Spire Healthcare Group PLC Trading Update and Revised Outlook (8857W)
06 August 2018 - 4:00PM
UK Regulatory
TIDMSPI
RNS Number : 8857W
Spire Healthcare Group PLC
06 August 2018
This announcement contains inside information
Spire Healthcare Group plc
Trading Update and Revised Outlook
6 August 2018
Spire Healthcare Group plc (LSE: SPI), the major UK independent
hospital group, provides the following trading update. Having
reviewed results for the period 1 January 2018 to 31 July 2018, and
assessed likely market conditions for the balance of the financial
year, the Company announces that it now expects EBITDA for the full
financial year 2018 to be materially lower than for 2017.
Unaudited provisional results for H1 2018
Spire expects to announce the results for H1 2018 on Tuesday 18
September 2018. Ahead of that it confirms the following provisional
unaudited results for H1 2018:
-- Revenues were approximately GBP475 million, a decrease of 1.1% on H1 2017.
-- EBITDA (before exceptional items) was approximately GBP66
million, at a margin of approximately 14%.
-- Capital expenditure was GBP34 million (H1 2017: GBP59.5 million).
-- Net debt at 30 June 2018 stood at approximately GBP458 million (H1 2017: GBP436.1 million).
Comment on H1 and H2 2018
In H1 2018, Self-Pay revenues increased 8.3%, PMI revenues
increased 0.9% and NHS revenues decreased 9.5%. Overall, private
revenues grew by 2.9%. Draft results for July 2018 show a return to
revenue growth as anticipated, albeit lower than planned.
We continue to expect private payor revenue growth in H2 2018,
and to see benefit from our investments in telephony and central
marketing, and our evolving relations with PMI payors. That growth
will be impacted, however, by continuing weakness in the NHS
business where we see new signs of further NHS triaging and
rationing in H2 2018, especially in orthopaedics as Clinical
Commissioning Groups tighten their approach towards managing
waiting lists.
We have invested significantly to improve our clinical quality
and to drive our private payor proposition, including embedding new
and enhanced standards, set and audited by our expanded clinical
team. This is being effected with a number of one-off step-up
costs, which in turn has led to overall hospital costs increasing
ahead of our original estimates. The impact on earnings has
therefore been more marked than anticipated.
In parallel we have identified and initiated substantial cost
saving exercises in other areas of the business, including central
functions and procurement. These savings are expected to have a
significant impact on our cost base from 2019 onwards, with some
benefit in H2 2018. In addition we have introduced a much tighter
capex environment, and capex for FY 2018 will be approximately
GBP90 million compared to GBP100 million original guidance and
GBP118 million in FY 2017. This reduction is helping to fund our
investments in clinical quality.
Comment by Justin Ash, Chief Executive Officer
"The current difficult market conditions - also seen by other
operators - had a greater impact on our business in the seven
months to 31 July 2018 than we had expected. Nevertheless, through
this transitional period we are relentlessly focused on raising our
clinical quality to "best in sector" level and we believe this is
beginning to bear fruit as a commercial differentiator. The recent
achievement of an "Outstanding" CQC result at Spire Nottingham
means that Spire now has four "Outstanding" hospitals out of only
14 in the entire independent sector, and all other CQC hospital or
service inspections this year have been upgrades to "Good".
With our renewed focus on the private market, we are seeing
encouraging momentum and expect our top line to recover through the
second half of 2018 and increasingly in 2019 and beyond, while the
benefit of our major cost savings initiatives will accelerate
through next year.
Our ongoing plans to lead on quality, to move our business model
further towards the private payor and to adapt our operating costs
to this new model, put us in a strong position against our
competitors. We remain confident in our medium to long term
prospects and fully committed to the delivery of our 80/100/200
Strategy."
For further information please contact:
Spire Healthcare:
Antony Mannion, Investor Relations Director
+44 (0)20 7427 9160
Instinctif:
Damian Reece
Guy Scarborough
+44 (0)20 7457 2020
Registered office and head office:
Spire Healthcare Group plc
3 Dorset Rise
London
EC4Y 8EN
Registered number: 9084066
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END
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