I would now like to hand the conference over to Mr. Michael Knaap, CEO. Please go ahead.
Thank you, Melanie, good afternoon, everyone, and thank you for joining us today for Monash IVF Group's results presentation for the first half of this financial year. Our CFO, Malik Jainudeen, joins me and will later be stepping us through some of the details of the financials. By way of background, Monash IVF is a market leader in providing fertility solutions for all in our core assisted reproductive services, diagnostics, genetics, and pathology services, with a growing network of 47 IVF and women's ultrasound clinics and centers across Australia and Southeast Asia. Our experienced and capable team includes 123 doctors and in excess of 550 scientific, nursing, and support staff. It's an appropriate time to take this opportunity to thank every one of our team for the unrelenting patient-first mindset and the agility that they have shown in order to thrive during the pandemic.
This focus and effort of our people is the reason we are delivering such a positive result today. I'd now like to touch on the key points in the first half of the financial year 2021, represented on page three of the presentation. We delivered a AUD 14.6 million reported NPAT, being an increase of 78.5% versus the previous corresponding period. This correlated to an adjusted or operating NPAT of AUD 12 million, representing a 32% growth on the previous corresponding period. This was well above our first half profit guidance provided in November 2020 of between AUD 11 million and AUD 11.5 million. We achieved 27.4% stimulated cycle growth in the first half of FY 2021, due partly to the recovery of pent-up demand created during the temporary suspension of services in the April to May 2020 period.
Importantly, in the second quarter of FY21, our Australian stimulated cycles grew by 33.1%, well above the industry national growth rate of 20.6% for the same period. This led to market share gains all across our group. These growth rates represent the resilience of our Australian IVF business and the industry as a whole, and it also highlights the non-discretionary and critical nature of our ARS services. Our Sydney CBD flagship clinic opened in November, illustrating best-in-class patient experience. This is a cornerstone initiative to attract new fertility specialists in the region and grow our market share where we only hold 9.1% market share in the first half of FY21. Our ultrasound business remained open throughout the pandemic and delivered solid ultrasound scan growth of 11.7%.
In Kuala Lumpur, we achieved 6.6% stimulated cycle growth as the clinic experienced a slower recovery with ongoing impact of COVID-19 on the Malaysian economy. Despite this, we made solid progress in our Southeast Asian expansion plan, with two Southeast Asian-based partnerships now in place. Our cash flow generation and our capital metrics all remain solid, with a strong balance sheet positioning us well for future organic and inorganic growth, which includes the support of key strategic infrastructure projects. With all of this in mind, we have recommenced dividends to our shareholders, declaring a AUD 0.021 fully franked interim dividend for the first half of FY21.
As we take a look at the financial summary on slide four, our revenue increased by 17.8% at AUD 90.8 million for the half, which was impacted positively by the robust recovery following the impact of COVID-19, market share gains, and an underlying increase in demand for ARS services, and a strong performance from our ultrasound business. Our underlying business and fundamentals are solid, with positive momentum of our growth and improvement programs, along with a strong patient pipeline as we entered into the second half of this financial year. We achieved AUD 12 million adjusted or underlying NPAT, an adjusted EBITDA of AUD 24.7 million, and a AUD 28.7 million reported EBITDA. Malik will take us through some of the adjustments later on. As we move on to the specifics of the recovery and our return to growth on slide six.
This table provides some of the growth metrics during and post the heavily impacted COVID-19 period and the subsequent recovery, which then evolved to market growth beyond the pent-up demand. In the March to June 2020 period, we declined in our Australian stimulated cycles by 14.5% and then managed to recover that and more with a 22.3% growth in the first quarter of this financial year. Our growth then accelerated in the second quarter of FY21 to 33.1% as we gained market share. Combined, this brought our total growth to 27.4% for the first half, and our new patient pipeline growth indicates strong growth well above historical industry averages will continue to occur in the second half of FY21. In Malaysia, COVID-19 restrictions and developments continue to hamper consumer confidence. This has impacted the quality of the recovery in that region.
We were pleased that we delivered 11.7% ultrasound scan growth in the first half of FY21 compared to the previous corresponding period following market share and industry growth. Having a clear picture of the recovery and growth acceleration of our Australian IVF volumes, I would like to cover off on the state growth rates on slide six. All our Australian states experienced robust growth in the first half of FY21, apart from Tasmania. In Queensland, our stimulated cycles increased by 43.4%, with the acquisition of Fertility Solutions and organic growth all contributing. In New South Wales, our stimulated cycles increased by 29.6%, with the new Sydney CBD clinic anticipated to contribute to ongoing growth. This clinic is performing to plan in the January and February months. Our Victorian stimulated cycles increased by 23.4% and we gained market share for the half.
