Easing Covid-19 helps push Netcare's revenue to pre-pandemic levels

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This was the first year since the pandemic began that Netcare operated almost without any Covid-19 restrictions.
This was the first year since the pandemic began that Netcare operated almost without any Covid-19 restrictions.
Darren Stewart/Gallo Images
  • Private hospital operator Netcare's revenue has exceeded its pre-pandemic levels.
  • As patients return for surgeries, full-week acute hospital occupancy exceeded September 2019 levels in the same month of 2022.
  • This was the first year since the pandemic began that Netcare operated almost without any Covid-19 restrictions.
  • For more stories, go to the News24 Business front page.

A year with fewer lockdowns and the emergence of less deadly variants of Covid-19 has helped private hospital operator Netcare's revenues recover, and it has not experienced related disruptions since the fourth wave subsided late in January.

The group reported a 3% increase in normalised revenue to R21.6 billion to end-September on Monday, along with a 23.4% increase in adjusted headline earnings per share to 83.2c. This allowed it to up its total dividend by almost half to 50c per share.

"Moreover, Covid-19 activity is currently at the lowest level since the start of the pandemic and has largely been incorporated into daily operations," wrote Netcare in its results statement.

It said that while the six months to the end of March 2022 felt the negative impact of the fourth wave, the subsequent abolishment of lockdown regulations drove robust demand from patients, increasing total occupancy in its hospitals to 60.1%.

Acute hospital occupancies, which include people staying in for surgeries and other non-Covid-19 medical admissions, increased to 66.4% by the end of September.

"[It] is the highest level since the onset of the pandemic and [is] ahead of the September 2019 level of 64.2%," said Netcare.

Surgical admissions increased by approximately 22.2% from September 2021, making up 59.5% of all admissions.

Total patient days increased by 5.4%, with acute hospital patient days improving by 4.8%. Netcare's mental health occupancies also showed substantial improvement, rising to 68.1% after falling to just 41% at the height of the Covid-19 pandemic in the six months to September 2020.

During that period in 2020, Netcare's total hospital occupancies fell to the lows of around 40%, and the group's operating profit margin tanked to minus 4.2% as a result.

This time, Netcare's operating profit margin has climbed to 10.6%, the highest since the six months to March 2020, when the group recorded an operating profit margin of 17% before SA went into lockdown.

"We are encouraged by the continuous improvement in the post-Covid-19 environment experienced to date," said Group CEO Dr Richard Friedland. "The higher activity levels in [the second half of] 2022, coupled with lower Covid-19 costs and ongoing efficiencies, resulted in strong operating leverage and an improvement in margin," he added.

In morning trade on Monday Netcare's shares were up 2.57% to R14.39 per share, having fallen almost 10% so far in 2022. 


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