Spire Healthcare Engages in Private Equity Sale Discussions
The UK's leading private hospital provider, Spire Healthcare, has entered into preliminary negotiations with several private equity groups regarding a potential acquisition that could result in the company's delisting from the London Stock Exchange. Among the interested parties are Bridgepoint Advisers and Triton Investments Advisers, as confirmed by Spire in a statement released on Monday.
Market Reaction and Company Valuation
Following the announcement, Spire's shares surged by an impressive 18%, positioning the company as the top performer on the FTSE 250 index for the day. This significant increase in share price has elevated Spire's market valuation to approximately £850 million, reflecting investor optimism about the potential deal. However, the company has emphasised that discussions are still at an early stage and cautioned that there is no guarantee a formal offer will materialise.
Strategic Review and Investor Pressure
Spire first signalled a strategic review of its operations in September, initiating talks with multiple parties to explore various options, including a possible sale of the business. This move came in response to mounting pressure from investors, notably Harwood Capital Management, which publicly expressed concerns that Spire's share price did not adequately reflect the company's underlying value. Harwood highlighted Spire's unencumbered hospital portfolio, valued at over £1.4 billion, and its occupational health business as key assets being undervalued by the market.
Spire's Operational Footprint and History
Spire Healthcare operates an extensive network of 38 hospitals and more than 50 clinics, medical centres, and consulting rooms across England, Wales, and Scotland. Founded in 2007 through the acquisition and rebranding of 25 Bupa hospitals, the company went public in 2014. Since then, it has expanded its portfolio by acquiring additional sites and constructing two new hospitals in Manchester and Nottingham, solidifying its position as a major player in the UK's private healthcare sector.
Financial Performance and NHS Challenges
In December, Spire issued a warning that its annual adjusted core profit would likely fall at the lower end of its projected range of £270 million to £285 million. While the company has benefited from an increase in self-pay patients and those with private health insurance, it has faced a slowdown in work commissioned by the NHS. Spire attributed this decline to budgetary constraints at integrated care boards, which oversee NHS services at a local level, noting that NHS volumes represent a "material uncertainty" for the sector. The company also criticised the NHS's proposed tariff uplift for 2026-27 as falling "significantly short" of inflation rates.
NHS Integration and Public Concerns
NHS-related work accounts for roughly 30% of Spire's revenue, providing a steady income stream. Chief Executive Justin Ash has advocated for an "integrated system" where private providers like Spire help reduce NHS waiting lists and support the return of long-term sick individuals to work, thereby unlocking growth. However, this approach has sparked growing public and NHS staff concerns about the creeping privatisation of the NHS, potentially leading to a two-tiered health system where access to treatment depends on wealth. Health Secretary Wes Streeting has defended the increased use of private sector providers while insisting they must "pull their weight" and not divert resources away from the NHS.
