Monash IVF Group Limited (MIS.F) Earnings Call Transcript & Summary

Good morning, everyone, and thank you for joining us today for our results presentation for the first half of FY '24. As always, I have Malik Jainudeen here, our CFO, who will be later stepping us through some of the financials. By way of introduction, Monash IVF is a market leader in providing reproductive care in our core assisted reproductive services, day hospitals, diagnostics, genetics and pathology services with an expanding network of IVF and women's ultrasound clinics and service centers across Australia and Southeast Asia. Our experienced capable team now includes 161 doctors and in excess of 900 scientific nursing, counseling and support staff. I would like to take this opportunity to thank every one of our teams for their unrelenting patient-first mindset. This focused care and commitment of our people is the reason we are delivering this result today and continue to have such an optimistic outlook for the future. I'd now like to touch on the key financial highlights for the half on Slide 3. Our underlying profits were at the top end of guidance provided in November, delivering an underlying NPAT of $15 million, which increased by 18.7% versus the previous period, and there was a revenue increase of 21.7% versus the previous period. With strong operating cash flow conversion of 99% and an optimistic outlook, we were able to declare a $0.025 per share fully franked final dividend, which was well up on the previous period. We have also extended our debt facility to February '27 that Malik will take us through later on. If you move to the operational highlights on Slide 4, of critical importance, we have continued to drive better outcomes for our patients with clinical success rates improving another 0.9% over the last year. In Australia, we further grew the ARS market share of 1.8% with an increase in stimulated cycles of 15.1%, which was well above industry growth of 5.1% in the half. Our Ultrasound business continued to gain momentum, delivering scan growth of 7% in the first half of this year. Our IVF patient pipeline continues to be strong with new patient registrations up 11% on the previous period. We continue to see the benefits of the strength of our doctor partnerships and being a destination of choice for specialists, welcoming another 9 fertility specialists and continuing down the path of building strength in talent and numbers of our fertility specialist team. Our WA expansion is progressing well with PIVET Medical Centre acquisition performing above expectations, and the acquisition of Fertility North is expected to be completed in March now that the ACCC clearance has been provided as of yesterday. Our clinical infrastructure and expansion projects have continued to progress well with Gold Coast complete and Cremorne in Melbourne complete and fully operational. Internationally and specifically in Southeast Asia, our stimulated cycles increased 4.1% versus the previous period with the International segment EBITDA decreasing slightly by $0.3 million. However, we are seeing positive signs in our pipeline in Kuala Lumpur and Singapore, indicating solid growth as we move into the second half of this financial year. I now wanted to touch on the compelling underlying structural tailwinds in our industry to support volume growth into the future, which is on Slide 5. The Australian IVF market grew in the first half '24 at above 5%, replicating the growth in the previous half year whilst the new patient registrations for the period were also up 11%, suggesting good growth again into the second half of FY '24. All our indicators are that we have a resilient industry throughout challenging economic times. We keep emphasizing that if you take one thing from this discussion, it should be that IVF services are absolutely not discretionary. The traditional demand drivers of advanced maternal age, improving pregnancy rates and favorable government funding are all still very relevant. There is new demand drivers with new services, growing patient segments and new channels that indicate over time the industry growth trajectory could trend towards 5%, with new demand drivers supplementing traditional demand drivers. If we look at Slide 6, the focus on the broad ARS Australian market where demand for services in Australia continues at historical high levels. The left-hand graph shows half yearly growth in stimulated cycles. In the first half of '24, industry stimulated cycles grew by 5.1%. As outlined previously, the traditional growth drivers and growth in new services and patient segments have all contributed to continued growth over the previous year, and they will be significant contributors to growth in the future. Although there can be some short-term volatile [ evidence ] in industry volumes, the industry is well above pre-pandemic levels, and our recent patient pipeline indicate that our market outlook for growth in the second half of FY '24 is very positive. The right-hand graph reflects the number of Australian cycles per year, noting the step change in volume in FY '21 post the initiation of the pandemic. And you can see that FY '22 and FY '23 volumes were maintained, and now we're expecting FY '24 will deliver some growth. Having a clear picture of the Australian IVF volumes, I would just like to cover off on more detail around market shares on Slide 7. Our stimulated cycle activity performed better than industry as we continue to grow market share in the first half of FY '24. This has now occurred over a sustained period of 4 years. Our market share in Australia grew by 1.8% to 20.9% during the first half as we accelerated the momentum gained from the previous years. We have market share gains in Victoria, Queensland, New South Wales, and there was a decline in South Australia. Pleasingly, the South Australian patient pipeline has improved in the second quarter of FY '24, which we anticipate will improve performance through treatments in the fourth quarter of this financial year. We're also happy with our introduction into the WA market through the PIVET acquisition, which positions us at 13.7% market share for the first half in FY '24 as we endeavor to become more meaningful in WA through the acquisition of Fertility North. Contribution from new fertility specialists attracted in previous and current years, effective marketing campaigns and the acquisition of PIVET and Fertility North will all contribute to market share growth in the second half of FY '24. As you can see from the graph on the bottom right, we have sustainably built market share by 3.6% over the last 4 years with further market share gains expected for the reasons previously outlined and with the strength of our current patient pipeline. I'd now like to welcome our CFO, Mr. Malik Jainudeen, to take us through the financial results for the year. Welcome, Malik.

