Covid uncertainty lingers at Spire

While this year’s waves of Covid-19 have been less disruptive than their predecessors, they have still managed to make the provision of healthcare more complicated. Spire Healthcare (SPI), the private hospital group, reported that its virus-related costs for the six months to 30 June totalled £25mn. 

The firm explained in its half-year results that the ongoing impacts of Covid-19 on its operations fall into two categories: staff absences/patient cancellations and “other” costs (such as testing costs and expenditure on agency staff). The company’s cost of sales amounted to more than £328mn in the first half–up from £304mn the previous year–as a result of this increased spend on agency workers. 

At the same time, Spire also said that long waiting lists for NHS care were driving patients to seek out private healthcare services. In the first half of this year, private revenue accounted for 73 per cent of the company’s total turnover, compared to 65 per cent in the same period in 2021. The majority of its remaining revenue comes from NHS contracts. 

Self payers now account for 29 per cent of Spire’s revenue, a figure which has almost doubled since before the pandemic. Analysts at Numis are expecting “strong revenue and earnings growth, underpinned by strong private demand” in the second half of this year. 

For its part, the company is anticipating revenue and adjusted Ebitda growth for the full year, though it noted this is “subject to the timing and severity of any future Covid-19 wave”. With some scientists predicting that the virus could surge again in the winter months, it may be a bit too early to give Spire a clean bill of financial health. Hold.

Last IC view: Hold, 236p, 10 Sep 2021