👉 Background: Monash IVF is the ASX-listed group that specialises in fertility services in Australia. They do everything from IVF to egg freezing to genetic testing and a whole lot more. In fact, Monash IVF earned their stripes by helping create Australia's first IVF baby.

👉 What happened: Earlier this year, Monash IVF found out they had mixed up two clients’ embryos. But the clinic only found out two years after the fact… and after a baby had been delivered. Interestingly Monash IVF reported this incident to the ASX as a ‘once off human error’ that would not materially impact company profit. But when the news got out, clients and investors were shook.

👉 What else: Next minute: Monash IVF’s share price fell 34%. Now, Monash IVF warned that after this incident, they expect their profits to drop by more than 11% to $27.5 million. Yet again, its share price took a big hit.

What's the key learning?

💡Publicly listed companies have an obligation to disclose any information that a reasonable person would expect to have a material effect on the price or value. And it must be disclosed immediately. Material news could be things like changes to company structure, changes to senior management, or major cyber security breaches.

💡In this case, Monash IVF discovered the embryo mix up in mid February. But they didn’t mention it in their half yearly results which were announced 2 weeks later. Fast forward to April, the board finally reported the embryo mix up was ‘not material’.

💡The drop in their share price and profit guidance since the news broke out shows otherwise. For a company like Monash IVF that relies heavily on brand reputation and client trust, a single mistake can have huuuge consequences. And regardless of what they believed is ‘material’’, the market had the final say.