This is particularly pleasing given the loss of five doctors in the previous corresponding period. In South Australia, our stimulated cycles increased by 14%, and in the Northern Territory, our cycles increased by 46.5%. Tasmania, on a small base, decreased their stimulated cycles by 6.2%. Furthermore, our frozen embryo transfers increased by 15.7%, with all states demonstrating solid growth, and it is expected to grow in the second half of FY 2021, following strong stimulated cycle growth in the first half of this financial year. As we now look at slide seven to focus on the broader ARS Australian market, where demand for services is at record highs. In our key markets, industry-stimulated cycle volumes were favorably impacted in the first quarter as a result of the pent-up demand created in the fourth quarter of the previous financial year.
This growth continued into the second quarter, whereby we now see the industry three and five-year annual CAGRs at around 3%. Broadly speaking, the COVID-19 pandemic has changed the mindset of our patient cohort, with great emphasis on family, health, and wellbeing, resulting in a redirection of priorities towards family extension. As we take a look at slide eight on our Australian market share. Market share gains reconfirm our best-in-class market positioning and our adaption to a COVID-safe operating environment to protect the health and safety of our patients, our doctors, and our employees. In our key markets, our stimulated cycle market share increased to 20.2% from 19.6%, with the gain being delivered in the second quarter in this financial year. This is a reflection of the positive momentum we have as we move into 2021.
Growth in market share was driven by a number of factors, some of which I have previously mentioned. However, others worth noting include the increase in marketing investment, which is having both a short-term and long-term positive patient pipeline impact. This has allowed us to have an extremely high share of voice during the pandemic, which triggered strong demand generation for our services. We have also been very successful in attracting new fertility specialists that are contributing towards the growth and market share gains. This has triggered stimulated cycle market share growth in Victoria, New South Wales, Queensland, and the Northern Territory, whilst we continue to hold majority market share in excess of 60% in South Australia. I would now like to welcome our CFO, Malik Jainudeen, to take us through the financial overview for the year.
Thanks, Michael. Turning over to slide 10, it illustrates the detail of the buildup and growth of our revenue during the six months. We generated an additional AUD 5.2 million of revenue in our domestic IVF business in the first quarter, much of this growth was achieved by servicing the pent-up demand created at the end of last year, following the shutdown of services in the initial response to COVID. At the start of the year, there was uncertainty as to whether growth could continue beyond the first quarter, our second quarter has demonstrated that real underlying growth has occurred. A further AUD 5.6 million of additional revenue was generated during the second quarter, reflecting growth in the industry but also market share gains. This revenue growth reflects the additional 608 stimulated cycles performed in the second quarter, resulting in more than 30% growth on last year.
It should be noted that our second quarter revenue per stimulated cycle was impacted from the bulk billing of treatments provided to patients who have been impacted by the suspension of one of our in-house genetic tests. The Fertility Solutions acquisition in Queensland in September 2019 added a further AUD 1.2 million of revenue and is performing well and above expectations. Our ultrasound business contributed a further AUD 1.4 million of revenues, reflecting scan growth of almost 12%, and our in-house NIPT test grew by almost 18%. The only negative, as Michael mentioned, was the performance of our KL clinic in Malaysia, which has been challenged by pricing pressures, more adverse and continued COVID impacts. While stimulated cycles grew, our average price in KL reduced in response to competitor activity. If we turn over to slide 11, it provides a summary of the P&L.
Our reported NPAT for the half was up by 78.5% to AUD 14.6 million. Our adjusted NPAT was AUD 12 million for the half, which is up by 32% on PCP and above the guidance provided in November at the AGM. We achieved reasonable leverage following the increase in revenues with adjusted EBIT up by 30%. In saying this, our cost base has had to increase to deliver the strong volume growth experienced. We've invested into the future, as Michael mentioned. Marketing spend was up by AUD 600,000 compared to last year, and it was quite evident during the half we had the majority of share of voice in the sector. We saw this as an opportunity, which has supported our strong pipeline going into the second half.
