NETCARE had an "extremely busy" year in both its core South African and UK markets, driven by increasing caseloads, its results for the year to September showed.
SA’s largest private hospital network is also the largest private hospital operator in the UK. It said its UK business had seen "significant growth" in patients outsourced by the financially strapped National Health Service (NHS), while in SA its operations had generated strong cash-flows.
Group revenue rose 6.1% in the year, along with a 6.1% weaker sterling-rand exchange rate. This nominally helped profit after tax rise 16.4% to R2.4bn. Operating profit rose 14.6% to R3.7bn.
"Most of our earnings are derived from SA," Netcare CEO Richard Friedland said on Monday. He also said there was no outflow of funds from the group’s South African operations to its UK facilities, and that the South African business was ring-fenced from UK debt.
But he remained "bullish" on healthcare demand in the UK, where the group has 2,800 of its 13,200 beds. About 3.5-million NHS patients, or 1-in-20 people in the UK, are awaiting medical procedures.
A policy of patient choice in the UK allows Netcare to take on patients at NHS tariffs. This means about 40% of patients at its BMI Healthcare facilities there are referred by the state.
However, there is plenty of room for growth. BMI Healthcare took on only 4% of elective cases from the NHS. "We haven’t even scratched the surface," Mr Friedland said.
The group remained the largest private acute care hospital provider in the UK, which accounted for 56 of its total 113 hospitals.
In SA, it had recently added significant capacity, with hospitals opening in Polokwane and Johannesburg’s west rand.
Mr Friedland said that as in the UK, Netcare wanted to be able to treat state patients in SA for an "agreed price".
This would substantially relieve the country’s burden of healthcare, he said.
Netcare’s earnings before interest, tax, depreciation and amortisation grew 11% instead of 13.1% in the year if foreign exchange gains were stripped out, while adjusted headline earnings per share rose 12.6%.
"The results were slightly below my expectations," André Bekker, healthcare analyst at Avior Capital Markets said on Monday. He said the group’s South African operations had seen fewer patients across the board after a slowdown in medical aid coverage growth rates and because of a mild winter.
But he also said the group had come in well below its peers in SA on patient day growth in the period. However, this was offset by expanding margins in the UK business, despite growing NHS patient arrivals.
Mr Bekker said that Jill Watts, CEO of the group’s BMI Healthcare facilities in the UK, was driving higher efficiencies, and that this had improved operating margins.
Ms Watts said on Monday that BMI Healthcare was moving to a lower-cost model and was streamlining operations.
"This is necessary to deliver a high level of quality healthcare and protect the business from declining margins," she said.
BULLISH: Netcare CEO Richard Friedland says most of the group’s revenues are derived from SA, although it has also shown growth in the UK. Picture: MARTIN RHODES
NETCARE had an "extremely busy" year in both its core South African and UK markets, driven by increasing caseloads, its results for the year to September showed.
SA’s largest private hospital network is also the largest private hospital operator in the UK. It said its UK business had seen "significant growth" in patients outsourced by the financially strapped National Health Service (NHS), while in SA its operations had generated strong cash-flows.
Group revenue rose 6.1% in the year, along with a 6.1% weaker sterling-rand exchange rate. This nominally helped profit after tax rise 16.4% to R2.4bn. Operating profit rose 14.6% to R3.7bn.
"Most of our earnings are derived from SA," Netcare CEO Richard Friedland said on Monday. He also said there was no outflow of funds from the group’s South African operations to its UK facilities, and that the South African business was ring-fenced from UK debt.
But he remained "bullish" on healthcare demand in the UK, where the group has 2,800 of its 13,200 beds. About 3.5-million NHS patients, or 1-in-20 people in the UK, are awaiting medical procedures.
A policy of patient choice in the UK allows Netcare to take on patients at NHS tariffs. This means about 40% of patients at its BMI Healthcare facilities there are referred by the state.
However, there is plenty of room for growth. BMI Healthcare took on only 4% of elective cases from the NHS. "We haven’t even scratched the surface," Mr Friedland said.
The group remained the largest private acute care hospital provider in the UK, which accounted for 56 of its total 113 hospitals.
In SA, it had recently added significant capacity, with hospitals opening in Polokwane and Johannesburg’s west rand.
Mr Friedland said that as in the UK, Netcare wanted to be able to treat state patients in SA for an "agreed price".
This would substantially relieve the country’s burden of healthcare, he said.
Netcare’s earnings before interest, tax, depreciation and amortisation grew 11% instead of 13.1% in the year if foreign exchange gains were stripped out, while adjusted headline earnings per share rose 12.6%.
"The results were slightly below my expectations," André Bekker, healthcare analyst at Avior Capital Markets said on Monday. He said the group’s South African operations had seen fewer patients across the board after a slowdown in medical aid coverage growth rates and because of a mild winter.
But he also said the group had come in well below its peers in SA on patient day growth in the period. However, this was offset by expanding margins in the UK business, despite growing NHS patient arrivals.
Mr Bekker said that Jill Watts, CEO of the group’s BMI Healthcare facilities in the UK, was driving higher efficiencies, and that this had improved operating margins.
Ms Watts said on Monday that BMI Healthcare was moving to a lower-cost model and was streamlining operations.
"This is necessary to deliver a high level of quality healthcare and protect the business from declining margins," she said.
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