Virtus Health Ltd (ASX: VRT) shares fell 4.5% in early trade on Wednesday, ending the day down 3% at $7.50. The stock is down 7% from its recent high of $8 and 20% off its 12-month high of $9.20.
What happened?
Precisely nothing. Apart from there being a couple of negative articles in the press recently over the IVF industry. Aside from that, this appears to be Mr Market at work.
Should investors be concerned?
There will be days when Mr Market offers you a great company for a cheaper price. I believe that yesterday was one of those days. Virtus Health only listed recently but offers an attractive entry point into the growing IVF market.
Virtus, along with Monash IVF Group Ltd (ASX: MVF) and Primary Health Care Limited (ASX: PRY) are three good options in the local IVF market and should all benefit from the long-term trend towards couples having children later in life.
Interestingly, Monash and Virtus shares fell on Wednesday, while Primary's rose. Market analysts believe that Primary's bulk-billed IVF service will strip some demand away from Monash and Virtus, however, I believe the superior and complimentary services offered by the two premium services will ensure they retain the majority of clients.
The biggest problem with investing in healthcare companies can be the ongoing capital requirements. Surgery units need to be fitted out and kept up to date, staff need to be trained, and premises bought. I'm a big fan of capital-light businesses that require little debt and offer massive operating leverage.
