28th Aug 2014 14:32
LONDON (Alliance News) - Spire Healthcare PLC Thursday said it swung to a pretax loss in the half year to end-June due to higher finance costs, costs related to restructuring and regulation, and lower property sale gains, although underlying profit and revenue rose as it treated more patients in its facilities and cut the costs of care.
Spire, which listed on the London Stock Exchange in July, posted a pretax loss of GBP1.7 million, compared with a pretax profit of GBP43.8 million a year earlier, as net finance costs rose to GBP67.5 million, from GBP48.7 million, its profit on the sale of properties dropped to GBP19.6 million, from GBP44.8 million, and costs for restructuring, governance and regulation rose to GBP11.1 million, from GBP5.4 million.
Adjusted earnings before interest, tax, depreciation and amortisation, the company's preferred measure of its operational performance, rose to GBP79.9 million, from GBP73.1 million a year earlier, as revenue rose to GBP417.2 million, from GBP377.5 million.
"The strategies we have put in place across all our payor groups whether they be privately insured, self-pay or NHS are delivering well, resulting in excellent revenue growth of over 10%," Chief Executive Rob Roger said in a statement.
In the company's Private Medical Insurance division, revenue rose to GBP214.5 million from GBP209.2 million.
National Health Service revenue was up 29% to GBP116.9 million from GBP90.5 million. In the first half of the previous year, the temporary suspension of a locally commissioned complex hit Spire's volumes and rates; however, this recovered in the second half of 2013 going into 2014.
Self-pay revenues were up 8.9% to GBP70.7 million, from GBP64.9 million. In early 2013 the company benefited from a number of hip revision procedures, but this work did not recur in 2014.
Spire expects revenue growth in the mid-single digits for the full year. Recent reductions in the 3% NHS tariff for the 2013/14 year was more than offset by volume growth in its NHS business, and it expects this to also be the case regarding a further reduction of the 2% NHS tariff that is applicable to the 2014/15 year.
The company said that its development strategy is on track, and expressed optimism over its recent acquisition of St Anthony's Hospital, and the further roll out of its Specialist Cancer Care Centres.
Investec initiated a Buy rating on Spire, saying that "as public sector funding fails to keep pace with demand, implying a potential GBP30 billion shortfall by 2021, we believe patients will increasingly face long waiting lists and treatment rationing and thus opt to be treated privately."
"We expect Spire to take share given its well invested estate, strong consultant relationships and industry leading clinical outcomes," Investec said.
Shares in Spire were trading up 7.7% at 245.50 pence Thursday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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