Social care provider Cambian (CMBN) has put last year’s profit warning behind it to report better-than-expected half-year figures.
Adjusted earnings before interest, tax, appreciation and amortisation (EBITDA) came in at £22 million in the six months to 30 June.
This was almost £5 million lower than in the same period a year earlier but eclipsed Canaccord Genuity’s expectations by 42% largely thanks to lower costs.
Shares jumped 10.1% to 88.3p on the news as investors believe that the company has put last year’s problems behind it.
Profit guidance for 2015 was revised lower in October due to a higher than anticipated investment needed to expand the business. Problems recruiting enough trained staff meant that admissions were lower than forecast.
This led to the group breaching its covenants in March and it has since appointed a new chief financial officer.
‘After a disappointing 12 months, Cambian should regain some investor credibility after having met/bettered expectations today,’ Canaccord Genuity’s analysts said in a note.
‘We currently estimate adj. EBITDA to increase in H2-16 to £27.2 million as occupancy increases and the remedial action programme is implemented.’
The broker forecasts net debt to adj EBITDA will fall to 6.1 times by the end of 2016, down from 6.7 times, or £256.7 million, today.
Cambian is a provider of schools, hospitals and specialist care homes for those suffering from behavioural or mental health problems.