Our cost base includes operating and commissioning costs at our new Sydney fertility clinic prior to opening in November. Our cost base also includes costs associated with our response to the suspension of niPGT-A testing. What was positive was the realization of cost-based actions taken in FY20, which has resulted in a AUD 2.7 million reduction in our cost base, which has offset many of the cost increases noted. If we turn over to slide 12, which provides a reconciliation of statutory profit to adjusted profit. The items we have adjusted are presented on the slide. We've adjusted out the cost associated with the new Sydney fertility clinic prior to it opening in November. We've adjusted the net benefit of JobKeeper subsidies received during the first quarter, which increased our reported NPAT by AUD 3.5 million.
The business was not eligible for any further JobKeeper payments beyond September, considering the strength of our revenue in the second quarter. In saying this, the JobKeeper subsidy has supported our business, considering we could not provide our services for a period of time, ensuring our workforce was engaged and maintained so that we could deal with the growth we have experienced. The last item to note is we've normalized out a AUD 200,000 increase in our acquisition-related earn-out provisions, considering the strong performance of our Fertility Solutions business in Queensland. If we turn over to slide 13, which summarizes movements in cash flow during the year. Our conversion of EBITDA to operating cash flow was solid at 83%, an improvement as compared to this time last year, and we should see further improvement in the second half.
Cash available for dividends and debt repayments was substantial, with AUD 9.6 million available for this, which is AUD 10 million higher than last year. We've continued to invest in the future with much of our AUD 6.2 million of CapEx spent on the new Sydney clinic and growth assets in our laboratories to keep up with the demand we have experienced and expect to experience in the second half. If we turn over to slide 14, which illustrates our balance sheet position. Net debt has reduced by AUD 4.7 million, and our balance sheet is well positioned to support the execution of our growth strategy. Following the equity raising last year, we've completed our new Sydney fertility clinic. We've completed an acquisition in Johor Bahru, which is just outside of Singapore. We have partnered with a large Indonesian private hospital to open a new clinic in Jakarta.
We are advancing our plans to build new clinics in Melbourne, Brisbane, and the Gold Coast, and we are prepared to open further clinics in Asia. Following the strong results in the first half, the board have declared a AUD 0.021 fully franked interim dividend, which is at a 68% underlying NPAT payout ratio. I'll hand you back to Michael now to go through the operational performance in more detail.
Thank you, Malik. We now turn to slide 18, as we start to work through some of the details of our Australian ARS operational performance. We'll start with scientific leadership. We have an 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. The chart at the top represents the continuous improvement in our clinical pregnancy rates across our whole group, with clinical pregnancies in calendar year 2020 increasing by a very significant 3.8% as compared to calendar year 2018. We have been on this journey of continuous improvement throughout our long heritage. However, it is worthwhile calling out some of the initiatives that have contributed to the group-wide improvement over the previous couple of years.
The key driver of our improvement is our group-wide scientific collaboration on the Monash Way, which has been in place for in excess of three years. Under the Monash Way, we unify scientific practices across all our clinics. We have a comprehensive end-to-end laboratory reviews. We have made investment in state-of-the-art equipment and lab systems, and our people continue to evolve our scientific value proposition whilst utilizing our in-house learning and development tools. Furthermore, all our internal reporting and benchmarking is aligned with the newly launched Your IVF national reporting guidelines and framework, ensuring we are monitoring and benchmarking across the industry in real time. We will continue to partner innovative organizations to advance new technologies, such as the safer and softer method of ICSI that is demonstrating improved fertility rates, therefore creating more embryos for our patients.
New partnerships and technologies, backed up by our ongoing research focus through our various internal research bodies, will ensure we continue to evolve and improve our success rates. If I take your attention to slide 17. In regards to doctor partnerships specifically, two new experienced fertility specialists have joined us, whilst an additional four trainee doctors were credentialed and are now treating patients. We now have nine trainee doctors in our network, with a foundation for growth and succession planning. We will continue to focus on recruiting fertility specialists across Australia, with a specific focus on the Sydney market to grow our market share. A key strategic leadership appointment was made of a genomic pathologist to lead our next generation of genetics products and services, as our genetics capability continues to evolve and support our IVF business.
