment channels. On the people front, we have achieved another key milestone in our people's engagement journey, with our highest ever reported engagement level of 64%, demonstrating a culture of success and well above all benchmarks. We also continue to make positive progress in building a diverse and inclusive workplace. Our learning and development framework, and focus on personal and professional development, will enable us to support growth opportunities and build capability, while also maintaining continuity and retention. We look at Slide 20 on our ultrasound performance, which has demonstrated a real positive turnaround. Our second half of FY23 ultrasound volumes grew by 12.7%, with both our Sydney and Melbourne clinics delivering volume and market share growth, highlighting the positive momentum of moving to FY24.
Our Sydney Ultrasound for Women business delivered 8.5% growth in scans over FY24. Our Monash Ultrasound for Women turnaround is progressing well, delivering scan growth of 5.1% in FY23, with growth skewed towards the second half of FY23, whereby we achieved 28% growth on the PCP. Furthermore, we have recruited three new sonologists to increase capacity and allow for succession planning in our ultrasound business. As we move abroad to our IRS international operational performance on Slide 21. Our Southeast Asian expansion strategy continues to build volume, with 19.9% volume growth for the year versus the PCP. Our underlying FY23 EBITDA decreased by 18.2% to AUD 2.9 million, which was impacted by ramp-up delays and therefore losses for FY23 in our Singapore clinic.
Our now 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 3.1%, while in Johor Bahru, we had solid revenue and EBITDA growth. In Singapore, the slow ramp-up was attributable to key doctor availability. However, we still see a great opportunity as we continue to refine doctor focus and recruit more fertility specialists, driving clinical and scientific leadership in the region, and also leveraging our highly skilled workforce, and provide a quality egg freezing service, as it is now being legalized since the first of July, 2023. Our Bali clinic is ramping up volumes. They now have embedded clinical services as we push marketing and education to drive cycle activity into the next financial year. The Jakarta clinic also delivered cycle growth during FY23.
We are absolutely committed to executing on more partnership opportunities in the Southeast Asian region, whilst we're very mindful of consolidating and optimizing on our existing clinics. On Slide 23 is our Vision 2026 strategic roadmap. Hopefully, many of you have noticed that it remains very, very consistent with historical strategies on a page, and it, it, indeed, also with our objectives and aspirations. We've just gone through another further review of our strategy with our, with our board, and we see no reason to materially change that strategy. We've certainly made significant progress on our strategic pillars over the previous years, as outlined in, in the previous Slides. With this platform established, we will continually evolve and improve in order to deliver our Vision 2026 objectives.
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 in the oncoming years. As demonstrated through the previous few years, we have strong momentum on our strategic growth initiatives, and these have become transparent in recent years. However, however, there is still much more to achieve, and this will become more visible over time. As we move to the all-important outlook statement for FY24 on Slide 23. We continue to believe and are optimistic that there is a fundamental shift in the community and the mindset of our patient cohort, with greater focus on family health and well-being, resulting in redirection of priorities towards family extension and creation. This was highly evident during the pandemic, whereby FY23 Australian industry activity was higher than FY19 by 22.3%.
Based on our New Patient Registrations pipeline going into FY24, we are confident that current industry activity is sustainable and will continue to grow into FY24. Whilst macroeconomic conditions in Australia, including cost of living and monetary policy, is impacting affordability of certain services and goods, it is not currently impacting New Patient Registrations to date. With New Patient Registrations, as previously said, up strongly on prior year, between January and July 2023. We are confident revenue and underlying NPAT will grow in FY24, noting the following drivers of growth: We will gain the full-year contribution from ART Associates Queensland and PIVET Medical Centre acquisitions. We'll gain the benefit of new fertility clinics and day hospital operations that will commence this year. We will convert our strong New Patient Registrations that was generated in FY23.
