Spire Healthcare Group plc (LON:SPI), a leading independent hospital group in the UK, today announced its interim results for the six months ended 30 June 2023 (‘the period’ or ‘H1 23’).
Strong H1 performance in line with full year expectations, with momentum continuing
Summary Group results for the six months ended 30 June 2023
| Six months ended 30 June (Unaudited) | |||
| (£ million) | 2023 | 2022 | Variance |
| Revenue | 676.5 | 597.9 | 13.1% |
| Adjusted operating profit (Adjusted EBIT) | 67.8 | 54.6 | 24.2% |
| Adjusting items | (2.0) | (5.6) | NM(1) |
| Operating profit (EBIT) | 65.8 | 49.0 | 34.3% |
| Profit before taxation | 20.3 | 3.0 | NM |
| Profit /(loss) after taxation | 12.7 | (0.6) | NM |
| Basic earnings / (loss) per share, pence | 3.1 | (0.1) | NM |
| Adjusted basic earnings per share, pence (2) | 3.4 | 1.1 | NM |
| Adjusted EBITDA (3) | 117.9 | 105.8 | 11.4% |
| Adjusted FCF (4) | 24.0 | 23.7 | NM |
| Net bank debt (5) | 248.5 | 227.8 | 9.1% |
| Net bank debt / EBITDA covenant ratio | 2.1 | 2.2 | (0.1) |
1.Not meaningful
2.Adjusted basic earnings / (loss) per share is stated before the effects of adjusting Items.
3.Adjusted EBITDA is calculated as operating profit, adjusted to add back depreciation, and adjusting items, referred to hereafter as ‘Adjusted EBITDA’. For EBITDA for covenant purposes, refer to note 16.
4.Adjusted FCF (Free Cash Flow) is calculated as Adjusted EBITDA, less rent, capital expenditure cash flows and changes in working capital after adjusting for one-off items which are not related to the normal trading activity of the business. Rent cash flows are defined as interest on, and payment of, lease liabilities. Capital expenditure cash flows are defined as the Purchase of plant, property and equipment.
5.Net bank debt is defined as bank borrowings less cash and cash equivalents.
6.Return in capital employed (ROCE) is the ratio of the Group’s Adjusted EBIT to total assets less cash, capital investments made in the last 12 months and current liabilities.
7.Capital investment includes capital spend on property, plant and equipment and right of use assets. Refer to note 14.
Financial and operating highlights
Strong revenue and earnings performance
· Revenue up 13.1% vs H1 22 to £676.5m, driven by continued strong demand
· Private revenue up by 10.4% vs H1 22 with strong growth in PMI and further growth in self-pay
· Continued support for the NHS, especially on longest waiting patients and orthopaedics, with NHS revenue up 17.1%
· Average revenue per case (ARPC) on a weighted basis up 6.6% to £3,337; admissions up 7.4% vs H1 22 to 141,347
· Adjusted EBIT up 24.2% vs H1 22 to £67.8m and Adjusted EBITDA up 11.4% vs H1 22 to £117.9m
· Profit before taxation of £20.3m (H1 22: £3.0m)
· Profit after taxation of £12.7m (H1 22: loss of £0.6m)
· Strong H1 23 performance supported by significantly reduced impact of COVID-19 relative to comparative prior year period (particularly affected in Jan-Apr 2022)
· Net bank debt / EBITDA covenant ratio of 2.1x at 30 June 2023 (2.2x at the end of FY22 and 2.2x at 30 June 2022)
Continued development of the business in line with strategy
· 98% of inspected hospitals and clinics currently rated ‘Good’ or ‘Outstanding’ by the CQC or equivalent in Scotland and Wales (end FY22: 98%)
· Further good progress in the delivery of efficiency programmes; on track to deliver at least £15m cost savings in 2023
· £36.1m capex investment in facilities and equipment (H1 22: £38.8m);
· Integration of The Doctors Clinic Group (DCG) into the business in line with expectations
· 41% like-for-like increase in the number of GP appointments across the in-hospital and recently acquired DCG business
· 5.5% colleague salary increases from 1 September 2023, with 3% rise for colleagues eligible for a bonus; lowest paid colleagues move in-line with the Real Living Wage
Current trading and outlook
Following the strong financial performance recorded in the first six months, the second half of the year to date has started in line with our expectations. The Group has continued to deliver operational and financial progress in line with our plans, with sustained growth in revenue, earnings and EBIT margin.
We are confident of achieving our guidance provided at the time of our FY22 results announcement in March 2023: ‘Overall in 2023, we expect to make further good progress and continued delivery of the Group’s strategy and in particular anticipate continued momentum in top-line growth, margin improvement and ROCE improvement.’
Justin Ash, Chief Executive Officer of Spire Healthcare, said:
“Our strategy is working, as this strong set of results demonstrates, with top-line momentum and strong profit growth. Our investments in a high quality service, partnerships with PMI providers and the NHS, and a compelling self-pay proposition, meant we treated a record number of patients in the first half of this year. Our efficiency programmes are on track, and we continue to manage mix to focus on treatment areas most appropriate for our acute hospital environment. This is enhancing our margin.
“In line with our strategy to develop adjacent services, we acquired The Doctors Clinic Group last year and the business is performing well. Demand for easily accessible private GP services continues to soar and our occupational health services are a key platform for employers seeking to retain staff and support their health needs.
“UK healthcare is entering an era of renewed choice as demand for healthcare diagnosis and treatment remains strong. By continuing to invest in innovative services, expanded facilities, technology, and our brilliant workforce, Spire is ideally positioned to meet this demand.”
Spire Healthcare is a leading independent healthcare group in the United Kingdom, with 39 hospitals and over 30 clinics, medical centres and consulting rooms across England, Wales and Scotland. It operates a network of private GPs and provides occupational health services to over 700 corporate clients.
Working in partnership with over 8,760 experienced consultants, Spire Healthcare delivered tailored, personalised care to approximately 926,500 inpatients, outpatients and day-case patients in 2022, and is the leading private provider, by volume, of knee and hip operations in the United Kingdom. The Group’s well-located and scalable hospitals have delivered successful and award-winning clinical outcomes, positioning the Group well with patients, consultants, the NHS, GPs and Private Medical Insurance (PMI) providers. 98% of Spire Healthcare’s inspected hospitals and clinics are rated ‘Good’, ‘Outstanding’ or the equivalent by health inspectors in England, Scotland and Wales.
