An “unprecedented decline” in NHS patient admissions is set to dramatically affect earnings at Spire Healthcare as it posted a massive drop in profits for the first half of the year.
Profit before tax at the private healthcare company fell 57.9pc compared with the same period last year to £5.1m, largely due to £15.3m of exceptional items. The largest of these was a £12.6m property impairment on its Spire Alexandra hospital site.
The FTSE 250 company has downgraded its outlook for the year and expects its full-year earnings before interest, taxes, depreciation and amortisation (ebitda) to come in between £120m and £125m. This is well below the £150m previously expected. The company warned in August that earnings would be below previous estimates without giving a figure.
Shares in Spire fell more than 11pc in early trade before recovering slightly and were down 4.55pc by lunchtime.
Justin Ash, chief executive, who took the helm at the troubled company in October, said: “The unprecedented decline, both in scale and speed, in NHS admissions has led to Spire having to announce disappointing first-half 2018 results and a revised outlook for the financial year as a whole.”
The NHS has been using private companies such as Spire to help make up for shortages of beds and staff, but it has begun reducing referrals as it looks to save money and tackle a £1bn deficit.
To counter this decline from the public sector, the company is now focusing on increasing the private share of its business to at least 80pc of revenues, with an emphasis on “clinical quality”, he said.
“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."
Spire has also brought in a senior executive from pub chain and brewer Greene King. John Forrest joins as chief operating officer on October 8.
The hospital operator has been plagued with historical issues, including being forced to pay out £27m to compensate victims of a rogue breast surgeon. The company shelved development projects in Milton Keynes and central London to focus on returning capital to investors.
Shortly after joining the company, Mr Ash fended off a £1.2bn takeover bid from Spire’s largest shareholder, Mediclinic, which it argued "significantly" undervalued the business. The company currently has a market value of £647.7m.