Woodford investors dealt fresh blow as stock collapses

The oncology treatment network backed by fallen star manager Neil Woodford has gone into administration.

Oncology clinic chain Rutherford Health declared bankruptcy yesterday, dealing another blow to investors still trapped in the collapsed Woodford Equity Income fund.

Neil Woodford was among the largest backers of Rutherford Health, one of the remaining nine unquoted positions that fund administrator Link Fund Solutions was struggling to sell as it wound up the strategy.

Link took the decision to close the fund, liquidate its holdings and return the cash to investors in mid-2019, meaning that nearly three years have passed with investors in limbo waiting for their capital to be returned.

Woodford Equity Income, which once had more than £10 billion invested in it, now has just £125 million left, according to its latest accounts published in September 2021.

Rutherford Health accounted for 30% of the remaining assets as of this date, meaning investors could stand to lose £37 million if that percentage weighting is still the same and the unquoted shares are marked down to zero.

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Since 2015, Rutherford Health built a network of oncology centres across the country that offered a range of advanced cancer treatments including high-energy proton beam therapy, radiotherapy, chemotherapy and immunotherapy.

It blamed the pandemic for a lack of cancer patients and overinvesting in infrastructure for its failure and subsequent liquidation.

Rutherford Health was also a large position in Woodford Patient Capital Trust, now run by Schroders as Schroder UK Public Private. Its collapse means a 6.6% net asset value write-down for the trust.

Managers Tim Creed and Roger Doig noted in April this year that there was a “material risk” that Rutherford Health could go into administration if it failed to secure long-term funding. In April, it raised £4.5 million to extend its lifespan ahead of tapping markets for a bigger cash injection.

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Stockbroker Numis notes: “The hangover legacy of Woodford continues to weigh on sentiment and performance for Schroder UK Public Private. Rutherford Health has been a long-standing position and while the management team highlight the technology may prove effective, the business model provided unsustainable given the high cash burn and limited revenues.

“Schroders continue to seek to shift the portfolio to reflect their approach, but the legacy holdings continue to dominate. The largest three investments: Oxford Nanopore (LSE:ONT) (c.26% at 31 March), Atom Bank (13%) and Benevolent AI (EURONEXT:BAI) (10%) represent around half the portfolio and will continue to be a significant driver of returns in the near term.”

To date, Link has made four capital distributions to investors totalling £2.54 billion from the sale of the Woodford Equity Income’s assets. It began the wind-up process in January 2020 but has been unable to sell many illiquid unquoted stocks.

Link says that it will update investors again in July on the asset sale process.