As the post-COVID-19 operating environment continues to normalise, the Netcare Group has delivered a robust incremental improvement in financial performance in H1 2023, when measured against the comparative six-month period ended 31 March 2022 (H1 2022).
The Group’s adjusted Headline Earnings Per Share (HEPS) increased 31.5% to 46.3 cents (H1 2022: 35.2 cents), and normalised EBITDA grew by 24.0% to R2 015 million (H1 2022: R1 625 million). The normalised EBITDA margin, including strategic costs and generator diesel costs, improved by 170 basis points to 17.5% (H1 2022: 15.8%). The margin improvement is largely attributable to higher occupancy levels in H1 2023 and well managed costs.
Netcare chief executive officer, Dr Richard Friedland, commented, “We are encouraged by the improvement in demand for private healthcare services. In March 2023, acute hospital occupancies in the core acute segment recorded the highest level since the onset of the pandemic. The sustained improvement in activity has resulted in Group revenue for H1 2023 exceeding H1 2019 pre-pandemic revenue by 9.7%.”
Excellent progress has also been made on implementing key strategic projects:
• The CareOn digitisation project was successfully rolled out at 30 acute hospitals covering 6 722 beds (which is 70% of registered beds) since the start of the project in 2020. The project remains within budget and timelines, demonstrating tangible evidence of efficiencies and savings. The digitisation of the Group’s entire ecosystem will provide a long-term sustainable competitive advantage and is critical to Netcare’s strategy of delivering person centred health and care that is digitally enabled and data driven. Although still in the implementation phase, the efficiencies and savings realised in H1 2023 of R50 million (FY 2022: R37 million) have exceeded expectations.
• The Group’s environmental sustainability strategy, which has received 31 national and international awards, continues to enhance efficiency across all facilities. Since 2013, the Group has invested R589 million in capex to implement more than 204 environmental sustainability projects. These have played a pivotal role in reducing exposure to the impact of the instability of the national electricity grid. Energy intensity per bed has been reduced by 35% and Netcare has achieved cumulative operational savings and benefits of more than R1.2 billion to date.
• Sales of NetcarePlus products continue to gain traction and are contributing to the Netcare ecosystem through the increased use of Group facilities.
• Netcare Diagnostics continued with the rollout of validated and quality assured Point of Care devices across Netcare’s ICU, high care, theatres and emergency departments.
• The new Netcare app will be launched in June 2023, and will further support Netcare’s digitally integrated patient experience, as the Group intentionally moves from the traditional siloed and episodic-led model of care to an ongoing engagement-led model of care.
In February 2023, Netcare Christiaan Barnard Memorial Hospital received Level One trauma accreditation from the Trauma Society of South Africa, which is aligned to the American Trauma Society accreditation principles. There are only four hospitals in South Africa that have achieved this status, all of which are in the Netcare Group.
The Just Energy Transition Plan (JET IP) developed by the Presidential Climate Commission was approved by Cabinet in September 2022, highlighting a shift in focus for South Africa and a period of intensified climate action. Dr Friedland commented, “We fully support these initiatives, and our environmental sustainability strategy and goals are well aligned with those of the JET IP. The Group’s 2030 strategy aims to achieve 100% electrical energy utilisation from renewable sources, with zero waste to landfill and a 20% reduction of impact on water sources.”
The Board has declared an interim dividend of 30,0 cents per share. This represents 64.8% of adjusted HEPS and is an increase of 50.0% over the 2022 interim dividend. This is in line with Netcare’s dividend policy, where the aim is to provide shareholders with a sustainable dividend of 50% - 70% of earnings.