Thank you, Michael, and good morning, everyone, and thank you for listening. So if you turn over to Slide 9, I'll just quickly take you through our buildup of our revenue. And if you look at the graph from left to right, I'll just talk about it in that flow. Another great result in the context of building revenue year-on-year, and since the start of the pandemic, we've illustrated revenue growth half-on-half and year-on-year. Revenue grew by 21%, and if you break that down, 9% came from the Domestic IVF business, excluding acquisitions, of which 5% was increased by prices and 4% by activity. As Michael said, when he was talking about market share, we are very buoyed by the Victorian business. Just remember, it is our largest business, and it increased stimulated cycles by 8%. Queensland increased by 6%, New South Wales by 11%. And if you look at the industry growth that Michael illustrated, which grew by 5%, that generated a further $3 million of revenue. As Michael said, again, market share gains in all markets, except for South Australia and Northern Territory, that drove additional revenue of $2.8 million, and price increases generated another $5 million across the Domestic IVF business. Kuala Lumpur was a negative. It had revenue that declined by 5%, but the Singapore business started to ramp up, and its stimulated cycles increased by 16%, resulting in a 0.3% increase in revenue. Looking at the Ultrasound business, it contributed 2% of the revenue growth or $1.7 million as the Melbourne business is fully recovered and the Sydney Ultrasound business has sustained its recovery that we talked about last year. The PIVET acquisition, if you remember, we acquired that business in May, so we had a full 6-month contribution from that business as well as a part contribution from the clinicians they came across as part of the ART Associates acquisition that added a 9% increase to revenue. And just lastly, further revenue growth of $4.8 million, which was experienced through our day hospitals. We opened the Gold Coast day hospital in late October. So we had 2 months of revenue contribution. And genetics income grew as well, and I think in 6 months' time, we'll talk about a material uplift coming out of that revenue stream. So in summary, 11% growth in our Australian IVF business and Ultrasound businesses, 2% growth in Asia and 9% from acquisitions. If we go over to Slide 10, just talk to EBITDA growth. Pleasing results. Underlying EBITDA increased by 20% to $32.2 million. Domestic IVF business, including the PIVET acquisition, generated additional EBITDA of $4.4 million, and that came from an increase of $15.6 million of revenue. The cost base pretty consistent with our health care peers, again, a little bit of pressure there. You'll see increases of 7% to 8% in property prices, which are aligned to CPI, utility increases that were double-digit growth. Labor increases at 4% to 6%, so fairly controlled through our major enterprise agreements as well as most of the other lines going up by CPI. But I think the result clearly demonstrates that price increases of between 5% to 8% has offset the majority of those pressures, and we should see stability going into the second half. International business EBITDA declined by 0.2%. I spoke about KL being a negative, but Michael, again, and I'll reiterate that KL has been off to a