Netcare, a leading private healthcare provider in South Africa, has announced that it remains on track to deliver its full-year guidance despite a challenging operating environment. The company reported that total paid patient days (PPD) grew by approximately 1.6% in the year to end-September, while acute PPD increased by about 0.8%. This growth was driven by resilient demand for private healthcare services.
The operating environment was affected by interventions by medical schemes to strengthen their solvency positions, which included benefit changes, downgrading scheme options to lower-cost preferred provider network options, and tighter managed healthcare protocols. These changes impacted activity levels across Netcare's acute hospital portfolio. However, the company noted that acute activity strengthened in the second half of the year, in line with expectations and consistent with typical seasonality.
Netcare's acute hospital portfolio was impacted by a decrease in the average number of beds in use, primarily due to renovations and the conversion of beds into higher-acuity disciplines. Despite this, full-year acute occupancy is expected to improve to 66% from 65% a year ago, driven by reduced beds in use and increased activity. The company also reported that mental health services saw significant growth, with mental health PPD expected to increase by about 8.2% for the full year.
Netcare's financial performance is expected to exceed that of the first half, supported by increased activity, sustained operational efficiencies, and the positive effect of its share buyback programme. The company's Hospital and Emergency Services segment is expected to see a 4.2% increase in revenue for the full year. Additionally, underlying revenue in the Primary Care segment is expected to increase by about 5.8%, excluding the effect of a non-renewed occupational healthcare contract.
The company's normalised ebitda margin is expected to increase year on year from the already strong base of 18.6% achieved in financial year 2025. This was driven by a disciplined balance between price and volume, increased activity levels, and tight management of operating costs. During the year, Netcare returned excess cash to shareholders through its share buyback programme, spending R1.04bn to repurchase 60.2-million shares.
Netcare's financial performance in the first half of the year was strong, with a 12% increase in profit to R924m and revenue growth of 4.8% to R13.3bn. This was driven by operational efficiencies and returns on its digital and AI investments. In May, the company revised its guidance for expected growth in total PPDs for the year to 1.1%-1.8%, with revenue growth guided at 4%-4.8%.
Netcare will release its full-year results on November 23, providing further insight into its financial performance. The company's ability to maintain its guidance despite a challenging environment is a testament to its resilience and operational efficiency. Key factors contributing to its performance include the growth in mental health services, the increase in acute occupancy, and the positive effect of its share buyback programme.
Key points
- Netcare's total paid patient days grew by approximately 1.6% in the year to end-September.
- The company's normalised ebitda margin is expected to increase year on year from 18.6%.
- Netcare's full-year results will be released on November 23.
