Netcare expects to reach annual targets

Private-hospital operator Netcare is on track to meet its annual guidance and expects to spend less on diesel, as power cuts were less severe than expected during the winter months.

The company, which is valued at about R19.3bn on the JSE, said on Thursday in a voluntary update about its year to end-September that its total paid patient days (PPDs) were expected to rise about 6.8% year on year, in line with the guidance of 6.5%-7.5% growth, and the occupancy rate to improve 4.3 percentage points to 64.4%. Revenue is expected to grow 9%10% for the group from the R21.6bn despite lower activity in June and July and the constrained economic environment, characterised by high inflation and interest-rate hikes, weighing on consumers.

“Medical PPDs have recovered to 99% of 2019 levels, while surgical PPDs continue to be impacted by, inter alia, declining maternity cases, which is in line with global/sector trends, and have recovered to approximately 91% of pre-pandemic levels,” the company said about the 11 months to end-August.

“Net revenue per PPD to August 2023 increased 2.7% compared to the 2022 financial year,” it added.

Spending on diesel for generators, to keep the lights on during power cuts, will also be lower than expected, as Netcare provided the previous guidance on the basis of stage 5 loadshedding.

At the end of August, R113m had been spent versus the expected R165m for the 2022 financial year, as rolling blackouts were less frequent than expected during the winter months of June, July and August.

“However, this cost still represents a significant increase against the 2022 financial year cost of R37m,” the group said.

CEO Richard Friedland announced in July that he would retire early at the end of September 2024 after almost two decades at the helm.

During Friedland’s tenure, Netcare built five new flagship hospitals and founded new business units such as Netcare 911.

It also turned its focus to the digitisation of healthcare, which includes electronic patient records, scripts, blood and other pathology test results and radiology results, expected to be completed in April 2024.

In May, Friedland warned about SA’s nursing shortage, saying that the crisis was putting a damper on the company’s growth prospects and threatened the provision of healthcare in the public and private sectors.

Netcare expects to release its annual results on November 20.