good start in January and February. Singapore off to a good start in January and February as well. So we should be talking about a good outcome in Asia in the second half in 6 months' time. Regarding the Ultrasound business. Again, it was a challenging business over the last 3 years, but we're seeing the recovery now. We talked about Sydney recovery last year. Melbourne has recovered in full in the 6-month period, and as a result, EBITDA has grown by $1.2 million. If you go over to Slide 11, just a quick highlight of our P&L. Revenue up by 21%, EBITDA up by 20%, NPAT up by 19%, margins largely maintained, again, heavy pressure from the current environment around CPI, but at the same time, there's been a heavy investment into the future. And we talk about new revenue streams, whether that's day hospitals, whether that's genetics. Marketing, that will drive growth in the next 1 to 2 years. And again, we've increased marketing year-on-year for the last 4 years. And as well, we've had a heavy investment in cybersecurity to protect our IT environment. Just on depreciation and amortization at a reported level, up by $1.8 million. Some of that includes rent expense for properties that are yet to be occupied and a little bit of noncash lease expense in there as well. If you're thinking about depreciation for the second half, we'll see a little bit of an uplift that will be on the back of new day hospitals. We'll have a full 6 months of depreciation for the new Melbourne day hospital on the Gold Coast for the full 6 months in the second half. Interest expense up by $1.2 million and that's pretty consistent. BBSY is higher. I mean we've had a higher average debt that went up about $21 million on average. Just on Slide 12, just a little bit on the cash flow. Again, as Michael said at the start, conversion really strong, close to 100%, and the first half usually is a slower conversion period. So we're pretty happy with 100%, and that compares to 89% last year and again, just illustrates the quality of earnings continue to support the strong cash flow conversion that we've illustrated. CapEx for the year was $13 million. Again, day hospitals -- the new day hospitals drove the bulk of it; 2 new relocated ultrasound clinics, which were done for greater capacity; and completed rollouts of our embryoscope technology into our full-time IVF laboratories. Thinking about the infrastructure program going forward. We're at the back end of it. We'll still have Brisbane, a smaller one in Sunshine, and we're thinking that we'll return to a more normal CapEx environment at the back end of FY '25. All righty. Just over to the balance sheet, Page 13. As Michael said, we've renewed our debt facility. You'll notice that it was classified as current at 31 December. That was due in December 2024, but we've now renewed it and extended it to February 2027, so that gives us security for another 3 years. And also to note, the size of the facility has gone up from $50 million to $70 million. And just in the context of the Fertility North acquisition, as Michael said, ACCC will not be opposing the transaction, so we should look to complete that in May -- sorry, in March. Hopefully, early March but at least, during March. And that will be funded through debt, so we've increased the size of the facility basically for that purpose. Back to you, Michael.

