Spire Healthcare Group PLC (LON:SPI) has swung to a first-half profit off the back of cost-cutting measures and more revenues from the National Health Service (NHS).
The private hospital firm reported a pre-tax profit of £9.6mln for the six months ended 30 June, swinging from a £2.2mln loss in the prior year.
READ: UBS thinks Spire will struggle to convince more people to leave the NHS and go private
Revenues were also up 3.4% to £491.6mln, while the interim dividend was maintained at 1.3p per share.
The boost in takings was helped by a large fall in capital investment, which was slashed by 41.2% year-on-year to £19.7mln, as well as a 5.1% increase in private medical insurance which the firm attributed to targeted marketing campaigns.
Spire also reported that revenues from services provided to the NHS had risen 2.5% in the period, mainly through the opening of new service lines, however, the company said the state-run service remained a “challenging market”.
Self-pay revenues, the firm’s third income branch, rose 1.4%, lower than in previous periods which the group blamed on a “deliberate focus” on core clinical procedures and repositioning away from procedures such as bariatrics, which treat obesity.
Looking ahead, the firm said the full year remained “in line” with management expectations and that it expected continued revenue growth, offset by mix and planned investments.
Justin Ash, Spire’s chief executive, said the company had achieved “stabilisation with revenue growth, continued quality improvement, cash generation and net debt reduction”.
He added that going forward the group would continue to develop its private revenue streams in “key areas” such as oncology.
The positive results will come as a relief to investors following the previous year’s turmoil which saw Spire’s profits suffer from what it said at the time was a “prolonged decline” in referrals from the NHS as budget cuts bit into the state provider’s coffers.
In a note, analysts at Peel Hunt upgraded Spire to ‘add’ from ‘hold’ and retained their 155p target price, saying the results indicated signs of revenue and margin improvements, both of which provided "catalysts" for the firm.
In late-morning trading on Monday, Spire’s shares were down 0.6% at 124.4p.
--Adds broker upgrade and updates share price--