Spire Healthcare Group PLC (LON:SPI) shares hit an all-time low on Monday after the company warned it expected to report “materially lower” 2018 profits on lower referrals from Britain’s National Health Service (NHS).
Spire which runs private hospitals, said it expects its annual underlying earnings (EBITDA) to fall to £66mln from £83.4mln in 2017 on annual revenue 1.1% lower at £475mln.
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Spire shares were down as much as 28% in early trade - the FTSE 250’s biggest loser.
Its performance was hurt by a steep fall in revenue from NHS business, which saw revenues fall 9.5% in the six months to the end of June 2018. As such, Spire said its growth would continue to be impacted by "continuing weakness” in the NHS business where it sees new signs of “further NHS triaging and rationing."
“While we remain optimistic about the CEO Justin Ash’s longer-term plans for Spire, his credibility will take a hit today and so the reiteration of his strategy which implies delivering EBITDA of more than £20 mln by 2022 will be met with scepticism,” said analysts at Liberum.
Management also announced the start of a new cost savings programme which it hopes will drive some benefit during the second half of 2018, as well as a 10% reduction in its capex sending to £90 mln.
“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,” Chief Executive Officer Justin Ash said in a statement.