Netcare’s acute hospital occupancies were at their highest level since the onset of the Covid pandemic, and further group operational and financial performance improvements were expected in the second half of this year, CEO Dr Richard Friedland said yesterday.
The group has seen a steady recovery in demand and normalisation of its operating environment since the pandemic, and while there were a number of challenges facing corporate South Africa, “we believe our advancing strategy and market positioning will hold us in good stead to navigate these challenges”, he said.
The impact of load-shedding on operations was “well contained”, with most of Netcare’s acute hospitals operating independently.
Uninterrupted power supply systems and 200 backup diesel generators supported facilities across the portfolio, he said in a statement. Netcare had invested in a solar power across 72 sites in the past decade, capable of generating 18 – 20 GWh per annum.
This was used during daylight hours and outside of load shedding to ensure safe, sustainable care was delivered without disruption.
Full-year revenue growth of between 9% and 12% was expected, following the 11.9% rise to R11.54 billion in the six months to March 31, compared with the same time in 2022.
The business would remain focused on cost efficiencies realised in the first half and in earnings before interest tax depreciation and amortisation (Ebitda) margins (excluding strategic costs and generator diesel costs), and earnings were expected to strengthen in line with improving occupancies, he said.
The interim dividend was raised 50% to 30 cents, or 64.8% of adjusted headline earnings per share (Heps). Adjusted headline earnings per share increased 31.5% to 46.3 cents.
The strength of the financial position meant dividend payments were likely to remain supported in line with dividend policy, and the group aimed to return at least 50% – 70% of adjusted headline earnings to shareholders.
Normalised Ebitda grew 24% to R2.02bn. The normalised Ebitda margin, including strategic and diesel costs, improved 170 basis points to 17.5%, largely due to higher occupancy levels and cost management.
The improvement in activity had resulted in first half group revenue exceeding that of the first half in pre-pandemic 2019 by 9.7%.
He said good progress was made on key projects: The CareOn digitisation project was successfully rolled out at 30 acute hospitals since the start of the project in 2020, with the project within budget and timelines.
Digitisation of the group’s ecosystem would provide a sustainable competitive advantage and was critical to the strategy of delivering person-centred health and care, he said.
Although still in the implementation phase, efficiencies from the project came to R50m in the first half compared with R37m in the 2022 year, which he said had exceeded expectations.
Netcare Diagnostics continued with the rollout of point-of-care devices across Netcare’s ICU, high care, theatres and emergency departments.
A new Netcare app would be launched next month as the group moved from a traditional siloed and episodic-led model of care to an engagement-led one.
Patient days (PPD) at acute hospitals increased by 11.3%, equating to 95.5% of the 2019 full year.
Medical PPDs grew at a faster pace than surgical PPDs and increased 15.6% over the first half of last year. Surgical PPDs rose 7.5% and were at 91.3% of pre-pandemic levels, contributing 72% of revenue.
Strong demand for mental health care had resulted in a 13.5% increase in PPDs, with Netcare Akeso Richards Bay, which opened in May last year, contributing 3.9%. The group continued to explore opportunities to meet the demand for mental healthcare.
Netcare Akeso Gqeberha (72 beds) was commissioned this month. Other initiatives to add a further 200 beds to the portfolio across three provinces were underway.
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