Vitrolife: Igenomix acquisition outshines Q2 details - ABG

Global IVF market back at pre-pandemic levels
On 15 July, Vitrolife released its full Q2’21 report, which was broadly in line with the pre-announced figures. Sales grew by 94% (CER) and totalled SEK 382m (13% above ABGSCe), corresponding to ~6% growth (CER) versus Q2’19. The growth in the quarter was driven by a recovery in the global IVF market to 2019 levels but also market share gains. The performance across markets is mixed, with Japan and the US now ahead of pre-pandemic levels, while China broadly is on par. Regions such as Latin America and Southeast Asia, as well as IVF tourism markets, are still behind. All product categories saw a strong comeback versus Q2’20 with particularly strong growth in Genomics, which had a negative mix effect on the gross margin at 62.1% (ABGSCe 64.3%). Reported EBITDA of SEK 134m was negatively impacted by exceptional transportation and acquisition costs, driving an adj. EBITDA of SEK 148m (13% above ABGSCe) for a margin of 38.7% (ABGSCe 38.8%).

Igenomix acquisition could increase EBITDA by ~50% in ’22e
Vitrolife has signed an agreement to acquire Igenomix, a global reproductive genetic testing company. The firm’s main diagnostics tests help select the right embryo (PGT-A) and determine the optimal time for implantation (ERA). It has sales from 80 countries and operates 26 laboratories. Igenomix has grown by a CAGR of 28% over the last four years and could add around 78% to sales and 50% to EBITDA in ‘22e. The total price tag of EV ~SEK 12.7bn corresponds to an LTM EV/Sales of 13x and EV/EBITDA of 50x and will be financed with new shares and debt. The acquisition is subject to regulatory approval, expected in Q4’21.

Currently trading at ’22e pro forma EV/EBITDA of 58x
We have not added Igenomix to our estimates but we have increased our Vitrolife ’21e-‘23 EBITDA estimates by 4-8% following the report. On a ‘22e pro forma basis the combined entity is trading at an EV/EBITDA of 58x, including the increase in net debt and additional shares.

https://www.introduce.se/foretag/Vitrolife/Equity-research/2021/7/vitrolife---igenomix-acquisition-outshines-q2-details/