Spire Healthcare Share Discussion Threads

[floridamassive] 10/8/2018 10:22

Absolutely bountyhunter, I will take a 3% rise on a down day like today when FTSE is down 0.6%. This beauty bottomed out at 155 after 3 big Director/CEO buys yesterday. Even without any bid (which I feel is coming soon) fair value of this stock is above 200. This is a SOLID BUY for me.

[bountyhunter] 10/8/2018 09:09

could end a lot higher today, rebound beginning?

[patmike] 10/8/2018 09:05

I wonder if the 3 million that just went through is the end of the big seller which held the share price at 1.60 yesterday? The next few hours will tell us.

[cantrememberthis2] 10/8/2018 08:29

Gap closed from 160-164.9p... Rather shake out now.
Any further lows and I'll go in again. Already went in again this morning at 159p

[bolador] 10/8/2018 08:25

The directors made a "statement" yesterday with the announcement of their significant share purchases.Not often you see this so one can only assume that they feel the share price will not stay at these levels for long and of course they will not be able to buy shares as soon as they know of any corporate activity.

[eastbourne1982] 10/8/2018 08:23

MDC acquired 29.9% of SPI in 2015 for 432 million pounds.

SPI is currently valued at 640 million pounds.

[cantrememberthis2] 10/8/2018 07:45

All the more relevant TODAY...

[bountyhunter] 10/8/2018 07:42

wasn't that rumour months ago

[cantrememberthis2] 10/8/2018 07:14

Jonwig Jon Jon
If spire was that sheet and in so much trouble MDC wouldn't have bid for them.
Also many bidders are long term investors. Unlike Joe public.

I note MDC were rumoured to be selling down their 29.9% stake. HCA....?

Game on...

[opodio] 10/8/2018 06:57

Upside Scenario
 Impact of reforms on e-referrals less than expected and the
NHS segment returns to growth.
 PMI volumes better than expected.
 Spire succeed in turning around near-term challenges and
achieve targeted 14.5% CAGR growth in self-pay to 2022.
 FY19E EPS: 14.2p; Target multiple: 18.5x; Price Target:
262p

[jonwig] 10/8/2018 06:50

When Berenberg says the debt covenant is "gearing = 4.0*EBITDA" they presumably mean "net debt = 4.0*EBITA" (otherwise the statement makes no sense). I can't find this in their 2017 AR - presumably it's in the original admission document.

The company says net debt of £458m and half-year EBITDA of £66m the covenant would be triggered at FY EBITDA of £114.5m, but the key phrase was "66m before exceptionals" which could be all sorts of stuff. There are some quite strict lease covenants committing them to minimum capital expenditure. (I see they were stuffed last year by the Ian Paterson scandal which cost them £29m - presumably that's cleared up.)

I think the debt covenant is probably what's holding the share price down. A would-be bidder won't overpay (and will probably bide its time) when the company itself is doubtful about future profits. I don't know enough about healthcare, NHS politics, etc. but I get the impression that the NHS is cutting down on what it deems as non-essential.

Best of luck to holders, though.

[cantrememberthis2] 10/8/2018 06:35

Funds waiting for another tranche... Will see when the pull this below 155p to 150p...

Game on

[floridamassive] 10/8/2018 00:07

SP seemed to have bottomed out at 155 and after the 3 mega director buys today, it’s on it’s way back up now. Folks who managed to get in at this ridiculously low price will do well over the coming days/weeks. This is a solid business and remember there are only two realities in life death and taxes and when the first one knocks on the door, you need good healthcare
and that’s where companies like SPI come into picture, when you need good treatment fast and don’t want to rely only dogdy NHS. Enough said!!

[justiceforthemany] 09/8/2018 22:47

From Feb 2018
FT

Spire Healthcare was in demand amid market speculation that hospital operators such as US peer HCA might be interested in buying the 29.9 per cent stake held by Mediclinic, its biggest shareholder.

Mediclinic abandoned plans in late November to buy Spire and, under Takeover Panel rules, is barred until May from making another approach.

[bountyhunter] 09/8/2018 22:00

Yes HCA is a possible predator imo. This is from Oct last year but interesting re HCA nonetheless...

"HCA is continuing to expand in the UK, with a private wing to an NHS hospital to open soon in Birmingham, while it is investing in complex therapy areas such as cancer treatment facilities.

It helps that HCA gets virtually none of its revenues from NHS referrals. Revenues from private medical insurance – the mainstay for most private healthcare providers – is going up “modestly̶1; as it captures share in a falling market.

HCA also has great hopes for the “self-pay market” – where patients who are generally uninsured pay for treatments on demand. It’s an area where the firm is seeing “double digit growth”, according to Coombs, and was one of the few bright spots in Spire’s numbers last month as well."

[cantrememberthis2] 09/8/2018 21:22

Also sterling down looks good for buyouts

[justiceforthemany] 09/8/2018 21:01

Hospital Corporation of America

[justiceforthemany] 09/8/2018 21:01

There have been rumours in the past about HCA buying out Mediclinic's share for as much as 400p

[justiceforthemany] 09/8/2018 21:00

So Berenberg saying key upside risk is a trade sale, in other words another bid from Mediclinic or HCA.

[bountyhunter] 09/8/2018 20:39

no they don't have an A&E but most procedures are not urgent

[abcurtis] 09/8/2018 19:17

Not for non urgent procedures

[jonwig] 09/8/2018 18:43

To factor in the higher risk from lower visibility and greater gearing, we reduce our applied EBITDA multiple from 9x to 7x and our terminal growth from 2% to 1%, and we increase our cost of equity to 14-15%. Our price target is 120p, and we see a trade sale as the key upside risk.

Peel Hunt also gone cautious.

We move our recommendation to ‘Under Review’ to recognise the lower visibility on estimates. We leave our current estimates unchanged pending greater clarity on the quantum of the miss and guidance.
NHS remains 29% of sales and represents potential headwind to group growth over medium-term with little visibility on outlook.

Don't blame the messenger.

[jonwig] 09/8/2018 18:40

In the meantime, we downgrade our 2018 EBITDA by 16% and EPS by 37%, noting that this implies gearing of 3.7x EBITDA at the end of 2018 (covenant 4.0x). With the shares down by 20% since our upgrade, our waning confidence in our prior investment thesis prompts us to consider a stop-loss action. Our new valuation, based on EV/EBITDA and DCF metrics that reflect higher risk, leads to a 120p/share price target. We therefore set our recommendation to Sell, and believe there is potential for intangible asset write-downs and a dividend cut. Speculation regarding the potential for Mediclinic to acquire Spire helps to the limit downside, but Mediclinic’s five-year low share price, and the negative reaction to its previous bid for Spire, adds risk to relying on that get-out-of-jail-free card.