Libertatem Healthcare doubled its revenue and ended the year owing more than it owns

The business improved, the balance sheet did not

Libertatem Healthcare Group Limited is a UK healthcare group. It reports as a consolidated group under UK GAAP, in pounds sterling, for financial years running from April to March. In the year to the end of March 2026 its revenue reached GBP 25.2m, up from GBP 12.5m a year earlier, a rise of 101.5%. Over the same period its operating loss shrank from GBP 3.7m to GBP 1.3m. The operating margin improved from -29.1% to -5.1%, a swing of 24.0 pp.

On that evidence, FY2026 looks like a group growing into its costs. The bottom line says otherwise. Net loss widened from GBP 3.7m to GBP 14.3m, and the net margin fell from -29.3% to -56.6%. Equity, the part of the balance sheet that belongs to the owners, stood at GBP 2.3m at the end of FY2025. At the end of FY2026 it stood at GBP -12.6m. In plain terms, the group's liabilities now exceed its assets by GBP 12.6m.

The equity ratio, equity divided by total assets, tells the same story more bluntly. It was 78.9% a year earlier, a comfortably owner-funded balance sheet. It is now -163.8%, a fall of 242.7 pp. Total assets did grow, from GBP 3.0m to GBP 7.7m, and cash rose from GBP 397k to GBP 633k. None of that offset what happened to equity.

So the tension is this: the trading business got better, and the company as a whole got much weaker.

The loss that sits between operating profit and the bottom line

In FY2025 the operating loss and the net loss were almost the same figure. Whatever the group lost, it lost in running the business. In FY2026 the two figures came far apart: an operating loss of GBP 1.3m against a net loss of GBP 14.3m. Most of the year's loss arose below the operating line.

Interest does not explain it. Interest expense for FY2026 was GBP 57.6k, nowhere near large enough to account for the gap. Depreciation and amortisation, at GBP 20.5k, sits inside operating profit and is small too. The group's EBITDA, operating profit before depreciation and amortisation, was GBP -1.3m, barely different from the operating loss.

When a group's net loss runs far ahead of its operating loss, the cause usually sits in a short list of places. The first is impairment: a write-down of goodwill or investments, often after an acquisition that is now judged to be worth less than was paid for it. A revenue line that grows 101.5% in a single year in a consolidated group can point to acquisitions, and acquisitions bring goodwill that can be written down later. The second is a loss on disposing of a business or writing off loans to companies outside the group. The third is fair value movements on financial instruments, such as convertible loans or guarantees. The accounts do not split the gap into these parts, and the figure that would settle it is the breakdown of exceptional items and finance costs in the notes.

One more detail matters. Equity fell by GBP 15.0m over the year, more than the net loss of GBP 14.3m. Something besides the year's loss reduced the owners' stake as well, such as a distribution, a reserve movement or a transaction with shareholders. The direction is clear even where the cause is not: the owners' cushion did not just shrink, it disappeared and went into deficit.

Negative equity is a statement about who carries the risk

A UK private limited company can keep trading with negative equity. Many do, for years. What negative equity says is that the balance sheet alone no longer supports the business. If the group stopped today and sold everything at book value, the proceeds would not cover what it owes. It keeps going because someone outside the balance sheet is willing to fund it: the owners, a parent, a lender, or suppliers who keep extending credit.

The operating side adds pressure. With an operating loss of GBP 1.3m, none of the GBP 57.6k interest bill was earned by the business. It was paid from cash, new borrowing or fresh money from owners. Cash of GBP 633k at year end is a modest buffer for a group with revenue of GBP 25.2m: it covers only a short stretch of losses at the FY2026 pace.

The improvement in trading is real, and I would not dismiss it. A group that sharply narrows its operating deficit while doubling revenue is moving in the right direction. But the next lender, landlord or supplier will look at equity before margin, and that number now works against the group in every negotiation. I would watch the cash line and any new funding from owners in the FY2027 accounts more closely than the revenue line.

What to check in your own company

Open your latest balance sheet and find equity. If it is positive, divide it by total assets and compare the result with the year before. A ratio that fell sharply in one year deserves a sentence of explanation from your finance team, even if it is still well above zero.

Then look at the gap between your operating result and your net result. If they are close, your losses or profits come from trading. If they are far apart, ask exactly which lines sit in between: impairments, write-offs, finance costs, fair value changes. Each one tells a different story about the future. A one-off write-down of an old acquisition is history. A recurring finance cost is a feature.

Finally, ask the uncomfortable question: if losses continued for another year, who would cover them? List every loan from owners or group companies. Ask whether any of them could be converted into equity, and whether that conversion would happen before a bank or a supplier raises the subject. A controller who has that answer ready negotiates. One who has to find it under pressure explains.

Libertatem Healthcare ran a better business in FY2026 and finished the year with a worse company. Growth fixed the operating line, something below it emptied the equity, and from here the balance sheet depends on the goodwill of whoever is funding it.