Spire reports return to pre-tax profits after pandemic losses

Spire Healthcare Group has swung back from heavy losses during the pandemic to post pre-tax profits in the first six months of 2021 despite continued costs due to Covid.

The private hospital operator reported profits before tax of £4.7 million in the six months to June this year, a huge increase on the £231.3 million pre-tax loss during the same period in 2020.

But pre-tax profits are still less than half of the £9.6 million reported pre-pandemic in the first six months of 2019, the company’s interim results show.

Chief executive Justin Ash said the company was experiencing additional costs arising from the “complexities of delivering safe care in a Covid-secure environment”.

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However, Spire Healthcare had successfully driven down the cost of Covid testing and its continued investment in digital systems and efficient pathways will deliver “significant” cost savings in 2022 and beyond, he added.

Mr Ash said: “I am pleased by our performance in the first six months of the year, which has seen us return to operating profit despite ongoing Covid costs, due to the exceptional growth in private revenues.

“As waiting lists continue to climb, the company is helping patients find options for treatment, be that privately or by assisting the NHS.

“The long-term prospects for the healthcare sector are positive and we stand ready to play our part in addressing waiting lists and supporting the UK’s recovery from the pandemic.”

But Spire Healthcare, which has 39 private hospitals and eight clinics across England, Wales and Scotland, said that a rise in coronavirus prevalence could have an impact on its earnings before income, tax, depreciation and amortisation (Ebitda) of around £4 million a month.

It added: “Admissions in July and August have been impacted by an increased prevalence of Covid-19 in the UK.

“Whilst revenues remained in growth, last minute cancellations due to patients, colleagues and consultants being required to self-isolate by NHS Test and Trace have led to higher labour costs, which impacted Ebitda by c. £4 million [sic] per month on average in July and August.

“However, we expect many of these Covid-related costs will be offset by improvements in testing and progressive efficiency measures providing a platform for margin expansion in 2022.

“Given the positive underlying trends, we are confident 2021 revenue will be materially above 2019.

“We also expect Ebitda to recover from the July and August levels to trade in line with 2019 over the last four months of the year, assuming current Covid-19 prevalence does not rise materially.

“Should it do so, the cost impacts seen in July and August could prevail for the rest of the year.”

The interim results also show that Spire Healthcare had seen 46.7% growth from self-pay revenue compared to 2019, up from £88.6 million to £129.9 million, with record numbers of appointments booked through the group’s digital portals.

Spire Healthcare also said it was ready to play its part in addressing the NHS backlog but its revenue growth was not dependent on growth in NHS use of the independent sector.

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It added: “It is widely acknowledged that growing NHS waiting lists are the most significant issue facing the healthcare system today and that the independent sector will have an important role to play to help address the problem.

“Spire Healthcare stands ready to play its part and we look forward to building on the strong relationships forged with local NHS partners during the pandemic.

“It remains to be seen if funding will be made available for a material growth in NHS use of the independent sector, although signals are positive from the Government’s recent funding announcement.

“Spire Healthcare’s strong private mix means the company is not dependent on such an uplift to deliver revenue growth in H2 21 [second half of 2021].”