Netcare Group yesterday said it met key operational and strategy goals in its 2024 financial year and increased its final dividend 7.7% to 70 cents a share, while ongoing improvements were expected to continue into 2025 and beyond.
This was according to CEO Dr Richard Friedland, who said yesterday that following the earlier school holidays in September 2023, hospital activity normalised in October and November 2024, and acute occupancy was trending at 64.6%. Also, occupancy at the Akeso mental health facilities was trending at 70.5%.
“We will continue to focus on operational efficiency and strategic innovation, streamlining processes to reduce costs, and investing in technology that enhances patient care and service delivery,” he said.
The group has forecast revenue for the financial year to September 30, 2025, to grow by between 5% and 6%, while total PPD (paid patient days) was expected to grow between 0.8% and 1.3%.
In the year under review to September 30, 2024, group revenue increased 6.3% to R25.2 billion, and normalised group earnings before interest, tax, depreciation, and amortisation (EBITDA) improved by 10.1% to R4.53bn.
“These steady results were driven by resilient demand for private healthcare services,” said Dr Friedland at the release of the annual results.
Seasonal inconsistencies affected volumes in the first half, while activity levels normalised in the second half, resulting in a 0.3% growth in PPD across acute and mental health services for the full year.
The group also acquired 60.4 million shares in the market at an average 1 193 cents per share, at a total cost of R722 million. A final dividend of 40 cents a share was declared.
“We continue to focus on optimising and extracting greater value from the entire healthcare ecosystem, enhancing operational efficiencies, improving the patient experience, ensuring benefit for all stakeholders, and generating attractive returns for shareholders,” said Dr Friedland.
During the year, higher activity levels, coupled with reduced expenditure on strategic projects coming to an end, and lower diesel costs, boosted operating leverage, and the EBITDA margin increased by 60 basis points to 18% from 17.4%.
Some R131m (R258m) was spent on projects, and generator diesel costs of R47m fell from R124m in 2023. Normalised operating profit increased by 12.6% to R3.2bn.
Hospital and emergency services, which comprise acute and mental health hospitals, as well as emergency and ancillary services, delivered a steady performance. Revenue increased 6.3% to R24.51bn, and PPD increased by 0.3% to 2 455 840 days.
Medical cases grew at a faster rate than surgical cases, which were impacted by sector trends of declining maternity cases and the outmigration of lower-margin day cases.
Acute hospital revenue per PPD increased 6%. In line with normalised volumes, full-week occupancy within acute hospitals improved in the second half, with May 2024 recording an average occupancy of 70.7%, the highest level since the COVID-19 pandemic and which was partially attributable to a higher severity in flu cases.
The rate of growth in mental health PPD was diluted by the inclusion of the new Netcare Akeso Gqeberha facility from May 2023. Demand for mental healthcare remained high, but the temporary unavailability of beds at certain high-occupancy sites for refurbishment work had constrained same-store capacity.
Dr Friedland said that in the short term, consumer preferences favoured more affordable restricted network plans.
The group geographic footprint, combined with the NetcarePlus GapCare products, positioned it to maintain a stable share of patients in these networks, and the group was enhancing operational efficiencies to offset the impact of lower tariffs associated with these contracts.
Although medical scheme membership growth had been limited, the pool of covered lives remained resilient, he said.
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