Spire Healthcare Group Plc (LSE:SPI) shares tumbled 22% after the company posted a slight earnings miss and issued a cautious outlook for 2025, revealing a £40 million EBITDA hit from higher employer National Insurance costs starting in April.
For 2024, revenue rose 11% to £1.51 billion, while adjusted EBITDA increased 9% to £260 million. However, cost pressures are mounting, with higher wage bills, energy costs, and changes in patient mix expected to weigh on margins this year.
The company is targeting £30 million in new cost savings for 2025, up £10 million from initial plans, as it seeks to offset rising expenses. Adjusted EBITDA is forecasted to be between £270 million and £285 million, reflecting these challenges.
Despite near-term cost pressures, Spire remains optimistic about long-term growth, citing increasing private patient demand, new NHS contracts, and expansion of its Primary Care business. However, investors remain wary of the near-term earnings drag.
Both Panmure Liberum and Peel Hunt described the miss against consensus as modest - so the knee-jerk markdown of the stock in early deals is a bit of a head-scratcher.
Peel maintains a 'buy' rating with a target of 340p, while Panmure also rates Spire as a 'buy' but with a more conservative 300p target, arguing that the earnings miss is already factored in given the stock’s underwhelming performance in recent years despite its strong financial results.
In early trading, the shares were down 50.9p at 173.6p.