Spire Healthcare Turns To Profit In H1

British hospital operator Spire Healthcare cut its profit growth guidance on Friday, blaming a funding crisis in the government-funded National Health Service (NHS) for a drop in referrals to its services.

In a downbeat prediction alongside its half-year figures, Spire said that it expected “near-term weakness in NHS demand” for the rest of the year, although Rob Roger, the chief executive, expected a recovery in the “medium to long term”. Some trusts will financing problems were also sending patients to the NHS rather than private firms.

The company said the suspension of penalties for lengthening waiting lists at the NHS – announced earlier this month – meant there was less urgency in outsourcing to the private sector.

The construction of Spire’s major new cancer radiotherapy centre, next to the Baddow Hospital at the Essex Healthcare Park in Chelmsford, is now well underway with opening scheduled for November.

Spire made a £30.8million profit compared to a £7.8million loss the year before on sales that were up 7.8 per cent at £449.8million.

Spire is now anticipating overall revenue and earnings, before interest, taxes, depreciation, and amortization, growth rate for the full financial year to be between 4% to 6%.

“Our positive performance in the first half 2015 is encouraging, the company told shareholders yesterday, but added that actions aimed at tackling the NHS budget deficit “has in the last few weeks reduced the flow of cases from the NHS to the independent sector”.

Net debt, meanwhile, was down slightly from £424.3 million (2.7 times adjusted ebitda) as of 31 December 2014, to £420 million this half year (2.5 times adjusted ebitda).

Brokerage Numis said: “While this recent NHS development creates near term uncertainty, we note that NHS waiting lists are at the highest level seen since February 2008, which we would expect to drive self-pay markets and expect Spire to continue to benefit from its high quality and transparent pricing model”.