Profit warning spoils the party at Pinnacle Staffing

It is hard to work out quite what has gone wrong at Pinnacle Staffing – but it sounds pretty worrying. The company, essentially a supplier of nurses to the NHS, put out a profit warning last week that said its profits this year would fall ‘very substantially’ short of market expectations. The statement referred to big cuts in the overhead base last year, shortly after it was spun-off from Nestor Healthcare, and also to demand for its services exceeding its ability to supply. That would normally be good news. It sounds as if Pinnacle has cut back so hard that it no longer has enough high-calibre people on its books.

Now, one of its non-executives, Trevor Jones, is to take over as deputy chairman to oversee the development of the business. He is a former head of the NHS in Scotland so should have one or two ideas about getting Pinnacle back on track. The shares need to get back on track, too. They fell from over 11p to 6p on the news, but have since picked up to 6.13p. I tipped them here in February this year at 8.88p. The only case for holding on is the faint possibility of a bid. But the safest course of action is to cut your losses: sell.