Netcare, the private health care and hospital group, lifted adjusted headline earnings a share 28.9 percent to 35.2 cents in the six months to March 31, and expects to return to pre-Covid profitability in the medium term.
CEO Richard Friedland said yesterday that the financial position of the group should also allow the continuation of dividend payments, barring no unexpected events associated with the Covid-19 pandemic.
An interim dividend of 20 cents a share was declared – no dividend was declared at the same time last year.
Earnings before interest, tax, depreciation and amortisation increased 8.1 percent to R1.6 billion following a steady improvement in the financial performance in the first half and notwithstanding the disruption caused by the Omicron Covid-19 variant during the fourth wave last year, he said.
Revenue increased 2.3 percent to R10.31bn. Operating profit was 12.8 percent higher at R1.03bn. Profit increased 19.5 percent to R448m. Net debt fell 11.4 percent to R5.38bn.
The margin improvement was mainly from higher occupancy since late January 2022, cost management and lower Covid-19 personal protective equipment expenditure.
These factors helped absorb the negative impact of lower occupancies in December 2021 and early January 2022, during the fourth wave of the pandemic.
“There has been strong demand for private health-care services since the fourth wave subsided. All the strategic projects remain on track,” the group said.
The roll-out of the CareOn digitisation project in hospitals was progressing in line with budget and timelines. The new 427-bed Netcare Alberton Hospital (replacing the Netcare Union and Netcare Clinton hospitals) opened in April 2022, with high occupancies to date.
The new 36-bed Netcare Akeso Richards Bay mental health facility opened early in May 2022. The group’s environmental sustainability strategy was delivering “tangible benefits.”
Strong cash generation resulted in debt being held at comfortable levels.
Operational costs of R112m (R96m) were incurred, with a further R161m to be spent in the second half.
The contribution to earnings from associates and joint ventures fell to R3m from R19m, largely due to the termination of the Lesotho Public Private Partnership in August 2021.
A factor beginning to emerge was the effects of Long Covid, a range of physical and mental health symptoms that subsequently present in patients who previously contracted Covid-19. Medical experts had noted over 200 conditions and long-term effects to date.
“This wide spectrum of clinical conditions may influence future demand for medical services, including primary care, dialysis, acute care and mental health,” Friedland said.
The group said the macro-environment continued to be impacted by global supply chain constraints, higher inflationary pressures and rising interest rates, which were likely to worsen, prolonging supply chain bottlenecks and placing pressure on prices.
“In the absence of further severe Covid-19 waves, we expect patient day growth for the full year to be between 2 percent and 3 percent, which translates into revenue growth of between 3 percent and 4 percent against the 2021 financial year,” the group said in its guidance.
BUSINESS REPORT ONLINE