Financial results released by both Netcare and Life Healthcare for the financial year ended 30 September have shown a significant improvement compared to last year, signifying positive recovery from the impact of the Covid-19 pandemic.
Released this morning, Netcare’s results show a steady sequential improvement over the second half of the current financial year when benchmarked against both the first half of the 2021 financial year and the second half of the 2020 financial year, resulting in a solid improvement in the year-on-year financial results.
Dividend payments resumed
Group revenue increased by 11.5% to R21 million up from R18.8 million in 2020. Group EBITDA for 2021 improved by 24.8% to R3.1 million, up from R2.5 million. Adjusted headline earnings per share (“HEPS”) increased by 107.4% to 67.4 cents compared to 32.5 cents in the previous year. The group declared a dividend of 34c per share in the year to end-September, after dividends were suspended for the 2020 financial year and the 2021 interim payment period.
Reported last week, Life Healthcare’s results showed that group revenue from continuing operations grew by 12.7% year on year to R21.7 billion. Group normalised EBITDA increased to R5.1 billion a 21.6% growth against the 2020 financial year.
According to Life Healthcare, the group’s strong performance was driven by an exceptional performance from its international operations, AMG with AMG reporting imaging volume growth higher than pre-COVID-19 levels in all major geographies, owing to a rebound in demand as COVID-19 restrictions were eased, as well as specific COVID-19-related contracts undertaken. In Southern Africa, its solid performance was attributed to continued sequential improvement across all operations as elective surgeries resumed during the easing of lockdown restrictions between the Covid-19 waves.
“We have become more adept at managing the transition between COVID-19 waves and the related changes in case mix, when surgical and non-COVID-19 medical cases are displaced as COVID-19 cases surge and then wane,” Life Healthcare CEO, Peter Wharton-Hood said.
He said the Group’s key objectives for 2021 were to improve operations; continue delivering high quality outcomes; to enhance the partnership of AMG in the UK and Europe with the public sector and private sector; enter southern Africa’s imaging market as well as review and optimise its current portfolio.
On the Group’s future outlook, Wharton-Hood says he remains cautiously optimistic given ongoing COVID-19 uncertainty but expects continued growth and margin expansion.
Netcare CEO, Dr Richard Friedland said the group’s outlook for the next financial year depends on the evolution of the pandemic and the potential scenarios emanating from it.
“The possibility of further waves of COVID-19 still exists. In the absence of new highly transmissible and virulent variants of the virus, Netcare expects a reduction in severity of such potential waves. This is due to increasing levels of immunity from natural infection and vaccination, which will continue to influence its ability to operate in an unrestrained environment,” Friedland explained.
He said it is broadly estimated that the pandemic resulted in the loss of approximately R1.5 billion in EBITDA to the group compared to R2.3 billion in the previous year. However, operating profit increased by 45.4% to more than R2 million compared to R1.3 million in 2020.
In addition to lower activity levels throughout the pandemic, Netcare also incurred COVID-19 related costs of approximately R5.2 million of which approximately 80% went to the purchase of PPE for staff, doctors and patients. These costs continued to weigh on margins, given the higher prices paid for PPE during the first wave in May 2020 due to a shortage of international supply and long lead times.
Total patient days in FY 2021 grew by 6.8%, comprising an increase in acute hospital patient days of 6.2% and 12.7% in mental health facilities.
“Despite the challenges of navigating the rolling waves of COVID-19 and the short recovery periods between waves, our average full week acute hospital occupancies continued to improve to 55.9% from 52.5% in the 2020 financial year. Similarly, mental health occupancies continued to show a steady improvement increasing from 55% to 62.1% for FY 2021,” said Dr Friedland.
The temporary suspension of elective surgery during the second and third waves, coupled with higher COVID-19 admissions, resulted in a decline of 12% in surgical elective admissions compared to 2020.