Global Courant 2023-05-22 17:50:47
Netcare says it has seen an emerging trend of new entrants to medical schemes taking out cheaper plans as households continue to struggle financially in South Africa.
Netcare released its unaudited interim group results for the six months ended March 31, 2023, showing what it described as a “robust financial performance” given the prevailing economy.
The group said its finances for the reporting period were strong compared to the six-month period ending March 31, 2022, even as the post-Covid-19 environment began to normalize.
It added that Covid-19 activity levels are the lowest since the start of the pandemic in 2020 and are included in day-to-day activities.
In addition, it saw an improvement in demand for private healthcare, with an 11.5% increase in total paid patient days (PPD).
The group said the improvement in activity has increased sales for H1 2023 by 9.7% compared to H1 2019.
Despite the volatile macroeconomic environment, we are encouraged by the continued improvement in our operational and financial performance.
“We are confident that our strategy positions us to capitalize on the long-term positive momentum driving healthcare growth and we remain committed to capturing growth opportunities, improving returns and successfully completing and delivering our most important strategic projects.”
The group has released the following key financial data:
11.9% increase in group revenue to R11,537 million 24.0% growth in group normalized EBITDA 220 bps improvement in group normalized EBITDA margin (excluding strategic costs and generator diesel costs) to 19.1% 31 .5% increase in adjusted total earnings per share HEPS to 46.3 cents 50.0% increase in interim dividend to 30.0 cents per share (64.8% of adjusted HEPS)
New trend in medical arrangements
Despite the positive results, the group noted that the economic headwind is hitting customers, especially those entering the market.
The group said existing members of the medical plan have largely kept their benefit plans. However, new entrants to medical plans are priced out of more inclusive plans.
Growing pressure on disposable income means new entrants to medical plans are looking for cheaper, limited plans.
Despite limited growth in medical plan membership, the group said it was encouraged by its existing pool of covered lives, demonstrating sustained demand for private health care.
Repel cargo
Despite the tax shedding having dire consequences for other companies, Netcare said it was able to contain those costs.
It said most of its acute hospitals have full island capacity, allowing them to operate completely off-grid. 200 backup diesel generators can also support the system.
The group also invested in a large solar power base at 72 sites, which is used during the day and used to ensure that care is still possible.
Diesel costs are expected to be R165 million for the full year, up from R37 million in FY 2022.
nursing
The group added that the national shortage of nurses is a significant constraint on the health sector.
It added that retaining nurses’ scarce skills is critical to the company.
However, it said it is working with the government, regulators and other stakeholders to improve underutilized university capacity to improve the number of nurses in the country.
While the group currently has the capacity to train 3,500 nurses, it is only accredited for 360 – despite the 9,000 prospective students for the year 2023.
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