Thank you, Malik. We'll move on to Slide 15 and start through some of the details of our Australian ARS operational performance. We'll start with doctor partnerships, which is an essential pillar of our strategy. 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. We collaborate with existing and prospective doctors to ensure that doctor value proposition is tailored to their needs and promotes long-term career progression. We continue to gather momentum in our doctor recruitment through acquisitions and direct recruitment, having welcomed 70 new clinicians over the last 5.5 years with 34 being added in the most recent 18 months. These results can only be achieved when you have a highly engaged doctor group being advocate for Monash IVF as a result of the experience and service quality they and their patients are recipients of. It's also worth noting that we'll add a further 8 new fertility specialists on completion of the Fertility North acquisition. Our focus remains on attracting and onboarding new and experienced fertility specialists, with suitable cultural fit, outstanding clinical competencies and industry reputation. Just take a look at our clinical infrastructure progress on Slide 16 with our investment creating state-of-the-art facilities across fertility, day surgery and ultrasound services. The completion of a new Brisbane flagship site in FY '25 will be the culmination of our major infrastructure transformation that has created 4 flagship sites in major cities in Australia. We've continued to invest in our long-term future through new and upgraded clinic infrastructure as a commitment to driving improvement to our patient and doctor experience whilst also representing the confidence we have in the future growth. We've completed new clinics in Cremorne, Victoria and the Gold Coast whilst expanding capacity in Sydney CBD and refreshing the PIVET site in Perth. We have also completed 2 new women's ultrasound clinics in Sydney at St Leonards and the Northern Beaches, and we've refurbished one in Kogarah whilst adding additional capacity. We are very proud of all our new clinics that create a warm, caring, comfortable and friendly environment. Any of you that would be interested in taking a tour of some of our new clinics, we would be certainly happy to oblige. If you take a look at an update on the acquisitions on Slide 17, following on from the successful acquisition of ART Associates in Brisbane, we prioritized building a presence in the WA market through the acquisition of PIVET, which was completed in May 2023. That acquisition has exceeded expectations over the last 8 months and is now well integrated into the Monash IVF family, including a rebranding to Monash IVF and the refurbishment of the clinic that you can see in the bottom of this particular slide with the Monash IVF green branded colors. Furthermore, the acquisition of Fertility North in Joondalup will complement the region as they service different catchment areas than PIVET. We look forward to welcoming the new fertility specialists and the team to Monash IVF. We are very pleased that the ACCC public review is now complete, and we can move forward with completing the acquisition. If you move to Slide 18 to focus on scientific leadership, we have a continued unrelenting focus on investing and building scientific capability to ensure that we're giving our patients the best possible outcomes and differentiating our value proposition to patients and doctors. The chart at the bottom left of this slide, we're very proud of, as it represents the continuous improvement in our clinical pregnancy rates across our group, with clinical pregnancies in 2023 to date increasing by a very significant 6.3% as compared to the calendar year of 2018. There has been strong incremental improvement in every single year. We've been on this journey of continuous improvement throughout our long heritage and the Monash way is well embedded across our group in our labs and has driven unified state-of-the-art science and technology. It's worthwhile calling out some of the initiatives that will drive further improvements to our success rates into the future. We will continue to partner innovative organizations to advance new technologies. A few examples include another sperm selection device, a safer and softer method of ICSI, minimizing damage to eggs and also a novel wearable hormone fertility tracker, which can potentially revolutionize reproductive treatment for our patients. Furthermore, we have completed the rollout of time lapse technology across our clinic network. This results in less embryo touch points during the development stage of the embryo, which will also facilitate artificial intelligence in the use of embryo selection. 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 demonstrates. If you take a look at the genetics opportunity on Slide 19, where we are well positioned to capitalize on growth. Government funding of genetic testing in Australia is rapidly expanding, which will drive a significant increase in uptake of genetic testing, leading to an increased pipeline for IVF treatments. Genetic testing in Australia is immature and rapidly evolving, resulting insignificant growth upside, particularly as affordability and awareness improves. The government is receptive to funding genetic testing as a means to lower incidents and improve diagnosis of chronic disease. This will reduce overall health care costs in the longer term. Our monthly genetic carrier screening volumes have increased by over 160% since the introduction of the Medicare rebate in November 2023, which gives you an idea of the momentum we're gathering in regards to purchasing the test and as the awareness builds post the Medicare funding introduction in November. We continue to be uniquely placed to capitalize on this growth opportunity with the current test in the market, the leading genetic pathologists, a large patient pool, a specialized genetic council network and also an integrated service transition model. If you take a look at Slide 20, a substantial strategic marketing investment in campaigns are driving market share gains and strong