Spire blames NHS patients drop for poor profits

SPIRE Healthcare Group has blamed an “unprecedented” drop in its NHS patient count for a slump in half-year profits.

Spire has reported a 7.9% drop in pre-tax profits to £8.2m for the six months to June 30, while underlying earnings tumbled 20.6% to £66.1m.

Revenue also suffered, falling 1.1% over the period to £475.6m.

Spire said its performance was due to “significantly declining NHS admissions, lower than anticipated growth in private admissions and planned investment in clinical quality and consumer engagement”.

The healthcare group last month warned it expected underlying earnings for the full financial year to be “materially lower” than a year earlier.

It now forecasts underlying earnings in the range of £120m-£125m, after charging non-recurring items of approximately £5m.

Chief executive Justin Ash said: “The unprecedented decline (both in scale and speed) in NHS admissions has led to Spire having to announce disappointing H1 2018 results and a revised outlook for the financial year as a whole.

“Nonetheless, our overall revenues are broadly flat as the growth opportunity in our private business, 2.5% in the period, continues to support our shift in strategic focus.”

While the “prolonged decline” in NHS volumes hit Spire margins, Mr Ash said overall costs were in line with budget, even after investing on clinical quality and its private healthcare business.

“We continue to review our nonclinical costs to ensure optimal efficiency,” he said.

“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.”

The chief executive added that the headwinds were creating “significant business challenges” for other healthcare businesses, “which in turn may lead to opportunities for Spire”.