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Netcare back on healthy footing as Covid disruption eases

Netcare back on healthy footing as Covid disruption eases

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Netcare's share price increased by almost 5% after it said yesterday that it was experiencing improved performance driven by recovery and normalising of its operating environment, following the Covid-19 pandemic disruptions.

The shares traded at R14.71 intraday.

In its results for the year ended September 30, 2022, the private healthcare provider said its normalised revenue rose by 3% to R21.6 billion, while its adjusted headline earnings per share increased by 23.4% to 83.2c.

It declared a final dividend of 30c a share which, together with the interim dividend of 20c declared in the first half of 2022, represented a distribution of 60% of adjusted headline earnings per share for the 2022 financial year.

Normalised operating profit increased by 13.2% to R2.3bn, helped by the relaxation of the national lockdown regulations in the second half of the year, which led to a strong improvement in demand and activity in the second half of 2022.

In an interview, Netcare CEO Richard Friedland said: "We're very pleased with our results and performance, particularly in the second half of the year. We have recovered to a normalised operating environment in the absence of any major Covid wave or disruption."

Netcare said its cash resources and available undrawn committed facilities amounted to R3.5bn, while its net debt, exclusive of IFRS 16 lease liabilities, reduced to R4.9bn from R5.3bn due to higher operating profit and improved working capital. But this was partially offset by ongoing capital expenditure and the payment of ordinary and preference dividends.

"We have a very strong cash generation of 130%. Overall debt declined about 8% year on year. The balance sheet strengthened quite significantly," Friedland said.

According to the group, the hospital and emergency services segment, which comprises acute and mental hospitals, as well as emergency and ancillary services, delivered a strong performance, driven by a significant decline in Covid-19 cases since late January 2022, thereby enabling recovery of demand for non-Covid-19 medical and surgical procedures, and facilitating a shift towards normalisation of case mix and length of stay.

"Total patient days increased by 5.4% for the 2022 financial year, with acute hospital patient days improving by 4.8% against the 2021 financial year," it said.

Full-week occupancy levels within acute hospitals increased to 59.3% from 56.2% in the comparative period.

"September 2022 saw 66.4% occupancy, which is marginally ahead of the September 2019 level of 64.2%. Netcare’s mental health occupancies showed strong improvement, increasing to 68.1% in the 2022 financial year from 62.1% in the 2021 financial year," it said.

Netcare said the Primary Care business maintained the solid performance reported in the first half of 2022, with the 2022 financial year revenue increasing by 6.6% year-on-year, driven by a 4.3% increase in patient visits.

“We have made pleasing progress in our key strategic projects that will operationalise our long-term strategy across our entire ecosystem,” Netcare said.

Looking forward, Friedland said: "In the absence of any further waves of Covid-19, we expect the patient base to grow between 6% and 7.5. We expect revenue to rise between 9% and 12%.“

BUSINESS REPORT

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