growth in our patient pipeline leading into the second half of FY '24. Our latest and refreshed egg freezing and donor campaigns are expected to drive continued growth in these key market segments, whilst our campaign is building awareness of genetic carrier screening is increasing the uptake of inquiries and conversion to the genetic testing. We continue to be recognized as an employer of choice that promotes diversity and inclusion and also leadership pathways. To highlight this, we had the highest number of internal appointments in this financial year, which demonstrates the success of our leadership and career pathways to create leaders for the future at Monash IVF. Furthermore, our workplace culture acknowledges the importance of mental health and psychological safety, and this is backed up by their support groups. If you turn to the women's imaging performance on Slide 21, which continues to trend favorably into financial year 2024. Scan growth was 7% in the first half of '24, which demonstrates sustainable turnaround across Sydney and Melbourne businesses and performance benefits that came from improved pricing and scan mix, along with the supply issues being addressed through improved sonographer availability. This all led to productivity improvements and increased earnings. Our investment in new clinics, increasing capacity and further improving the patient experience are all enablers for future growth in our women's imaging business. As we turn our attention to the international operations in Southeast Asia on Slide 22, it's fair to say that there was some varied performance across the Southeast Asian business in the first half. However, there is some real positive signs leading into the second half, indicating a much improved financial performance. Internationally and specifically in Southeast Asia, our stimulated cycles increased 4.1% versus the previous period with the International segment EBITDA decreasing by $0.3 million. Performance was mixed with Johor Bahru performing strongly, Singapore building momentum, and Kuala Lumpur was impacted by local market challenges. Our now established clinic platform with scientific clinic and nursing capabilities will ensure that we deliver leverage and gain growth in the region into the future. In Kuala Lumpur, our stimulated cycles declined by 6.9%. However, our new patient consults for the first half were up 15% versus the pcp, indicating an improved second half, which has absolutely commenced in January and February. Johor Bahru continues to perform strongly. And in Singapore, our volume and profitability is improving. And again, we have commenced well in the second half of FY '24. Our Bali clinic is earnings positive in the first half of FY '24, and we are focused on driving volume and demand creation through business development and marketing, and the Jakarta clinic, which we have a minority position in, is generating demand. However, conversion to treatment is a focus area to improve. We absolutely remain committed to the Southeast Asian region and to further build our clinic footprint through our pipeline of partnership opportunities whilst optimizing our existing clinics. If we move to Slide 24, which is our strategy on a page or our Vision 2026 strategic road map. Many of you will be familiar with this, with our Vision 2026 strategic road map as it continues to remain consistent regarding our objectives and aspirations. We have made significant progress on our strategic pillars and all our outcome metrics are continuing to trend favorably in the first half of FY '24, and this is off the back of compelling improvement over the previous 4 years. This demonstrates the significant progress and momentum we have to ensure that we achieve our Vision 2026 objectives, but there's still much more to achieve, and this will become more visible over the oncoming years. Our Vision 2026 strategic road map continues to enable everyone to understand the priorities, actions, decisions required to achieve success and deliver profitable growth in the oncoming years and beyond 2026. As we move to Slide 25 on the all-important outlook statement, the Australian IVF industry and Monash IVF will continue to be a beneficiary of underlying structural demand drivers while supplemented by emerging services such as genetics and egg freezing, growing patient segments, in particular, the LGBTQIA+ segment and new patient acquisition channels. Whilst macroeconomic conditions in Australia including cost of living and monetary policies impacting affordability of certain services and goods, it is not currently impacting Monash IVF's new patient registration to date. Our FY '24 underlying group NPAT is expected to be between $29 million and $30 million compared to $25.5 million in the prior comparative period. Just worthwhile noting that this does exclude any contribution from Fertility North acquisition weeks, which we expect to complete in March. Just like to touch on some of the key drivers of revenue and earnings growth in the second half of FY compared to the second half of FY '23. And they include the full year contribution from the PIVET Medical Centre acquisition, which occurred in May 2023. There'll be further contribution from new fertility specialists attracted during the second half of FY '23 and the first half of FY '24, which will drive growth in activity into the future. And we will continue to focus on the attraction of suitable fertility specialists. We have ongoing and sustainable conversion of IVF new patients registrations growth experienced during the first half. And it's pleasing to see that the first couple of months in this calendar year were also steady growth. The growth in reproductive carrier screening, which will lead to onward referrals to IVF and the commencement and contribution from new day hospital operations will also contribute to incremental earnings. We expect to see continued improvement in the Ultrasound business, and we also have further progress in Southeast Asia, including Singapore and Kuala Lumpur with a positive start to the second half. With that, we're happy to move to questions. Thank you, Rachel.

