24th Mar 2015 12:31
LONDON (Alliance News) - Spire Healthcare Group PLC Tuesday proposed a maiden final dividend and guided mid-to-high single-digit revenue growth for 2015, as rising patient numbers in its National Health Service arm drove up revenue, helping it to post a narrowed pretax loss for 2014.
In its first full-year results since listing on the London Stock Exchange last July, the independent hospital group proposed a maiden final dividend of 1.8 pence, and said that, as it detailed at the time of its IPO it plans to adopt a progressive dividend policy based on a payout ratio of around 20% of pretax profit.
Spire posted a pretax loss of GBP7.0 million in 2014, narrowed from a pretax loss of GBP51.9 million in 2013, as a rise in revenue to GBP856.0 million from GBP764.5 million helped offset GBP54.0 million in exceptional costs primarily relating to its listing and GBP85.9 million in finance costs including interest on loans and bank facilities.
In the previous year, the company had recorded finance costs of GBP196.1 million, including exceptional costs of GBP42.2 million from the sale of a freehold and interest rate swaps being recycled into the income statement as they no longer met the criteria for hedge accounting.
Stripping out these exceptional costs, Spire reported a rise in earnings before interest, tax, depreciation and amortisation of 6.1% to GBP159.2 million from GBP150.0 million.
Spire attributed its strong revenue growth to positive contribution from all three of its major payor groups, including a 28.5% rise in National Health Service revenue boosted by an increase in the number of surgical admissions, in-patient, daycase and out-patients, and bolstered by its acquisition of St Anthony's Hospital last May.
Private medical insurance revenue rose 4.5%, boosted by the acquisition, and 1.4% excluding St.Anthony's as lower in-patient and daycase admissions were offset by higher average revenue per case due to a rate increase, and an increase in out-patient revenue.
The company said that the growth in rate was constrained by an increase in the number of surgical cases being treated as lower-revenue-per-case daycases. However, revenue per case of in-patient admissions rose 6.4%, as more complex surgical procedures were undertaken.
In the self-pay segment, revenue rose 9.9%, or 7.4% excluding St.Anthony's, due to higher numbers of surgical admissions helped offset lower in-patient and daycase admissions.
The company continued to invest in increasing its capacity during the year, opening a new sports medicine centre at Spire Southampton Hospital, a new orthopaedic centre at Spire Cheshire Hospital and a new reception area and out-patient suite at Spire Cambridge Lead Hospital.
Additionally, new operating theatres were opened in Cardiff, Harpenden and South Bank during the year. Spire said it invested GBP105.1 million during the year across the business, including the St.Anthony's acquisition.
The company said that its new financial year has begun similarly to the end of 2014, with revenue growth in all of its payor groups and private medical insurance revenue underpinned by St.Anthony's. It expects these trends to continue throughout the year.
Spire guided for 2015 an Ebitda margin in line with 2014 and high single-digit growth in earnings per share. It expects growth in its reported profits to be weighted towards the second half of 2015, as a result of the timing of its listing in 2014 and consequent listing costs.
"Spire is ideally positioned for its next phase of development. We are well capitalised and ready to capture a growing share of the UK's expanding independent healthcare market and provide much needed additional capacity in areas such as radiotherapy and cancer care," said Chief Executive Officer Rob Roger in a statement.
"Overall, the positive revenue trends are continuing into 2015 and should once again drive mid to high single-digit revenue growth at Ebitda margins in line with 2014," Roger added.
Shares in Spire were trading down 4.2% at 373.64 pence Tuesday midday, despite the positive outlook and maiden dividend. Spire's shares have been trading positively going into the results, having gained 23% since the beginning of March.
Broker Numis cut its rating on Spire to Hold from Buy, citing the company's strong share performance since its IPO. Whilst the company's results came in line, Numis has lowered its lowered its earnings before interest taxes depreciation and amortisation forecast for 2016 by 4%, as it is expected a slower ramp up of private medical insurance revenue.
Investec put its rating and price target for the company under review. It said Spire's guidance looks broadly in line with consensus, and it sees little in the statement to support the strong share price movement.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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