Spire Healthcare posts full-year growth, warns of looming labour cost rises

(Sharecast News) - Spire Healthcare reported an 11.2% rise in full-year revenue in its final results on Thursday, to £1.51bn, as adjusted EBITDA increased 11.1% to £260m, although it warned of looming headwinds from upcoming increases to wages and National Insurance. The FTSE 250 company said adjusted operating profit grew 14.6% to £149.4m, while profit before tax rose 10.7% to £38.3m.

Adjusted profit before tax increased 19.4% to £50.2m, though profit after tax declined 6.8% to £26m due to higher adjusting items.

The firm said adjusted basic earnings per share rose 11.4% to 8.8p, while reported EPS declined 7.4% to 6.3p.

It said it maintained a strong operational performance, with revenue growth of 6.2% on a comparable basis, driven by an 8.8% increase in NHS-funded admissions and a 4.3% rise in private patient revenue.

Hospitals revenue grew 5.5%, while primary care services saw a 15% increase.

Adjusted EBITDA margin for the group stood at 17.2%, with hospitals margin improving 30 basis points to 18% and primary care margin expanding 340 basis points to 8.5%.

Spire said it delivered over £20m in cost savings during the year through procurement efficiencies, automation of booking processes, and workforce optimisation.

The company continued to expand its primary care network, opening three new clinics, while its Vita business outperformed expectations with £107m in revenue and £11m in EBITDA.

NHS demand remained strong, with Spire increasing eRS slots and achieving 20% growth in fourth-quarter volume, particularly in orthopaedic procedures.

The board recommended a final dividend of 2.3p per share, up from 2.1p in the prior year.

Net bank debt rose slightly to £325.9m, with a leverage ratio of 2.0x adjusted EBITDA, down from 2.2x in 2023.

Looking ahead, Spire said it expected mid-single-digit revenue growth in 2025, driven by continued expansion in hospitals and rising demand for its primary care services.

Private medical insurer-funded admissions are expected to increase, partially offsetting a shift in self-pay patient mix.

The firm said it anticipated at least £30m in additional cost savings for 2025, raising its cumulative cost-saving target for 2024-2026 to £80m from £60m.

However, it said it faced a £30m EBITDA headwind from National Insurance and minimum wage increases, and the expiry of its energy hedge.

Spire said it expected to mitigate a portion of these costs through efficiency measures, pricing adjustments, and a higher-margin case mix.

For 2025, adjusted EBITDA was expected to be in the range of £270m to £285m.

Over the medium term, Spire said it was aiming to sustain more than 5% revenue growth in its Hospitals business while expanding its primary care and Vita segments.

The company said it expected to fully offset cost pressures by 2027, supporting its return on capital and hospital margin targets.

It noted that trading since the start of 2025 has remained in line with expectations.

"This is a good set of results, delivering all core guidance measures in a changing market," said chief executive officer Justin Ash.

"Market fundamentals remain strong, with private medical insurance coverage growing significantly and a strong partnership with the NHS.

"We are excited about the future - we remain confident in the combination of structural market growth, supplemented by the potential of new primary care services to complement our hospitals, and a continued strategic partnership with the NHS helping to deliver waiting list reductions."

Ash said that in the year ahead, the company would face pressure on costs as a result of National Insurance and minimum wage changes.

"However, we already have a successful efficiencies programme in place and intend to drive self-help measures even faster, partly offsetting the impact to operating costs.

"I am excited about our prospects for 2025 and on behalf of Spire, we look forward to contributing in even greater measure to the nation's health."

Reporting by Josh White for Sharecast.com.