Netcare H1 HEPS up 20%

Netcare, a leading healthcare provider, recently reported a significant impact on its profit margins due to higher hospital occupancy levels for the six months ending in March. Despite this challenge, the company managed to achieve a 2% revenue increase, while headline earnings per share soared by nearly 20%. In a recent interview with CNBC Africa, Richard Friedland, the CEO of Netcare, shared insights into the company's operating environment, the return to normalcy in healthcare services, and the key factors driving growth. Friedland highlighted the impact of the COVID-19 pandemic on Netcare's operations, noting a shift in hospitalization trends during the fourth wave. He explained that while the rate of community transmission was high, hospitalizations were relatively lower due to increased immunity among South Africans. This led to lower occupancies in the first quarter of the reporting period, with a gradual return to normalcy in the following months. The return to normalcy was characterized by an increase in elective surgeries and non-emergency procedures, such as joint replacements, spinal surgeries, and ENT procedures. Friedland emphasized that many of these procedures were delayed from the previous year, as patients opted for conservative treatments initially. As a result, the company experienced a surge in surgical admissions, driving operating profit improvements by 150%. Friedland attributed this success to higher occupancies, reduced costs of COVID-19 personal protective equipment (PPE), and overall operational efficiencies. Looking ahead, Friedland expressed caution about forecasting future growth, citing macroeconomic uncertainties and the evolving nature of the COVID-19 virus. He highlighted potential challenges, such as a cost of living crisis in South Africa and the impact of new COVID-19 variants on healthcare services. Despite the challenges, Friedland remains optimistic about the defensive nature of healthcare and the resilience of the company in adapting to changing circumstances. While the future remains uncertain, Netcare is committed to navigating the challenges and prioritizing the health and well-being of its patients and communities.