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UPDATE 2-Spire Healthcare profit slumps, outlook muted; shares plunge
September 14, 2017 / 7:13 AM / 3 months ago

UPDATE 2-Spire Healthcare profit slumps, outlook muted; shares plunge

(Adds shares, details, analysts’ comments)

By Justin George Varghese

Sept 14 (Reuters) - Spire Healthcare Group Plc, Britain’s second-largest healthcare firm, said first-half profit slumped 75 percent, hurt by legal settlement charges, sending its shares down as much as 25 percent on Thursday morning.

The company reported a 2.4 percent rise in first-half revenue, but expected revenue growth in the second half to be flat.

“Spire has seen significantly lower than anticipated revenues in July and August - this recent trend in performance appears to be continuing into early September,” it said.

Spire previously forecast revenue growth in the range of 3-5 percent for the year.

Profit fell to 8.9 million pounds ($11.8 million) for the six months ended June 30, from 35.7 million pounds a year ago.

One-third of the company’s revenue came in from work carried out on behalf of the National Health Service (NHS), the UK’s publicly funded healthcare system.

NHS, which has been operating with an over 180 million pound deficit and a shortage of beds, has been seeking assistance from companies such as Spire, BMI Healthcare and Nuffield Health.

Spire’s referrals coming in through NHS have softened meaningfully, Liberum analysts said, adding that they expected guidance downgrades to be larger beyond 2017.

The company’s business linked to online NHS referrals weakened, with revenue rising 3.5 percent in the first half, compared with an 8 percent growth in the year-ago period.

“Longer term, Spire is well positioned to grow self-pay revenues as patients choose not to wait for NHS treatment,” said Cora McCallum, an analyst with Investec.

Spire decided to settle claims relating to actions by Ian Paterson, a former breast surgeon currently facing jail-time for carrying out operations on patients he wrongly diagnosed, leading to a charge of 27.6 million pounds.

Spire, which currently runs 39 private hospitals across the UK, launched two more hospitals this year – one in Manchester and another in Nottingham.

The company said start-up costs and the loss of an operational month in Manchester as it was relocated to the new facility also adversely impacted its first-half results.

Shares in Spire were down 14.7 percent at 264.4 pence as of 0855 GMT. ($1 = 0.7576 pounds) (Reporting by Justin George Varghese in Bengaluru; Editing by Sunil Nair and Amrutha Gayathri)

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