Spire Healthcare issues profit warning after NHS spending cuts

SPENDING cuts in the National Health Service have pushed supplier Spire Healthcare to warn its profits will be “materially lower”, resulting in its market value plunging by a fifth and its shares hitting an all-time low.

The UK’S second largest private healthcare company said revenue from the work it does for the NHS, which accounts for a third of its turnover, fell 9.5pc in the first half, compared with a 2.9pc rise in private sector revenue. Overall revenue slipped 1.1pc to £475m.

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.

Spire’s revenue growth will continue to be dragged down by the NHS business, where it sees “new signs of further NHS triaging and rationing in [the second half of ] 2018, especially in orthopaedics as clinical commissioning groups tighten their approach towards managing waiting lists”.

As a result its earnings before interest, taxes, depreciation and amortisation will come in below previous estimates of £150m for the year.

Shares in Spire, which floated at 210p in August 2014, fell 21.8pc to 193.4p yesterday. The company’s CEO Justin Ash, who took the helm in October, said the FTSE 250 company was going through a “transitional period”, adding: “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.”

The company plans to move towards private sector work and cut costs. Mr Ash claimed the business was “seeing encouraging momentum” and expected sales to recover by 2020.