- Strong organic growth underpins a positive earnings cycle.
- Raft of NHS contract extensions and new awards.
- Increased insourcing capacity is a game changer.
The NHS is in crisis. Prior to the coronavirus pandemic there were 4.4mn people on a waiting list for care, an eye-watering backlog level. The suspension of non-urgent services and changes to individuals’ behaviour during the pandemic meant that the number of people joining the NHS waiting list initially dropped, but this has risen sharply as the ‘hidden’ backlog of cases becomes visible.
Patients kept away by fears of Covid-19 infection are now seeking referrals for symptoms from their GPs, creating even more pressure on a stretched NHS. At the same time, the NHS is trying to clear a backlog of patients who had referrals and procedures delayed or cancelled.
No matter which candidate wins the contest for the leadership of the Conservative Party, more must be done urgently to bust the patient backlog for NHS treatment. One way is to enlist more help from the private sector to reduce pressure on hospitals and help cut waiting lists. Purchasing private capacity is not new, the pandemic demanded unprecedented block-booking arrangements with private health care operators. However, given the staffing shortages across all sectors of the NHS, private health care companies are likely to play an even greater role in the future if the UK Government is going to service the public demand.
This is good news for one Aim-listed company that reduces reliance on the public sector through the delivery of efficient, responsive healthcare, ensuring access to high quality care for patients as well as wellbeing services in the workplace.
Despite being forecast to deliver in excess of 100 per cent earnings growth over the next two years, this company is tantalisingly priced on a 2023/24 forward PE ratio of just 10 times. The group is strategically aligned with NHS policy, specifically focused on the delivery of non-acute care components out of hospitals and closer to home. High demand isn’t going to change any time soon given record backlogs in the NHS and a buy-and-build strategy has created the infrastructure to deliver a range of services. For good measure, the business is cash generative and has a cash rich balance sheet to deploy on further earnings accretive acquisitions.
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