Private company's losses 'could lead to Darzi centre sell-off'
By Ian Quinn
Analysts have predicted that one of the biggest private companies in primary care may sell off or close its loss-making GP operations entirely, including its network of Darzi centres, after it announced it was separating the division from the rest of its business.
Despite having won or reached preferred bidder stage for 68 tenders, including a string of GP led health centres across the country, Assura revealed losses before interest and taxes in its medical division of £4.5m.
City experts say Assura shareholders would rather the GP operations were sold off or shut as they are not expected to earn enough money to make a profit for a considerable period.
Announcing its half yearly results, Assura warned that the current high volume of procurement for contracts, such as the Darzi rollout, was likely to slow after the general election and warned that the medical business would ‘be loss making for some time and will consume further cash.'
It added: ‘The board is in the process of evaluating a number of options to separate the GPCo business from the rest of the group.'
City analyst Investec said the move ‘could include sale, spin-off or closure' of the GP ventures.
It added that it would cost Assura around £10m to spin off or close the ventures but that the benefits of either move would outweigh the long-term damage to the company's share value of holding on to the loss making division.
Huge doubts have been raised of late into the ability of private sector companies to make what they regard as enough profits from primary care.
Assura's results reveal it is only half way towards the £60m a year revenues it needs to break even from its GP operations which include GP services, walk-in centres and urgent care centres.
Despite opening a string of centres in Bath, Coventry, Stockton, Hartlepool, Reading, Hull, Hertford and Cheshunt, since April, just three of Assura's GP companies reported a profit in the first six months of the year.
Commenting on today's announcement, Richard Burrell, company CEO, said: ‘Both our pharmacy and GPCo businesses increased revenues strongly in the period and our pharmacy business is now cash generative. Trading since the year end has been in line with our expectations and we look to the future with confidence.'Assura has revealed losses before interest and taxes in its medical division of £4.5m Assura has revealed losses before interest and taxes in its medical division of £4.5m