16.01.19
Private giant Spire cuts expected earnings again amid NHS funding squeeze
Private hospital group Spire has cut its expected core earnings forecast for the second time in a year, driven by increasing waiting times and funding pressures across the NHS and prompting many investors to sell their shares in the FTSE-listed company.
One of Britain’s biggest private hospital companies, Spire said its earnings before tax, interest, and other charges will be in the range of £120m, far lower compared to the £150m generated the year before.
The earnings forecast is below the previous forecast of £125m in September, and extends a decline that has wiped out two-thirds of the group’s stock market value in the past six months.
The company has previously hit out at NHS funding squeezes as the main cause to its decline in profits when in September Spire revealed a 20% profit hit.
Chief executive Justin Ash said an “unprecedented depth and speed of decline” in NHS admissions had led to the company’s disappointing results and was critical of the NHS for sending less patients than before for elective surgery.
Spire operates 39 hospitals and 11 clinics in the UK and employs around 8,400 full-time staff, providing care for self-pay patients, private medical insurance, and referrals from the NHS.
Since Spire was created in 2007 by a private equity firm, investors have endured a turbulent time as the private company struggled with a £27.6m compensation pay-out to settle claims from 750 patients regarding botched surgery as well as issues at three new hospitals.
Spire’s second profit warning has seen its shares fall 13% over the past day after the £5m hit to its annual estimate— but the company reiterated it had increased the number of its hospitals rated outstanding or good by the CQC.
Image credit - PeopleImages