Our domestic IVF and ultrasound patient pricing will increase by 5% to 8% during the first half of FY24. This will be across all state-based markets, which is anticipated to offset cost-based increases. The new fertility specialists that we attracted in FY23 will drive further volume growth in FY24. We will continue to focus on recruitment of suitable fertility specialists. We're also well positioned to capitalize on the growth opportunity in reproductive genetic carrier screening. Our continued performance optimization of our ultrasound operations, particularly in Melbourne, following operating challenges during the pandemic, will contribute to growth. We will also further progress our Southeast Asian growth strategy, including ramp up of activity in the Singapore and Bali fertility clinics. We certainly have a lot to look forward to.
This brings a close to the formal part of the presentation, and we are happy to move to questions. Thanks, Cameron.
Thank you. If you do wish 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 before asking your question. Your first question today comes from Jonathon Higgins at Unified Capital Partners. Please go ahead.
Hi, guys. Thanks for taking the time today and good results. Looking forward to FY24 and hopefully a better run at it domestically. just a couple from me. Just firstly, just around the fertility specialists, can you give me an idea of just where they sit? I think that chart you've got is the numbers through the year, and then you've got a nit number. Can you give me an idea of where current numbers of fertility specialists are and where they were pre-COVID, please?
Hey, John. If you look at our second-last Slide in the pack, you know, we quote 153 specialists, that's across Gynaecology and international fertility specialists. If you look at domestic, if you got it in front of you, but if you don't, there's 117 fertility specialists in Australia, 13 are trainees. If you look back at our present FY19, you know, that's where we quote circa 30% odd growth in doctor numbers in the doctor Slide that we have on page 14. About 25% up compared to FY19.
Awesome. Thanks, guys. Just a couple more from me. Just Brent, looking at the segment notes, talking about the contribution from PIVET and ART. There's just a few, I mean, obviously there's a couple of different lines for the NPAT, just looking at the consolidated amount. Can you just clarify when you're saying that if you'd have owned PIVET and ART, it would have contributed, you've got the consolidated net profit after tax number there against the change, that circa AUD 2 million increase. Is that the right way to sort of read the contribution if you'd owned it through the period at, at AUD 2 million increase versus that?
Yeah, that, that's right, Jon. As a reminder, we had ART for 9 months, you know, PIVET really for nothing in FY23. You know, you, you may see in the announcement we made when we did buy PIVET about EPS accretion expectations for PIVET, and, you know, you can apply that to FY24 if you like. ART will have another 3 months contribution in the back of the envelope. I'm sure you'll calculate the number.
All right, awesome. Last one from me, guys, and I'll join the queue again. Just in terms of your outlook, you've I think you've spoken through the call around your outlook for industry volumes as well as the outlook for you guys as, you know, obviously some market share gains, extra acquisitions, the greenfield site. In terms of the industry outlook, you've said you expect the industry to grow into FY24. You've spoken around genetics. Can you just sort of clarify just, you know, your expectations or your thoughts around where industry growth goes this year and how it sort of compounds into future years? Thanks.
Yeah. Yeah, I, I guess we've, we've quoted the 2%-3% guide. It gets difficult to comment in regards to the whole industry, but we're a fairly significant subset of that. Our New Patient Registrations certainly indicate and inbound inquiries for that matter, which are demonstrating growth on PCP, certainly indicate that that growth, as a minimum, is probably sustainable throughout FY24.
Thanks, guys.
Thanks, Jon.
Thank you. Your next question comes from Rachel Harwood at Macquarie. Please go ahead.
Good morning, Michael and Malik. Thanks for taking my questions.
Hey, Rachel.
Hey. Just firstly, on that New Patient Registration, growth really strong. I mean, second half up 23%. Are you still expecting about 70% of those to convert to cycles at the moment? Then how are you expecting this to kind of drive volume in, in first half 2024?
