FTSE 250 private healthcare firm could see ‘increased demand’ under Labour
The UK’s second-largest private healthcare group could benefit if Labour wins the general election on 4 July, according to a leading broker, as the party vows to clear the NHS waiting list backlog over the next parliament.
RBC Capital Markets analysts said in a note that independent operators, including FTSE 250-listed Spire Healthcare, may see “increased demand” as a result of more near-term usage of private healthcare under Labour’s plans.
Shadow health secretary Wes Streeting told Morning Wire earlier this month that Labour would use “spare capacity in the private sector” to reduce NHS waiting lists and provide it “on NHS terms, so they never have to worry about a bill”.
Data from the Private Healthcare Information Network shows there were nearly 900,000 admissions to UK private hospitals in 2023, more than any previous year.
“Given that capacity utilisation within these networks is already high, it is unlikely that they will have the ability to ramp up their treatment volumes, but greater demand from the NHS would be incrementally helpful for independent operators if they are able to slot more patients into treatment lists,” RBC said.
Analysts added that while a longer-term “material increase” in UK healthcare infrastructure investment could improve NHS satisfaction and be a headwind for Spire, they did “not see this as likely in any reasonable timeframe”.
Spire runs 39 hospitals and works with more than 8,000 consultants. Its revenue increased by 13.4 per cent to £1.4bn last year, with the firm citing increased demand as the central reason for its growth. Spire claims to have delivered care to more than 1m people in 2023.
The firm’s admissions funded by private medical insurance were at record levels last year, going above pre-pandemic figures for the first time.
Polls widely expect Keir Starmer’s party to achieve a majority next Thursday.
RBC noted that the performance of London’s blue-chip FTSE 100 index had seen a “remarkably similar” performance over the last three to six months compared to the last time the government switched from Tory to Labour in 1997, which delivered “notably strong” gains on either side of the election.
Its analysts identified financial services, housing, retail, transport and energy as among the most exposed sectors of the stock market to a potential Labour victory.