LONDON (Alliance News) - Spire Healthcare Group PLC on Tuesday warned on its annual earnings outcome as it reported a drop in first half earnings due to falling admissions rates.
Shares in the FTSE 250-listed company were down 6.6% at 158.00 pence each, the worst performer on the FTSE 250 index.
The private healthcare operator also said that it has appointed John Forrest as chief operating officer, with effect on October 8. Forrest will be joining from fellow FTSE 250 constituent Greene King, where he is currently managing director for the Pub Partners division of the pub retailer, and has been for a year since 2017.
Forrest has been part of Greene King for nearly three years since 2015, and prior to that was part of blue chip hospitality firm Whitbread for nearly nine years from 2007 to 2015, leaving as chief operating officer for Premier Inn.
For the six months to the end of June, Spire reported pretax profit of GBP5.1 million, down sharply on GBP12.1 million the year before, on revenue that fell by 1.1% to GBP475.6 million from GBP481.0 million.
The fall in performance was due to lower in-patient and day case admissions, which dropped by 4.1% to 133,700 cases from 139,400, as well as a change in the admissions mix, with less orthopaedic work and more oncology.
There was also a decline in National Health Service admissions and revenue by 9.2%, which were hit by cost constraints and shift changes in referral management schemes.
Looking ahead, Spire expects earnings before interest, taxes, depreciation and amortisation for 2018 in the range of GBP120 million to GBP125 million, down from GBP150 million in 2017. Current trading in August has seen flat group revenue, with NHS revenue continuing to decline by a mid-single digit percentage, but growth in private payor revenue.
"We continue to review our non-clinical costs to ensure optimal efficiency. We have also robustly reviewed our previously proposed capital expenditure plans, and now expect to maintain the quality and capability of our asset base with a reduced level of expenditure. More broadly, the headwinds that Spire is facing, as the largest company in the sector by revenues and Ebitda, appear to be translating into significant business challenges for many sector participants, which in turn may lead to opportunities for Spire," said Chief Executive Officer Justin Ash.
"I believe our reset strategy is absolutely the right one for Spire and that Spire continues to be well positioned to reinforce its leading role in the independent sector and indeed in UK healthcare as a whole," Ash added.
Spire Healthcare declared an unchanged dividend of 1.3 pence per share for the first half.