Yeah, good question. We are. We've seen no sign of any delay in our conversion rates, even in these current conditions, so certainly we do expect 70% of that to come through. It is worthwhile noting that of that number, I think about 12% of that is related to acquisitions, and the rest is organic. It's worthwhile reminding everyone, too, that New Patient Registrations are just or new patient treatments are around 51, 2, 3% of our total volume. It's only a subsection of our total volume for FY24.
Yeah. Understood. I guess just turning to Singapore, I guess you mentioned slower volume ramp up was a, a bit of a drag, but could you maybe talk to expectations in FY24 for volumes, and then maybe just make a comment on how difficult it is to recruit specialists in this market?
Yeah. Obviously, we've, we've got a base there now, and some of our clinicians are getting a little bit more mo-momentum, and we're looking to recruit other, other fertility specialists. I, I think as a, you know, with the brand strength that we have and our clinical and scientific leadership, we, we have a good chance of recruiting incremental doctors, and, and we've found that now with, you know, five that are currently on, on our books, but not necessarily all exclusive. Without, you know, guiding you towards a volume expectation, you know, we started this anticipating, you know, 200+ stimulated cycles in its first year, and, it was, you know, around 25% short of that.
We expect to get to that, those sort of run rates and beyond, depending on our success of recruiting of doctors.
Yeah. Understood. Just last one from me, just I guess a follow on in terms of Singapore, I mean, with egg freezing recently approved, how significant do you expect this to be to the Singapore business? Is this trend, you know, significant in Singapore as it is in, in the domestic market?
Yeah, it's, it's hard to say. Look, the early inbound interest is, is reasonable, so it is getting some, some good coverage. As far as what I... Obviously, it's completely incremental volume in that particular market. We've probably got a little bit more to play out to see how the dynamic of that is going to work. Certainly, us, as well as other competitors are, are marketing it, just started to market it pretty heavily. Probably a little bit of water to go under the bridge to understand the full impact, but certainly the legislation was changed because there was a high level demand in regards to egg freezing.
That's great. Thank you very much.
Thank you. Your next question comes from David Stanton at Jefferies. Please go ahead.
Good morning, team, and thanks very much for taking my question. Firstly, a question for Malik. Wouldn't want him to feel left out. You know, I, we saw Australia's operating expense was around AUD 84 million in the second half. Is it, is it fair for 2024 to sort of think, okay, double that and add about 4% for, for the total costs, Australian operating expense costs for, for 2024? Is that the way we should be thinking about it, please?
Yeah, yeah, that, that's fair, Dave. There, there'll be a little bit of noise next year with, you know, onboarding or commissioning day hospitals. That, that cost base may evolve, change slightly. I do think margins that will be driven out of those day hospitals will be okay initially anyway. You know, I think, I think that's a fair assumption that you can apply that the cost base will grow in a circa 4-6%, let's say, expect the top line to make up for it from a price perspective.
understood. Understood. You know, can you talk to EBITDA growth trajectory that you're expecting in FY24 in the international division, please?
The international, you know, as we've highlighted a number of times, Singapore was a drag, you know, in isolation.
Sure.
Naturally, you know, if we don't have, initial ramp up to, you know, reasonable levels in the first half, which took a bit of time, and then second half was probably lower than we anticipated. You know, we're, we're doing about 15 cycles a month, you know, to get to breakeven. You know, if we get to breakeven, we're naturally going to get improved margins in Asia as well as at a group level in that, in that, in that case or scenario. Yes, I do expect improvement, on the back of Singapore, from a margin perspective.
Understand. Then final one. Then I'll get back in the queue as well. you know, do you think there's a sort of a willingness for repeat IVF from those who, who started their IVF journey during COVID, and, and that's, to some extent, driving growth? I, I sort of see that you, you talked to New Patient Registrations, about 51% of total volumes, you know, are the rest, you know, frequent flyers, if you like?
Yeah, well, that, that's exactly right. That's how it plays out. As you build your New Patient Registrations and they come through for treatment, they then become return patients, hopefully for not too long, whether it's be for another cycle or whether it be for another child. So, so, so the cycle or evolution of a patient's journey with us could be two, three, four, five years, depending on how, how many children they want to have, and that New Patient Registration is just that first indication of requiring some fertility support.