[Operator Instructions] Your first question comes from Tom Godfrey from Ord Minnett.

Can you hear me okay? Right. I might just first one kick off with just the outlook for cycle growth. I mean in terms of the 7% organic NPR growth number for the first half '24, can you give us sort of a sense of how that sort of tracked through the half? Is it accelerating, moderating? And then you referenced it there, Michael, but just any sort of guide as to how growth has started in Jan and Feb?

Yes. Well, we're not publishing the numbers, but certainly, we have indicated that the patient pipeline is continuing to grow, and those rates are pretty comparable to the first half exit run rates that we've published here today. And we're still seeing good growth profile, although we are cycling into comps that are a little bit stronger in Jan-Feb as a result of the ART Associates in Queensland acquisition. But good growth profile continues into the second half. We're not going to give a complete breakup of it, but it's certainly trajectory-ing in a similar fashion to the first half.

Got it. No, that's understandable and helpful. Second one was just around the genetic carrier screening volumes. You guys have referenced up 160% since the rebate was introduced. So just wanted to sort of understand how that's tracking versus your expectations and maybe if you could also remind us sort of time line for that to translate to IVF volumes and what you're thinking there.

Yes, yes, yes. We're really good. Like we're happy with the initial response, being mindful that it only started in the 1st of November and then you hit Christmas and holiday period, so we're expecting to see that further accelerate through February. In actual fact, that 160% number that we quoted in growth was relative into January to October. We're seeing February probably lift a lot higher than that based on the current run rate of tests that have been acquired. So yes, trends are positive as expected, and we expect it to further accelerate really, really strongly into this calendar year. As far as turnaround to IVF treatments, I think the turnaround cycle by the time people understand their risk, they consider that and how to manage it and get advice and counseling and then go through the process of understanding the pathway forward through treatment and building a model to manage that. It probably takes around about 12 months by the time they actually get into treatment. So you won't see a lot of impact in FY '24, but you will start to see that PGTM treatment through IVF will increase quite significantly. But look, pleasingly, like before the support for genetic carrier screening came in place, 2 years ago, we were doing 200 PGTM cycles or IVF cycles to manage disease risk. This year, we're anticipating to do beyond 400. So awareness is building. Usage is building, and it's going to do nothing but accelerate over the next 12 months.

No, that's really helpful. Last one for me. It's sort of a longer-term question, but I think about 12 months ago, you guys sort of spoke to Southeast Asia by '26 being 25% of group stimulated cycles. Obviously, there's a few things sort of playing out across those businesses. But just any sense as to the sort of milestones we should be looking for, for you to be on that trajectory and whether that will evolve longer term?

We're absolutely focused right now on optimizing what we have and lifting the performance of them. It hasn't accelerated as much as we would like, but we think we've got some really good momentum right now. But we are a little bit behind in our new clinics that we plan to roll out as far as 3 per year, but I'd expect we will be accelerating that this year, and we're currently looking at a pipeline of new opportunities to get involved in some more clinics in Southeast Asia. So that 25% number is probably going to be a little bit delayed for a year or so, Tom.

The next question is from Sean Laaman from Morgan Stanley.

Maybe, Malik, first of all, you've done a good job of managing the cost base. But should we expect a similar level of growth in the cost base, some of the metrics you gave us for the second half? And should we expect perhaps a similar margin outcome in the second half as to what you delivered in the first half?

Sean, so just answering your question, yes, there has been a heavy amount of investment in the business the last 18 to 24 months. And as you're aware, the business -- the core [ business is ] so solid. So we do have that luxury. So you won't see a huge amount of margin increase in the second half, and I say that because the Gold Coast new day hospital will -- has just started ramping up. The Melbourne day hospital has only really just started, and it still has to complete its full, call it, private health accreditation type of work to generate that type of revenue. So there's still going to be a little bit of cost noise. I think we haven't cycled through the full cycle of cost increases in our business, but I don't see it going up beyond this second half. So that's outside of the norm. I think we're going to revert to a 2% to 3% to 4% type CPI number, at least through discussions that we have with our suppliers as well as some of our enterprise agreements. I'm going to remain at that 3% to 5%, which is locked in till FY '26. I think I said during my section that depreciation and interest will go up. That's just nature of where our debt is at the moment as well as the depreciation on the new day hospitals. In terms of Southeast Asia, we will get benefit from a margin point of view. Again, Singapore hasn't finished its ramp-up. As Michael said, Singapore is looking really positive in January and February. And I think KL, KL had a tough first half, but all the lead indicators in that business is very positive. Consultation volumes for patients coming in to see our doctors is still really solid. If that pipeline converts, I think we'll see a pretty hefty increase in margins in the Asian business. So there'll be ups and downs, Sean, but I think it's in our control.

And sorry, Michael, I might have missed it, but the organic cycle growth in Australia, did you provide that? Or can you provide that?

Our organic cycle growth for the first half?

Correct, in Australia.

Yes. And excluding acquisitions, that was 5%, Sean. And I said in my section as well, Victoria, really strong. New South Wales really strong. Queensland, really strong. South Australia and Northern Territory dragged it down slightly.

Sure. And what were specifically the issues in South Aus? And have you dealt with them? Are they behind or ongoing?

