Monash IVF (ASX:MVF) Plunges 15% as $312m Takeover Bid Collapses- Is This a Buying Opportunity?

Monash IVF: Is This a Buying Opportunity?

Monash IVF (ASX: MVF) shares crashed 15% to 69.5 cents last week after Soul Patts and Genesis Capital abruptly withdrew their A$312 million takeover bid. The consortium gave no explanation for walking away from the 80-cent offer that Monash’s board had rejected as “opportunistic” just four weeks ago. With the takeover premium now evaporated and the stock down more than 50% this year, investors face a critical question- is this a buying opportunity or a warning to stay away?

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Why Soul Patts Walked Away- And What the 20% Stake Reveals

The withdrawal came with no reasons provided, just a brief statement noting Monash IVF would inform shareholders of any material developments. This silence is frustrating but also telling.

What stands out is that the consortium hasn’t sold its 19.6% stake. If due diligence had uncovered serious problems, you’d expect them to dump shares alongside the bid withdrawal. Instead, Soul Patts, one of Australia’s most patient investors, remains a major shareholder.

We believe this signals confidence in the business, just not at 80 cents. The consortium likely concluded the board wouldn’t budge without a higher offer. Rather than overpay, they’ve pulled back to wait for a better entry point.

A Year of Crisis- From $1 to 70 Cents

Monash IVF has endured an extraordinary year of reputational damage. In April, the company revealed a Brisbane patient had given birth to a genetically unrelated baby after the wrong embryo was transferred, the first such incident in Australia’s IVF history. Then in June, a second embryo error emerged at its Melbourne clinic, prompting CEO Michael Knaap to resign.

Monash IVF had already paid A$56 million in 2024 to settle a class action over inaccurate genetic testing that led patients to discard potentially viable embryos.

The financial impact has been real but contained. FY25 revenue rose 6.7% to A$271.9 million, and underlying EBITDA climbed 5.6% to A$66.3 million. However, underlying NPAT fell 8.1% to A$27.4 million as margins compressed. The market is also pricing in a weaker outlook; the company has guided for FY26 Underlying NPAT of A$20m-A$23m, which would be a significant drop from the A$27.4m achieved in FY25.

New CEO Dr Victoria Atkinson won’t start until 18 May 2026, leaving the company under interim leadership at a critical time. Companies in crisis typically need permanent leadership to restore confidence quickly; this extended transition is concerning.

The Investor’s Takeaway

The bull case centres on valuation. At current prices, Monash IVF trades at approximately 5.5x-6.0x EBITDA, a substantial discount to the 11.9x multiple paid for rival Virtus Health in 2022. Structural demand for IVF services remains robust, driven by demographic trends and delayed parenthood. While Macquarie maintained a 94-cent price target in late November, the market is now waiting to see if analysts re-rate the stock following the bid’s collapse.

The bear case is equally compelling. There’s no takeover catalyst now, reputational repair could take years, and the leadership vacuum won’t be filled until mid-2026. Soul Patts walking away, even without selling its stake, raises questions about what they found during due diligence discussions. Adding to the bearish sentiment, Monash IVF did not declare a final dividend for FY25 for the first time in years, citing the need to preserve cash following the A$56 million class action settlement.

For value investors with a 2-3 year horizon, this looks like an opportunity to accumulate a beaten-down healthcare business at depressed multiples. For momentum traders, there’s simply no catalyst to drive near-term upside.

The critical question is whether Soul Patts returns with a higher bid once the dust settles and whether new management can restore patient trust. If both happen, today’s buyers could be well rewarded.