Understood. Thank you.
Thank you. Once again, if you would like to ask a question today, please register by pressing star then 1 on your telephone and waiting for your name to be announced. Your next question comes from Shane Storey at Wilsons.
Good morning.
Please go ahead.
Yeah, good morning. I might go back to the volume piece there. Just interested in following up on something Dave was just on about. I mean, I noticed that the growth in frozen embryo transfer probably lagging a little bit behind stimulated cycles. Is that also an impact, do you think, where you've had a strong sort of influx of new patients that, that then will, over time, will sort of go back and, and have frozen egg embryo transfers?
Yeah, it does tend to be a bit of a lag, Shane. You know, the fresh or, or, or initial stimulated cycle is the source for frozen embryo transfers at a later date. Frozen embryo transfers do follow or lag the initial stimulated cycle as, as, as a trend. Hopefully, we're, we're using less and less of them as our success rates are, are, are building as well, given the, given the movement in that over the last five years.
Sure. Then when we look at that, you know, sharp turnaround into positive growth for the second half of 23 after a year or so of negative 6s, is there a low base effect in that second half that we need to be cautious about? Or, how many. You, you seem to be pretty confident then, that the industry's now through, a rebasing exercise, if you like, following the pandemic?
Yeah. Hey, Shane, it's Malik. Yeah, we, we, we have that view. Absolutely, we do. You know, we call out the industry is 22% odd up in FY23 compared to FY19. If you look at FY21 and 22, it's FY23 is still at levels, you know, very close to 21, which was an exceptional year for the industry and recovery from FY20. You know, on the back of our pipeline, you know, in the outlook statement, we talked anecdotally or, you know, from a perspective that January to July, NPRs are up on the prior period. You know, that, that's gonna drive, you know, our volumes in the first half, let's say. You know, we, we don't see the industry necessarily going back to, you know, levels four or five years ago.
You know, your comment about rebasing is probably correct. You know, we're probably at the right base now to move forward, you know, at that 2%-3% growth per year.
Look, my last question really is just maybe, Malik, while you're up at the mic, just to comment on some of the margin dynamics in the second half for your Australian business. Here I'm sort of interested most in the ultrasound piece, where I think in the first half you said that, you know, you, you expected the revenue. We saw that, but then there'd be some leverage developing there, and I, I just wonder what sort of margin exit rate, you know, what that looked like coming into 2024 and how you expect, I guess, the non-IVF sort of parts of the Australian business to perform margin-wise over 2024.
Yeah, ultrasound isn't in a, a great margin business, let's say. You know, it's very much a volume play. You know, when ultrasound's performing well, you're at circa 15%-20% EBITDA. You know, last year on the first half, we were probably closer to 5%-10%. So, you know, ultrasound is close to 17% or 18% of our top line. So, you know, you can sort of do the math on, you know, the margin benefit that it has at a group level from improving in the first half versus the second half, from the margins of 5%-10% in the first half and 15%-20% in the second half.
That's very helpful. That's all I have. Thanks.
Thank you. Your next question comes from Sean Laaman at Morgan Stanley. Please go ahead.
Good morning, Michael and Malik. I hope you're both well. First one, still, still on, still on cost. Just Michael or Malik, give us an idea of the percentage of the cost base that you feel like you have really good line of sight on, whether it be through EBAs or contracting with consumables. Then on the 5%-8% price, is it reasonable to expect margin growth for here, or really that's just a number to give you confidence that you're going to hold margin?