In regards to clinical infrastructure, the pictures you see on this slide are of our Sydney CBD clinic that has commenced patient treatments, and the recent refurbishment of our Repromed clinic in Adelaide. The strategic priority of clinic infrastructure continues to be a focus in the medium-term horizon. Other key infrastructure projects include transformation of our Melbourne footprint, and new clinics in both the Gold Coast and Brisbane are in the preliminary phases of planning. Our patient experience principle remains focused on care, empathy, support, empowerment, and a consistent patient journey throughout our network of clinics. Our net promoter score continues to be a key measure of patient satisfaction, which assists us in identifying and prioritizing areas of the business in most need of improvement. We turn to slide 18. Our people engagement remains a key priority.
We are continuing to develop, adapt, and innovate our people-based processes to navigate COVID normal, with the safety of our people, patients, and doctors the key priority. We have also implemented a new flexible working policy to support our employees working under a hybrid model, returning to offices and clinics, and working from home. We continue to work with our leadership teams to drive engagement to create a high-performing, accountable, fun, safe, and inclusive workplace. On our marketing and brands, we strategically increased our marketing investment during the first half of FY21, building a strong media presence. We also implemented a new innovative and progressive marketing strategy with the launch of a new brand, new creative for mainstream and digital advertising and events, and also a new website for our IVF business.
All this activity and effort is a key driver of market share growth and has contributed to set us up for a strong future pipeline. If we take a look at slide 19 on our diagnostics performance. We delivered solid growth in the first half of FY 2021, whereby ultrasound scan volumes increased by 11.7%, and non-invasive prenatal testing increased by 17.9%. Our ultrasound scan volumes increased across all markets, with Sydney growing by 13.6%, and Melbourne growth was a little more subdued at 2.7%. The Melbourne market was impacted by the COVID-19 movement restrictions during the July to October period. The COVID-19 movement restrictions impacted the patient geographical spread, with clinics in outer suburban areas delivering good growth, and there was decline in the inner-city locations. We are now starting to gradually see a reversion of patients back to the inner-city clinics.
With the key appointment of our genetics and genomic pathologist, this ensures compliance with our NPAAC lab supervision guidelines, which become mandatory for all IVF labs from August 2021. We also delivered a 64% increase in reproductive carrier screening counseling volumes, which is expected to be a key strategic driver of future stimulated cycle growth in order to prevent genetic disease in children. Public awareness is continuing to grow for this service. As we take a quick look at our ARS international performance on slide 20. Recovery in Kuala Lumpur has been slower due to the ongoing impact of COVID-19. However, given the challenging environment, the performance was solid, with stimulated cycles increasing by 6.6% for the first half.
Our KL revenue was AUD 5.5 million, which was down 6.6% compared to the PCP, which was primarily due to promotional and discount offerings in light of current competitive pricing pressure and the weaker macroeconomic conditions. The EBIT decreased by 22% from AUD 2.5 million to AUD 1.9 million. Movement control orders continued to impact performance in Kuala Lumpur during the first half of 2021, they have continued into the early months of the second half. We are continuing to service our patient needs. We have made progress with our Southeast Asian expansion strategy, in June 2020, we acquired a majority stake in a recently established IVF clinic in Johor Bahru, Malaysia. The clinic services patients in Southern Malaysia and Singapore, which has been impacted by the continued closure of the border between Singapore and Malaysia.
Given the current restrictions, the Johor Bahru clinic is performing in line with expectations. In January of 2021, we, in partnership with a large Indonesian private hospital group, Mitra Keluarga, opened a greenfield fertility clinic in Jakarta, further expanding our footprint in the Southeast Asian region. The acquisition and partnership opportunities are continuing to evolve and present in this region, notwithstanding the current pandemic. If we move to slide 22. Our Vision 2022 strategic roadmap is consistent and provides a clear pathway forward. It also enables everyone to understand the priorities, actions, and decisions required to achieve success and deliver profitable growth in the oncoming years. We have made significant progress on our strategic pillars, as outlined in previous slides, and we will continue to do so in order to deliver our Vision 2022.
It is pleasing that we continue to maintain momentum on our strategic growth initiatives whilst navigating through the uncertainties and interruptions as a result of the pandemic. Moving to slide 23. The strong and swift recovery in industry volumes following the disruption to IVF services during the pandemic demonstrates the resilience of the industry and the favorable underlying demographics and the fundamentals. The desire for patients to seek assistance when trying to conceive has increased despite the ongoing pandemic. Our patient pipeline balance sheet and adapted COVID-safe operating environment positions us well to grow future earnings through operational and strategic growth initiatives. I would just like to reemphasize a few of the key initiatives to support this growth. We have recently attracted new fertility specialists and opened the Sydney CBD IVF clinic. We are investing in the transformation of our Melbourne footprint, along with other clinic infrastructure projects.
