Spire Healthcare shares plunge as group warns of cost hit despite NHS demand
Shares in NHS private healthcare provider Spire Healthcare plunged by nearly a quarter in early deals this morning after the company warned that higher costs could cut earnings by as much as 10 per cent.
The company said it faced a £30m hit to earnings before interest, tax, deprecation and amortisation (EBITDA) in the year ahead due to National Insurance and minimum wage increases, and the expiry of its energy hedge.
While the group said it expected to mitigate a portion of these costs through efficiency measures, pricing adjustments, and a higher-margin case mix, it said adjusted EBITDA was expected to be in the range of £270m to £285m for 2025, up only marginally from the £260m reported for 2024.
Overall in 2024 the group delivered a 6.2 per cent increase in revenue in 2024, due to strong NHS and demand and private patient growth.
The company reported an 8.8 per cent increase in revenue from NHS work and delivered a 20 per cent increase in volume during the fourth quarter.
Orthopaedic procedures comprised over 60 per cent of this NHS work.
Private patient revenue also grew by 4.3 per cent, with strong contributions from Private Medical Insurance (PMI) and self pay.
Chief executive Justin Ash said: “This is a good set of results, delivering all core guidance measures in a changing market. We saw revenue growth of 6.2 per cent year-on-year and adjusted profit before tax growing 29.4 per cent. Market fundamentals remain strong, with private medical insurance coverage growing significantly and a strong partnership with the NHS.
“Our strategy is delivering. We broadened our range of services to meet more healthcare needs in our hospitals, our clinics, in the community and at home; welcomed more NHS patients and invested significantly in our Hospital staff.
“We are playing a pivotal role in helping employees stay in work or return to work; all whilst maintaining and improving our quality of care and levels of patient safety, which remain our number one priorities. I thank all our colleagues and consultant partners for their expertise and commitment.
“We are excited about the future. We remain confident in the combination of structural market growth, supplemented by the potential of new Primary Care services to complement our hospitals, and a continued strategic partnership with the NHS helping to deliver waiting list reductions.
“In the year ahead, we will see pressure on costs as a result of National Insurance and Minimum Wage changes. 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.”