Netcare Group said the signing into law of the National Health Insurance (NHI) Bill by President Cyril Ramaphosa last week would not affect the final phases of their 10-year strategy to transform the way the group delivers healthcare, and it expected the strategy will enhance their future participation in universal healthcare.
CEO of the private hospital and healthcare provider Dr Richard Friedland said at the release of results for the six months to March yesterday, that Netcare had always acknowledged that the inequities in healthcare access and delivery in South Africa needed to be addressed and it was fully supportive of universal healthcare.
“The bill was, however, was signed without addressing the fundamental areas of weakness. Furthermore, significant flaws in the bill and the legislative processes followed in promulgating the bill will likely result in the bill being challenged on numerous fronts, unfortunately leading to further delays in implementation,” he said.
Friedland said these potential delays in universal healthcare provision in South Africa could have been avoided had the government engaged meaningfully with all interested parties.
Netcare’s adjusted headline earnings per share (Heps) increased 5.8% to 49 cents, a percentage that was far lower than the over-20% gains in this figure since 2020, but the latest growth was despite lower volumes and high inflation in the healthcare sector, particularly wages and medical consumables.
Friedland said activity across the group was influenced by seasonality, lower respiratory admissions, less maternity cases, a curbing of poor credit-risk activity and anticipated changes in low-cost medical scheme networks.
Group revenue increased 4.3% to R12.03 billion and normalised earnings before interest tax depreciation and amortisation (Ebitda) improved 7.5% to R2.17bn. The Ebitda margin increased 50 basis points to 18% from 17.5% in the first half of 2023.
He said the 8.7% operating profit increase indicated that Netcare was achieving strong operating leverage due to its focus on better efficiencies.
Friedland said they while they were expecting positive growth in paid patient days (PPD) in the second half of 2024, the decline in activity in the first half would result in full-year growth ranging from -0.5% to 0.5%.
He said PPDs for the first half fell by 0.8%, although for the seven months to April 30, total PPDs grew 0.4%, indicating an improvement in the seasonal factor.
On the change to more affordable healthcare plans, Friedland said this was caused by the weak economic environment and pressure on disposable incomes.
“Despite the changes in networks, Netcare’s geographic footprint coupled with NetcarePlus GapCare products enabled it to retain a steady portion of patients in networks where Netcare is not a designated service provider,” he said.
The interim dividend was the same as in interim 2023, 30 cents – it made up 61.2% of adjusted Heps, in line with group policy that aims to pay out a dividend of 50% to 70% of earnings.
The share buyback programme continued and 11.2 million shares were acquired at an average price of R12.96. A further 19.1 million shares were bought post-March 31, 2024 at an average price of R11.35.
At March 31, cash and undrawn facilities came to a healthy R3.3bn. Net debt fell to R5.8bn from R5bn at the last year-end due to seasonality, dividend payments, share buybacks and higher interest rates.
The hospital and emergency services division comprising acute and mental health hospitals as well as emergency and ancillary services, increased revenue by 4.3% to R11.71bn. Total PPDs decreased by 0.8%, comprising a 1.7% reduction in acute PPDs and a 7% increase in mental health PPDs.
In the primary healthcare division, the occupational health business recorded a strong performance, enhanced by new contracts.
BUSINESS REPORT