Spire Healthcare Reports Mixed 2024 Results Amid Cost Pressures
Why we think this is neutral
Spire Healthcare's 2024 results present a mixed picture. While revenue grew by 11.2% to £1,511.2m and adjusted EBITDA increased by 11.1% to £260.0m, there are concerning factors that temper the positive aspects. The decrease in profit after taxation by 6.8% and the 7.4% drop in basic earnings per share are significant negatives. The company faces substantial headwinds, including cost pressures from National Insurance and National Minimum Wage changes, as well as payor mix shifts. However, Spire is proactively addressing these challenges through accelerated cost savings initiatives and strategic growth in its Primary Care segment. The outlook for FY25 indicates continued growth but with a notable EBITDA impact from external factors. The company's ability to navigate these challenges while maintaining growth will be crucial for its performance in the coming year.
Key Points
- Revenue increased 11.2% to £1,511.2m
- Adjusted EBITDA up 11.1% to £260.0m
- Profit after taxation decreased 6.8% to £26.0m
- Basic earnings per share down 7.4% to 6.3p
- NHS revenue up 8.8%, private patient revenue up 4.3%
- Net bank debt increased to £325.9m
- Accelerating cost savings, targeting at least £30m in FY25
- FY25 adjusted EBITDA guidance of £270m to £285m
- Anticipating £(30)m EBITDA impact in FY25 from external factors
- Maintaining compliance with banking covenants
Summary
Spire Healthcare Group plc reported its 2024 results with revenue up 11.2% to £1,511.2m and adjusted EBITDA increasing 11.1% to £260.0m. However, profit after taxation decreased 6.8% to £26.0m, and basic earnings per share fell 7.4% to 6.3p. The company saw strong performance in NHS revenue, up 8.8% year-on-year, and private patient revenue growth of 4.3%. Spire faces significant headwinds from cost pressures, including National Insurance and National Minimum Wage changes, as well as payor mix shifts. To counter these, the company is accelerating cost savings initiatives, targeting at least £30m in FY25. The outlook for FY25 includes guidance for adjusted EBITDA of £270m to £285m, with expected mid-single digit revenue growth. However, a £(30)m EBITDA impact is anticipated from various external factors. The company's net bank debt increased to £325.9m, but it maintains compliance with banking covenants and has access to a £60m undrawn revolving credit facility.