With demand increasing, the pressure on the public's beloved NHS is growing. This provides opportunities for private healthcare company Spire (SPI), as longer waiting times mean more patients are driven to private services. In the first half of 2016, Spire saw double-digit like-for-like revenue growth from both NHS referrals and those opting to pay for treatment at the point of use. Stripping out the closure of a hospital in September, overall like-for-like turnover increased 5.4 per cent as insured patient revenue was flat.
Aside from increasing patient numbers, the group has also seen an increase in price per patient, in part thanks to more complex care. For example, Spire has recently begun offering the services of a new robotic surgery technology known as da Vinci. The company says the robot can perform complex surgical procedures more precisely than a doctor, and although it is more expensive for the patient it is cheaper for the hospital over the long term.
Spire continues to invest in its sites, both opening new hospitals and revamping old ones. This resulted in a 91 per cent increase in capital expenditure to £72m, but net debt remained stable thanks to the continued strong adjusted cash profit conversion of 112 per cent.
Broker Numis expects pre-tax profits of £93.3m for the year to December 2016 giving adjusted EPS of 18.2p, up from £89.3m and 17.8p in the 2015 financial year.
SPIRE (SPI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 342p | MARKET VALUE: | £1.37bn | |
| TOUCH: | 342-344p | 12-MONTH HIGH / LOW: | 391p | 275p |
| DIVIDEND YIELD: | 1.1% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 256p* | NET DEBT: | 41% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 450 | 39.4 | 7.7 | 1.3 |
| 2016 | 470 | 46.0 | 8.9 | 1.3 |
| % change | +4 | +17 | +16 | - |
Ex-div: 17 Nov Payment: 13 Dec *Includes intangible assets of £519m, or 130p a share | ||||
