Three recent profit warnings had painted a pretty bleak picture for private healthcare provider Cambian (CMBN). So even though shareholders probably weren't expecting much from these preliminary results, adjusted cash profit of £42.5m - £3.5m below February's guidance and a 12 per cent decrease on 2014 figures - still probably came as a kick in the teeth. Unsurprisingly, the share price pulled back by over 10 per cent.
Acquisitions had previously played a big part in Cambian's growth strategy but the group has now admitted the expansion was "overly ambitious". Difficulties in staff recruitment meant some new facilities were not opened on time, which led to a slowdown in admissions and thus lower revenue. A failure to adequately control the group cost base fed through into a squeeze on margins and a further deterioration in profitability.
More worryingly, net cash flow remained in negative territory, which left the group in breach of its banking covenants. However, as of 26 April, lending banks have agreed to amend the group's £290m facilities agreement. Management is said to be "implementing a number of remedial actions", including commissioning PricewaterhouseCoopers to undertake a financial review to ensure better cost control.
Analysts are yet to update their forecasts for next year, but prior to these results broker Investec was anticipating adjusted pre-tax profit of £19.7m and EPS of 8.2p, rising to £21.4m and 9p in 2017.
CAMBIAN (CMBN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 67.8p | MARKET VALUE: | £125m | |
| TOUCH: | 67.5p-68.5p | 12-MONTH HIGH: | 310p | LOW: 53p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 133p* | NET DEBT | 98% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 140 | 8.4 | na | na |
| 2012 | 184 | 2.7 | na | na |
| 2013 | 214 | 7.8 | 16.1 | nil |
| 2014 | 241 | -4.2 | -6.1 | 1.8 |
| 2015 | 290 | -16.4 | -5.4 | nil |
| % change | +20 | - | - | - |
Ex-div:na Payment:na *Includes intangible assets of £186m, or 101p a share | ||||