Our innovative marketing investment above historical levels continues to deliver a strong patient pipeline for the future. We are also continuing our focus on the significant opportunities available in the Southeast Asian IVF market. As we move to the all-important outlook statement on slide 24. I would like to clarify that the following outlook statement is subject to any further COVID-19 related disruption of services. Our reported NPAT for the year ending 30 June 2021 is expected to be approximately AUD 23.7 million-AUD 25.7 million, as compared to AUD 11.8 million in the prior comparative period. Our NPAT before certain non-regular items for the year ending 30 June 2021 is expected to be approximately AUD 21 million-AUD 23 million, as compared to AUD 14.4 million in the prior comparative period.
To clarify the difference between our reported and adjusted or operating NPAT, the difference is the total non-regular items that occurred in the first half of 2021, amounting to AUD 2.7 million post-tax, which Malik has already taken us through. It is also worthwhile noting that the NPAT before certain non-regular items is inclusive of the impact of goodwill and ex gratia remediation treatment offers applicable to our non-invasive PGT-A patients that were impacted by the suspension of this program. That concludes the formal part of the presentation, and Malik and I are happy to take questions. Thank you, Melanie.
Thank you. Your first question comes from David Stanton with Jefferies. Please go ahead.
Good afternoon, team, and thanks very much for taking my questions. Firstly, just in Australia, I wonder if you could tell me how many remediation cycles you had in the first half, please. If you can give us that number, were they mostly seen in the second quarter, or are they split between the first and second quarters? Thank you.
Hey, David. It's Malik here. They all came through in the second quarter.
I won't quote the exact numbers, but it's immaterial. Many of those patients were already in our pipeline for future service. It's just happened that they were all bulk bill treatments provided to that patient group.
Okay. Yeah, sure. I guess I would say that, even if they're, as you say, immaterial, they're going to have some effect on your market share gains. Would that be a fair enough statement or not?
I think the market share gains are valid as they're presented, David, because, as Malik said, those patients were already in the pipeline and were planning treatment anyway.
Okay. If we could move on to sort of a market growth assumption in Australia, for the second half of FY21 in terms of volume. Would it be fair to say that we should be thinking the market may grow at 6%-7% for the second half?
We can only go by the numbers that we're seeing, and as we said, our patient pipeline is strong and we expect it to be well above historical averages in growth rate and we see a number, a little bit north of the number that you've quoted of 6% to 7%. Our outlook statement reflects that.
Understood. Longer term, ex-COVID and the bump you've seen from people getting back into IVF post-COVID, should we be thinking, still a longer term growth rate for the industry is in that 2%-3% volume growth range in Australia?
I think at this stage, we do see consistent growth rates, and that's driven also by new technology, genetics capability, et cetera, donor services, social egg freezing, and all those other elements that continue to grow the category. We don't see an abating to that in the near term. Certainly, in the longer term, we expect it to probably normalize that number of
Okay. Finally, before I get back in the queue, your cost growth implied in your guidance for the full year, should we be thinking an ongoing increase in marketing spend into the second half, greater than the first half and, effectively cost growth, guidance, I guess, for the second half of FY 2021 compared to the first half close?
The second half spend will be consistent with the first half, David. We'll continue with that momentum because we're seeing that it has an improvement to our pipeline. The strategy around the marketing is working.
Overall marketing spend first half equals second half, but overall cost growth, should we be thinking expense growth or expenses in the second half should equal expenses in the first half?
Yeah. The real step change is the Sydney fixed costs, and we call that out as a non-regular item in.
parts of the first half, That'll be embedded in our cost base going forward. You can.
Understood. Thank you.
add that back into our cost base in the second half.
Great. Thank you.
Thanks, David.
Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. There are no further questions at this time. I'll now hand back to Mr. Knaap for closing remarks.
Yeah, look, I'd just like to say thank you for your time and interest in Monash IVF, and we, Malik and myself, and Hamish Hamilton, our COO, will be joining us on the roadshow, and we look forward to seeing many of you over the oncoming weeks. Thank you again for your time.
That does conclude our conference for today. Thank you for participating. You may now disconnect.