Ann: Chairman's Address to Shareholders, page-22

With significant intangible assets for both mvf and vrt, is rota a good metric? Wouldn’t roe which is still very high (about 13-14% for vrt and 17% for mvf) a better metric?

In terms of human capital I have a bit of an understanding.

The departure of burmeister is unusual due to her significant pulling power in Melbourne. I remember reading that mvf did not expect her departure to effect 17 and 18 earnings which is very hard to believe, and has been debunked by their latest release (unless the earnings loss in 19 from lynn is on top of the 20% NPAT drop!)

Fertility specialisation is very popular amongst o&g trainees for a few reasons but mainly due to the flexibility and work hours, particularly as the number of female o&g doctors is incredibly high and rising. Being an obstetrician would be an extremely difficult job, the oncall is probably the most onerous of any medical specialty, in terms of frequency.

I don’t think vrt and mvf will have any problems filling chairs.
The doctors are also often given shares which are escrowed usually for 12 months which gets them ‘hooked’ to dividends etc and helps to keep them onside.
Popular fertility specialists are a much harder crowd to keep, but in the main fairly rare. They have the power of word of mouth and social media, but most of the doctors receive their referrals though mvf itself rather than directly to the doctor, but even popular specialist who leave mvf or vrt will need to keep using them for diagnostics etc.

Without wanting to stereotype but the large number of female fertility specialists often don’t want the hassle of running their own business and so the corporate model does work. Fertility is very different to surgery and gp practises. Radiology has some similarity, having significant capital expenses and a referral network, but the enormous rise in imaging is keeping them popular and ‘rare’, and making it hard for corporate radiology.

Mvf and vrt’s biggest advantage is their scale for sales and marketing. Individual drs can’t compete.

Overall I don’t think vrt or mvf are broken.
I think the claim regarding the cyclical nature of these business are overblown.
There are risks particularly with regard to government funding but I think these are relatively small, as both sides of the house would be very unpopular for cutting ivf funding.

I think the biggest problem with mvf and vrt were they tried to sell the discourse of rising cycles when they listed which caused high expectations. They are back to earth now and I think will prosper. I believe mvf could be in for a rough year or so and sp could certainly fall further but overall it’s a sound business model imo.