Spire left nursing headache after profit warning
The firm expects earnings for the 2018 financial year to be materially lower than last year.
Shares in Spire Healthcare tumbled on Monday after the private hospitals operator warned over its full-year performance in the face of falling NHS spending.
The group said in a stock market update that it expects earnings for the 2018 financial year to be materially lower than last year as it flagged “continuing weakness in the NHS business”.
Spire added that it anticipates “new signs of further NHS triaging and rationing in half two 2018, especially in orthopaedics as Clinical Commissioning Groups tighten their approach towards managing waiting lists.”
The warning sent shares plummeting more than 20% to 194.2p in morning trade.
For the first half of the year, Spire said revenues were estimated to be £475 million, a decrease of 1.1%, while earnings were approximately £66 million.
Spire added that it has “invested significantly” into improving clinical quality and enhancing its private business, leading to overall hospital costs increasing ahead of original estimates, which also weighed on earnings.
Boss Justin Ash said: “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.
“Nevertheless, through this transitional period we are relentlessly focused on raising our clinical quality to ‘best in sector’ level and we believe this is beginning to bear fruit as a commercial differentiator.
“With our renewed focus on the private market, we are seeing encouraging momentum and expect our top line to recover through the second half of 2018 and increasingly in 2019 and beyond, while the benefit of our major cost savings initiatives will accelerate through next year.”
Spire added that it has initiated “substantial” cost saving exercises in other areas of the business, including central functions and procurement.
This, the firm said, is expected to have a significant impact on its cost base from 2019 onwards.