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Spire Healthcare warns annual earnings will fall amid NHS revenue weakness

By BFN News | 07:13 AM | Monday 06 August, 2018


Hospital owner Spire Healthcare Group warned that it expected its full-year earnings to be materially lower than the previous year after revenue slipped in the first half and expenses rose. For the six months through June, the company said revenue fell 1.1% to £475m. Ebitda before exceptional items was around £66m, at a margin of around 14%, Spire said, without providing a comparative figure. Capital expenditure dropped to £34m, down from £59.5m on-year, while net debt at 30 June was £458m, up from £436.1m on-year. Spire said the fall in revenue was driven by a 9.5% decline in its NHS division, which was expected to see further weakness in the second half. 'We see new signs of further NHS triaging and rationing in the second half, especially in orthopaedics as clinical commissioning groups tighten their approach towards managing waiting lists.' Cost expectations had also risen, the company said. 'We have invested significantly to improve our clinical quality and to drive our private payor proposition, including embedding new and enhanced standards, set and audited by our expanded clinical team,' Shire said. 'This is being effected with a number of one-off step-up costs, which in turn has led to overall hospital costs increasing ahead of our original estimates. 'The impact on earnings has therefore been more marked than anticipated.' Spire said it had initiated substantial cost saving exercises in other areas of the business, including central functions and procurement. They were expected to have a significant impact on the cost base from 2019 onwards, with some benefit in the second half of 2018. Capex for the year would be about £90m down from original guidance of £100m. 'The current difficult market conditions - also seen by other operators - had a greater impact on our business in the seven months to 31 July 2018 than we had expected,' chief executive Justin Ash said. 'Nevertheless, through this transitional period we are relentlessly focused on raising our clinical quality.' Story provided by StockMarketWire.com

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