MiHomecare Ltd reported a 4% drop in turnover to £48.4m in the year ended 31 March 2017, from £50.7m in 2016.
Cost of sales at the community and domiciliary care provider also fell to £38.8m, from £40.1m, leaving a gross profit of £9.6m (2016: £10.4m). Administrative expenses rose in the reporting period to £22m, up from £18.9m.
Losses before tax grew to £18.6m last year, up from £8.8m in 2016 but the business is confident it will return to profit as it accelerates growth plans.
The dip in turnover was a result of it exiting ‘unsustainable contracts’, with the accounts including a number of balance sheet write-offs that had been driven by the restructure of the business.
MiHomecare, which is part of MC Care Holdings, was owned by Mitie Group plc until 28 February 2017.
Mitie divested the healthcare business due to ‘a turbulent’ period with challenges including increasing demands of local authority contracts and rises in the national living wage.
Private equity firm Apposite Capital owns MC Care Holdings, which is the parent of both MiHomecare and Complete Care.
The new management at MiHomecare implemented a turnaround plan during 2017, which included the exit of several branches and consolidation of others.
Its financial statement said: ‘The company is exposed to UK market conditions. Company performance and resourcing requirements may be impacted by any changes in the market. We have an ability to recognise and adapt to any change in requirement for services and are well placed to adapt to policy changes.’
It is ‘closely monitoring’ the outcomes of the UK’s exit from the EU.
Moving forward, profitability for the year ended 31 March 2018 is expected to have ‘significantly improved’.
Sam Gray, Apposite Capital partner, told CM: ‘The losses of the businesses reduced significantly over the last 12 months following the successful implementation of the turnaround plan. The businesses have a strong balance sheet and are now approaching profitability, which is earlier than anticipated.
‘Market demand remains very strong for domiciliary care and complex home care services and we are committed to continue to improve the quality of the services that it is delivered to the people we care for. We have successfully completed the acquisition of key assets of Ark Home Healthcare recently which will accelerate the growth of MiHomecare and Complete Care.’