Spire Healthcare confident after first-half growth

12th Sep 2024 10:06

(Sharecast News) - Spire Healthcare Group reported a strong set of first-half results on Thursday, driven by growth in private revenue, increased support for the NHS, and improving margins in its hospitals.

The FTSE 250 company said that for the six months ended 30 June, it recorded a 12.7% rise in revenue to £762.5m, with adjusted EBITDA increasing 10.8% to £130.6m.

Adjusted profit before tax surged 20.2% to £26.8m, while profit before tax rose 11.8% to £22.7m.

The group said its hospitals business saw a 5.4% revenue increase compared to the same period last year.

Private medical insurance (PMI) revenue grew 9.7%, reflecting strong demand, though self-pay revenue decreased 3%.

NHS revenue grew 5.2%, and the average revenue per case rose 4.7% to £3,495.

Admissions remained stable at 140,657 for the period.

The hospitals segment also recorded a 6.6% rise in adjusted EBITDA to £126.3m, and a 6.9% increase in adjusted EBIT to £73.2m.

Spire's new services contributed significantly to its performance, with that revenue soaring to £59.7m, up from £6.7m in the first half of 2023.

The growth was largely attributed to the acquisition of Vita Health Group (VHG), which generated £53m in revenue.

Adjusted EBITDA for the new services rose to £4.3m from a loss of £0.6m the prior year.

Strategically, Spire said it continued to deliver on its long-term goals.

The firm maintained high-quality ratings, with 98% of its inspected hospitals and clinics rated 'Good' or 'Outstanding' by the CQC or equivalent bodies in Scotland and Wales.

Patient satisfaction also improved, with 97% of inpatient and day case patients rating their overall experience as 'Good' or 'Very Good'.

Spire said its cost-saving programme remained on track to deliver at least £15m in savings for 2024.

Additionally, the group invested £51.5m in facilities and equipment, up from £31m the prior year.

Spire's management reiterated its guidance for full-year adjusted EBITDA to be within the £255m to £275m range and expressed optimism about its outlook for the 2025 financial year, driven by ongoing efficiency and digitalisation initiatives.

"These are strong results that demonstrate our strategy as an expanded group is delivering," said chief executive officer Justin Ash.

"Our private revenue grew in the first half, driven by strong growth in private medical insurance (PMI) which has seen a resurgence amongst working-age people.

"Patients are also increasingly switching between self-pay and PMI."

Ash said Spire's work with the NHS also increased in the first half, partly due to higher commissioning, increased complexity and patients exercising the right to choose where they receive treatment.

"Spire stands ready to work with the new government to help address NHS waiting lists.

"Our investment in mental health and physiotherapy has also seen good growth, and we are confident this will continue.

"Vita plays a vital role in helping people live healthier lives and get back to work."

Justin Ash said he was also pleased to report that Spire's savings programme remained on track, as it maintained its "safe and high quality" care.

"We look forward to building on the group's performance in the first half and we are entering the second half confident of further progress."

At 0943 BST, shares in Spire Healthcare were down 0.2% at 249.5p.

Reporting by Josh White for Sharecast.com.