Shares in Spire Healthcare dropped as much as 25 per cent today after the firm revealed first-half profits plunged because of a legal settlement.
Britain's second-largest healthcare firm said pre-tax profit dropped 73.7 per cent compared with the previous year to £12.1m due to exceptional charges of £32.1m.
Spire yesterday announced it would contribute £27.2m to a fund to compensate the 750 patients of Ian Paterson, a former breast surgeon at Spire hospitals facing jail time for carrying out operations on patients he wrongly diagnosed.
Revenue increased by 2.4 per cent to £481m, but Spire warned it had seen significantly lower than expected revenues in July and August, and it said revenue in the second half is expected to be flat.
Shares in the FTSE 250 firm plummeted as much as 25 per cent at the market open. At the time of writing they had recovered slightly to trade down 14.91 per cent at 263.7p.
Why it's interesting
Spire runs 39 private hospitals across England, Wales and Scotland, and this year it launched two more in Manchester and Nottingham. It also has plans to build a new hospital in Milton Keynes.
The firm said it lost a month of earnings in Manchester as the business relocated to a new facility. Exceptional charges relating to pre-opening costs for its two new hospitals also dragged profits down.
Spire is still searching for a permanent boss after executive chairman Garry Watts decided to revert to his previous role as non-executive chairman due to an illness. Simon Gordon, chief financial officer, has stepped in as interim chief exec.
What Spire said
We have had a satisfactory first half in line with our plan.
Following the completion of criminal proceedings against Ian Paterson earlier this year, we are pleased to announce that we have reached a settlement agreement with all civil claimants in connection with his practice at Spire.
Although it is disappointing to report that growth in our NHS business appears to be slowing to some extent in H2 2017 and to accordingly have to revise our outlook for FY 2017, our correspondingly strong self-pay growth in H1 2017 (14 per cent on an underlying basis) demonstrates that our core strategic proposition remains valid.