Yes. It's pretty hard to identify. We think it was a mix of many things as market share complexities are, but -- and little bits of a few wins from our competitors and maybe some of the volume moving interstate as well. But have we identified it and corrected it? Yes, absolutely. We've had campaigns and fixes in place for the last sort of 6 months. And as we highlighted, we're starting to see the benefits of [indiscernible] inquiries and new patient registrations pick up towards the back end of the second half of last year. So we think that, that market share will recover into the second half but particularly into the fourth quarter of this financial year.

Great, Michael. And one last one, just to check some numbers because I think it's super interesting. So I think you just mentioned 200 cycles last year associated with disease management, and this year, you're expecting over 400 in relation to the carrier screening introduction -- funding introduction.

Yes. So it was 200 2 years ago, so that was FY '22, and we're expecting 400 this financial year. But yes, it's related to carrier screening introduction but really not seeing the full benefit of the Medicare impact that only came in on the 1st of November as the time line to convert to treatment is around 12 months.

The next question is from Shane Storey from Wilsons Advisory.

I'm going to start, please, just by looking at the 9 specialists that you have said joined the business so far in FY '24. Are you able to provide an estimate of the cycles you think that are available there? I mean I know that you don't get 100% conversion day 1, but in your experience, I mean, how long does it take to embed those specialists?

So look, they're all different types of specialists. There's one high-volume doctor that has started with us in the Sydney market, which has a run rate of around about 300 stimulated cycles. So you'll get the immediate benefit of that. Most of the other 8 are transitioning into the industry, so recent graduates, trainees or CREIs. So they'll be building their business over time. So yes, they might do a first year number of 200 or so combined, but certainly, we'll be building that into the future. So on that basis, you'd probably get to an annualized run rate for calendar year FY -- calendar year '24 of around about 500.

I might just switch to the International business, please. Michael, in your comments, you sort of indicated a bit of a change in fortune there, increase in run rates in the second half. Were we right in thinking that was in Singapore? And then if that's true, is that something that you've done as a business or some other event that's happened in that market?

Yes. Singapore is one of the places. But certainly, Singapore is -- as you know, it's fairly expensive to live in Singapore, so the cost base there is higher. So it's really important to push demand to cover the cost base and get into profit because it can do some damage on your bottom line. Absolutely [ deliberate ] by us with a very good Southeast Asian Managing Director, Jan Lagerwij, who's really been focused on getting the right doctor value proposition in that market, and we managed to embed a new medical director into our clinic that has a great reputation, Dr. Kelly Loi, who has started to do some higher volumes of cycles into our network. And those doctors over there have done a lot on our pay upfront and branding build and marketing perspective as well to build the awareness of Monash IVF in Singapore. So that's been the key drivers of Singapore. Certainly, KL is the other area where we expect some significant impact given the pipeline has built after some challenging probably couple of years in Kuala Lumpur as a result of COVID, the economic and political environment. So we're seeing that revert to growth in the second half, and our pipeline indicates that and the first couple of months absolutely indicate. The other 3 clinics are a little bit smaller by nature. So they're the 2 that will drive the -- a fairly substantial improvement.

Last one for me. Just a quick one for Malik please just to help us get our second half finance costs a little bit right, please.

Second half finance costs, Malik.

Sorry, Shane, do you mean interest expense? Yes, so average...

[indiscernible] price [indiscernible].

Yes. So you're probably looking at an increase of around -- and I'll talk about interest -- true interest expense as opposed to lease expense. You're probably looking at $200,000 to $300,000 increase.

The next question is from David Stanton from Jefferies.

Just 2 from me. Can you hear me?

Yes, we can hear you.

Just 2 quick questions from me. Full year tax rate, I wonder if Malik could give us a bit of a hand with that. And then full year CapEx, any sort of guidance there, please?

Yes. So tax rate is going to be consistent with the full year last year, call it, circa 27.5% to 28.5%, around that mark, Dave; traditional 30% Aussie rate. International is a bit mixed because KL is at 24%, Singapore at 17%. So there's a bit of mix in there and a little bit of R&D recovery as well that comes out of our research. But it should land about 27.5% to 28.5%. In terms of CapEx, you'd see that we did $13 million in the first half. We'll probably do $6 million to $8 million second half, and that's consistent with what we said in August. We're looking at a full year around $20 million.

The next question is from Rachael Harwood from Macquarie.

