Independent hospital group Spire Healthcare (SPI) reversed 2018’s first half losses, posting a £9.6m pre-tax profit for the six months to 30 June 2019.

But investors have focused on lacklustre top line growth, leaving the share price modestly lower (less than 1%) at 124.7p. Revenues increased just 3.4% to £491.6m.

Private medical insurance, representing 50% of the business saw the strongest growth, up 5.1%, which the company said demonstrated market share gains.

The self-pay segment saw relatively lacklustre growth of 1.4% as the company moves its focus towards self-pay outpatient services.

The NHS segment, representing around a third of revenues saw growth of 4.9% as the company benefited from a positive revenues mix, with growth in higher cost hip and knee replacements offsetting declines in soft tissue repair.

Chief executive Justin Ash said ‘We remained uncompromising in our focus on patient safety and quality of care and we now have 81% of sites rated Good, Outstanding or the equivalent. We are delighted that both our new hospitals in Manchester and Nottingham have been rated Outstanding and we now have the highest number of Outstanding sites of any independent provider’.

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The company signed a new partnership with GenesisCare (GEN) in Bristol to create an integrated private cancer service to private patients. It will be used as a template for future partnerships at other sites. Genesis will acquire two sites from Spire for £12m, with Spire retaining 50% of profits for providing diagnostics and surgey while Genesis will contribute its expertise in radiotherapy.

Spire signed long term pricing agreements with Axa Healthcare and Bupa, supporting its strategic focus on private patients.

Net debt for the purposes of satisfying the company’s bank covenant limit was £366.6m, which is 3.3 times earnings before interest, depreciations and amortisation (EBITDA), under the four times allowed.

The dividend was maintained at 1.3p per share and the company reiterated its full year guidance for continued revenue growth offset by mix and planned investments.

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Issue Date: 16 Sep 2019