- 2024 sales and earnings up 11%
- Shares were flat year-to-date
- Warning on costs and margins
On the surface, today’s full-year results from FTSE 250 private hospital operator Spire Healthcare (SPI) looked fine, but investors spied one or two things they clearly didn’t like and sent the shares sharply lower from the open.
By mid-morning the stock was trading 36p or 16% lower at 188p, having earlier hit their lowest level in four years, on heavy volume.
ADVERSE REACTION
Optically there seemed to be nothing wrong with today’s results for the year to December, with revenue and EBITDA (earnings before interest, tax, depreciation and amortisation) both rising by double-digit rates to £1.5 billion and £260 million respectively.
EPS (earnings per share) on an adjusted basis also rose by double digits from 7.9p to 8.8p, the final dividend was increased and ROCE (return on capital employed) increased to 8.2% from 7.5% the previous year.
There was a dip in free cash flow, from £48 million to £39 million, and net bank debt increased slightly to £326 million, although thanks to the double-digit rise in EBITDA gearing came down to two times, which is perfectly manageable.
The group is delivering cost savings ahead of plan, but investors reacted badly to the news it faces a hit of up to £30 million from the changes to National Insurance and the National Minimum Wage, despite claims it expects to offset some of the rise through accelerated efficiencies and price rises.
‘In the year ahead, we will see pressure on costs as a result of National Insurance and Minimum Wage changes,’ commented chief executive Justin Ash.
‘However, we already have a successful efficiencies programme in place and intend to drive self-help measures even faster, partly offsetting the impact to operating costs.’
The firm also said growth in private patients would be driven by more people switching from self-pay to private medical insurance, which generates lower margins.
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