Yeah, firstly, on, on cost base and how much control or line of sight we have, as I've called out before, around 45%-50% of our cost base is labor. You know, about 60%-65% is subject to enterprise agreements. You know, we call out that that's largely locked in at 3.5%-5% at most. That gives us some comfort over at least, you know, 30% odd of our, of our cost base. Properties are moving in line with CPI, you know, that's about 10% of our cost base. You know, circa 8% growth in the property line, but, you know, I think that normalizes from here, potentially. Going into 2024, maybe 2023 is, is the new base, let's say.
you know, then, then you're looking at our doctor fee for service, you know, they move in line with our patient pricing. you know, if we move 5% on our patient price, our doctor fees go up by 5%, so there's margin protection in that. Consumables, you know, 10% of our cost base, you know, I think they're going up at probably closer to CPI, some of it more, but again, only 10% of our cost base, so we feel as though we can, we can manage that within reason. The, and the rest of the cost base is largely, you know, growth driven, let's say. Whilst we're on this growth story, Sean, you know, we'll keep pushing forward.
We're trying to grow our business, and, you know, that comes at a cost, but we'll, we'll try to balance the cost base as best as we can, knowing that, you know, we may grow the top line.
Just to conclude on that, no, we don't expect those price increases to increase margin. We have geared those price increases to, you know, recover incremental cost base in our organization.
Thank you, Michael. Just to move on to the carrier screening, I mean, it would be wonderful if it was broadly adopted across Australia, but, gentlemen, what, what are, what are your thoughts on, on how it does get adopted once it comes in? Is it through, like, leaflet drops at GP offices, through education programs? How do we envisage that it happens, and, and what's your level of confidence that it is indeed broadly adopted?
I think, the practitioners societies that influence doctors in their practice, as well as the colleges of obs and gynes, I think they're gonna be strong, and have been in the past, about recommending to the doctors that they offer that service to their patients. You know, historically, it's been, say, AUD 700 per test. That service now will be bulk billed for a basic carrier screen test, so therefore, there's no out-of-pocket, there's no affordability issue. They can also upgrade to a more fulsome, you know, disease panel to do the carrier screen testing as well.
look, that in conjunction with our own, you know, marketing strategies across the industry and the awareness that's building for carrier screen testing through government initiatives as well, I think we'll, we'll facilitate fairly quick transition to, you know, close to 80% in 2 years of those that are choosing to plan to have a family, to undertake that test, given, given, it's just gonna be a standard part of family planning, and also, there's no out-of-pocket attached to, to the basic test.
Cool. Thank, thanks, Michael. Just one last one. I probably should know this, but in the, the, revenue waterfall, in the DSU and other, where there was AUD 3 million revenue increase, within that, genetics, what, what actually is the genetics piece within that, that part of the, the revenue?
It is largely reproductive genetic screening, Sean. It's showing upside at this stage, but still early days.
Great. All right, gentlemen, thanks, thanks. Look forward to catching up.
Thanks, Sean.
Thank you. Your next question is a follow-up question from David Stanton at Jefferies. Please go ahead.
Hello again, David.
Thanks very much, Dean. hello, hello, hello. just very quickly from me, just more housekeeping stuff. fair to think that the D&A in 2024, you know, you, Malik, you mentioned it will... The D part at least will increase, we should we think the all, all in D&A shall increase by about 5% in 2024 over, over 2023? First question.
I think it's probably closer to, to 10%, Dave, given some of the infrastructure projects we have in the day hospitals particularly.
Okay. Then tax rate, you know, for 2024, in line with the 2023 number actual?
Yeah, depending on what happens in Asia, obviously a, a lower tax rate over there. I think, you know, safe to apply 28%, let's say.
Done. That's it, won't bother you anymore. Thank you.
Thanks, Dave.
Thank you. That does conclude our question and answer session for today. I would like to hand back now for some closing remarks.
Yeah, thank you, Cameron. Well, thank you everyone for taking the time to listen to the Monash IVF story. Really look forward to catching up with many of you over the oncoming week, and if you've got any follow-up questions or queries, feel free to connect with myself or Malik.
Thank you.
Thank you.
Thank you. That concludes our conference for today. Thank you for participating. You may now disconnect your lines.