Totally warns of weaker earnings amid inflation, staffing issues
Sharecast
Published Mar 02, 2023 13:42
Updated Mar 02, 2023 14:12
Totally warns of weaker earnings amid inflation, staffing issues
Sharecast - The AIM-traded company said revenue for its insourcing and outsourcing services that target the reduction of NHS waiting lists had doubled in the financial year-to-date.
In addition, the delivery of NHS 111 resilience support through a new contract awarded in January had provided additional organic revenue growth.
That contract went live in February.
Totally’s board said it remained confident in its medium- and long-term opportunities, positioning it to support the NHS as it continued to focus on recovery and the embedding of sustainable services to cope with higher levels of demand.
However, Totally said it had been impacted by the combined effects of high inflation, national strikes, workforce shortages, and delays in tender processes.
The firm said it now expected EBITDA for the year ending 31 March to be around £6.3m, below current consensus market expectations.
Totally said it had taken multiple actions to manage and control costs, while continuing to deliver essential services on behalf of the NHS.
Some impact on forecasts for the first quarter of the next financial year was also expected.
Despite the challenges, the company said it intended to maintain its dividend in line with previous expectations, with cash at period end set to total £5.5m.
“We have seen revenue growth broadly in line with expectations as we continue to operate in what are exceptionally challenging conditions which require difficult decisions to be made in relation to the management of costs and maintenance of essential NHS services,” said chief executive officer Wendy Lawrence.
“As unprecedented demand for healthcare services continues, we have been impacted by the same challenges facing the NHS.
“National strikes are putting more pressure on services and we have seen increased numbers of calls to 111 which need to be answered within existing performance targets.”
Lawrence said workforce shortages, driven by doctors and nurses leaving the sector following the Covid-19 pandemic and clinical staff from abroad choosing not to come to the UK following Brexit, had increased Totally’s reliance on agency staff for a period, increasing costs and complexity for rota fill.
That, she added, had been exacerbated by higher cost inflation and changes in the staffing market.
“We continue to take a range of actions to manage costs and reduce our reliance on agency staff and remain confident in the quality of our services, our ability to deliver and the opportunities available for independent providers in this sector.
“The business is robust and well placed to take advantage of increased opportunities and deliver profitable growth.
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“Demand for support to help NHS services to recover, and deliver wellbeing programmes to corporate clients, is higher than ever and we have faced significant challenges before and have proven our ability to manage the business carefully and position it for success.”
At 1342 GMT, shares in Totally were down 28.32% at 20.25p.
Reporting by Josh White for Sharecast.com.
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