Shares in Spire Healthcare (SPI) shifted into reverse after the hospital operator downgraded its full-year guidance for revenues and earnings due to NHS funding shortfalls. Total NHS sales increased 14 per cent during the first half, but contract activity is now under threat due to widespread deficits across UK healthcare trusts in 2015-16. The short-term weakness as a result of NHS contracts is compounded by the possible removal of penalties linked to waiting lists, which would effectively reduce outsourcing to the private sector.
Pre-exceptional operating profits of £58.9m, though 2.8 per cent up the 2014 half-year, were slightly adrift of City forecasts. The numbers were solid enough, but there are lofty expectations for Spire's growth rates, particularly given the majority Conservative government in Westminster.
Spire registered operational improvements, including an 8 per cent increase in in-patient and day-case discharges. Work also commenced on new hospitals in Manchester and Nottingham, while Spire's major new cancer radiotherapy centre in Chelmsford is expected to open during the fourth quarter.
Despite the guidance downgrade, JPMorgan Cazenove increased its adjusted EPS to 21.0p (from 19.4p), against 18.3p in 2014.
| SPIRE HEALTHCARE (SPI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 350p | MARKET VALUE: | £1.4bn | |
| TOUCH: | 350-351p | 12-MONTH HIGH: | 403p | LOW: 220p |
| DIVIDEND YIELD: | 0.9% | PE RATIO: | 28 | |
| NET ASSET VALUE: | 244p* | NET DEBT: | 43% | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 417 | -1.7 | -3.1 | nil |
| 2015 | 450 | 39.4 | 7.7 | 1.3 |
| % change | +8 | - | - | - |
Ex-div: 19 Nov Payment: 15 Dec *Includes intangible assets of £519m, or 130p a share | ||||
