A proposed increase in the price of work paid for by the NHS sends private hospital operator Spire Healthcare (SPI) 3.3% higher to 320p.

In a pre-close update the £1.2 billion cap reiterated guidance of a 3% to 3.7% revenue gain in 2015, but thanks to an anticipated 1.1% rise in the NHS tariff turnover in the current year will be between 3% and 5%.

This puts the figure at between £908 million and £932 million, while earnings before interest, tax, depreciation and amortisation (EBITDA) margin will be flat at 18.1%.

Spire, providing 2016 guidance for the first time, expects a 1.5% increase in average revenue per procedure commissioned by the NHS from April when the price hike kicks in for the first time.

Investec was quick to update its forecasts with EBITDA now expected to be 3% higher in 2016 at £161.8 million.

Web - Spire - 8 Jan 2016

Private medical insurance revenues will remain flat during 2016, an area that accounts for 70% of group revenue. An over-burdened NHS, however, is expected to drive business towards Spire, especially from people deciding to pay for their own treatment to avoid joining a long waiting list.

‘We continue to believe Spire is well-positioned to benefit from NHS constraints and offer an attractive patient proposition particularly for the growing self-pay market,’ Numis analyst Sally Taylor says.

Issue Date: 08 Jan 2016