NHS cutbacks hit profits at Spire Healthcare

Joanna Bourke
Private hospital operator Spire Healthcare saw profits fall in the six months to June 2018: PA Wire/PA Images

Investors turned their back on struggling private hospital operator Spire Healthcare on Tuesday after it posted “disappointing” results and downgraded annual guidance.

The FTSE 250 firm warned it has suffered from the Government’s belt-tightening. Spire’s boss Justin Ash said: “The NHS is sending in less patients than last year for elective surgery, such as hip replacements.”

He added: “The unprecedented decline (both in scale and speed) in NHS admissions has led to Spire having to announce disappointing first-half results.”

The NHS impact, along with investments in the business, contributed to pre-tax profits in the half-year to June dropping 7.9% to £8.2 million. Sales fell 1.1% to £475.6 million.

Spire now expects full-year profits to be in the range of £120 million to £125 million, well below the £150 million analysts had pencilled in.

The update comes a month after the firm warned profits would be “materially lower” than expected, resulting in its shares hitting an all-time low.

Shares in Spire fell 7.2p, or more than 4%, to 162p earlier today. It floated at 210p in 2014.

The profits drop is the latest in a string of setbacks. Last year the firm put £27 million aside for compensating victims of rogue breast cancer surgeon Ian Paterson, who is in prison. Spire also saw South African suitor Mediclinic end £1.3 billion takeover talks.

Ash, who was appointed chief executive last year, today attempted to remain upbeat about future growth. He pointed to more younger patients “who do not think of the NHS as their default” looking to pay privately.

The firm held its interim dividend steady at 1.3p per share.

Separately Spire named John Forrest, former chief operating officer of pubs firm Greene King’s retail operations, as its new chief operating officer.