Just firstly, just looking at KL, you noted a decline in the first half, but new patient registration is up 15%. Is that conversion rate kind of similar to the Australian market of 70%? And is it kind of a good guide into the second half?

So the metric's a little bit different, Rachael. That metric is new patient consult as opposed to registration. So it's an earlier indicator. But certainly, the conversion rate is pretty strong and pretty comparable to Monash in Australia, generally speaking, but it's just a different point that we're capturing there.

Yes, understood. That's great. And apologies if I missed it, but you mentioned Fertility North is expected -- do you expect, I guess, much benefit in that fourth quarter from Fertility North? Or is that mostly expected to ramp in the first half '25?

Yes, we'll probably confirm that when we complete it. But yes, we do expect -- look, that last quarter of the financial year tends to be pretty strong throughout the industry, generally speaking, so we expect to get a reasonable benefit in the last quarter and some of March hopefully.

[Operator Instructions] Your next question is from Jonathon Higgins from Unified Capital Partners.

Congratulations on the result. Great set of results, and thanks also for your guidance. Just a couple from me. Just firstly in regards to just more sort of, I think, sort of longer-term initiatives, we're all sort of been focused on the second half in FY '24, but you've done a significant amount of work in terms of upgrading your day hospitals, geographies, expanded into Perth and the like. Can you sort of give us a bit of an idea what that means into the likes of FY '25 and beyond?

Yes. I won't go into the financial sort of impact, but absolutely, the strategic investments and drivers that we have made over the last couple of years and continue to make will reap greater benefits in FY '25 than FY '24 given completion times and ramp-up and so forth. The doctor acquisition model, the new clinics, the investment in Southeast Asia and the improvement we're seeing there will carry forward with incremental growth into FY '25 and beyond. The acquisitions will get a full year benefit of Fertility North into FY '25, and the high-volume doctor that I've talked about before that's doing around 300 cycles only started in January. So yes, we've got some really good growth drivers well embedded through our strategy and not to mention the opportunity that is genetics and starting to reap the benefits from those treatments in that particular year now that Medicare is funding the tests. So really, really good growth drivers in FY '25. We're doing a lot of work on focusing on growth FY '25, FY '26 with other projects beyond those what I just discussed. So it's not a half or 1-year wonder. It's really sustainable, and there's really good growth options beyond FY '24.

No, I appreciate that context on sort of the more medium and longer-term outlook. I mean I think 6 months ago or probably -- or 12 months ago, probably there's a lot of focus on discretionary items, which you knocked off on the front. Can you talk us through just your outlook on price? You guys have moved on price from the start of this financial year. Usually, you do move on price. Your doctors get paid a percentage of volumes. Any sort of forward ideas around pricing?

Jon, at the moment, we're not yet making decisions on next year, but we'll do that shortly. But I sit here right now thinking that we will move on price. There hasn't been anything that's impeded us historically. And your comment about discretionary, whether this is discretionary or not that Michael said, it's not something that we think about. We will move by 3% to 4% most likely. We'll align it with CPI as much as we can. And we've got stakeholders in our business that we have to manage when we talk about patient price increases such as our doctors because they're the front line, and they've got to be able to deliver that. So I think 3% to 4% won't be a problem come 1st of July.

Understand. And just last one for me. I mean you guys are the trade player in the market. There's been some private equity movements. You guys benefited from that. It looks like plus just as a result of your broader strategy on doctor additions. Is that sort of -- any like dynamics around sort of churn and competitors with fertility specialists? Has that settled down or you're sort of seeing some good dynamics of further doctor recruitment [indiscernible]?

Yes. Yes. Thanks, Jon. No, it's still quite dynamic out there. There's still opportunities, but we're right there front and center with those opportunities given the doctor partnerships that we currently have and our value proposition for doctors. But also, we are doing a lot of work given the competitive nature of doctor's recruitment, on the retention strategies and engagement with our current doctors, which is at all time sort of high levels. So yes, still expect some movement in the industry over sort of near term, but it probably will settle down in the next 6 or 12 months.

There are no further questions at this time. I'll now hand back for closing remarks.

Yes. Thank you, Rachel. Thanks all for your interest in the Monash IVF Group. I'm certainly looking forward to catching up with you all with Malik and Hamish, our COO, and myself over the oncoming week or so. Have a good day. Thank you.