Spire Healthcare cautiously optimistic as revenues beat forecasts

Spire Healthcare posted better-than-expected results on Thursday, after self-pay revenues increased in the second half.

Revenues for the year to 31 December eased 6% to £919.9m, with earnings before interest, tax, depreciation and amortisation down 15% at £189.0m. The pre-tax loss, which included a £200m write down of goodwill related to historical balances, was £231.0m, compared to a pre-tax profit of £9.6m a year previously.

The private healthcare provider, which has 39 hospitals and eight clinics, said 2020 had started well, with strong growth in self-pay. But admissions and revenues declined as Covid-19 spread, with the "vast majority" of private elective surgery suspended from 1 April and then all capacity made available to the NHS. As a result, first half revenues eased 18% to £401.9m.

However, as the year progressed, Spire was able to undertake elective work for both NHS and private patients, which helped push second-half revenues 5.9% higher to £518.0m.

Looking to the current year, Spire said trading in January and February was in line with expectations, adding: "Underlying trends remain positive, with private enquiries above prior year, a waiting list of private surgery and significant national unmet demand for both NHS and private diagnostics and procedures.

"The board remains cautiously optimistic that trading will return to 2019 levels in 2021."

As at 1000 GMT, shares in Spire were down 2% at 152.4p.

Liberum, which has a ‘hold’ rating and 180p target price on the stock, said: "The better performance appears to have driven by a more complex case mix driving higher revenue per case and margin as well as better working capital management."

But it cautioned: "While 2020 was better-than-expected, that is unlikely to move the shares materially given the circumstances of last year. The focus is on guidance for the year and while it was largely within consensus expectations, there is still a fair degree of uncertainty that might limit performance until we get another update on progress at the first half results in September."