South Africa’s largest private hospital group soars amid NHI threat

Netcare has reported solid results for the 2024 financial year despite medical scheme memberships remaining stagnant.

Netcare released its results for the year through September 2024, which revealed a robust performance from South Africa’s leading private healthcare provider.

Revenue grew by over 6% while the company’s profit for the year grew to R2.14 billion, up 18.32%.

The company said this was aided by an ongoing focus on operational efficiencies, digitisation benefits, and lower strategic costs, which resulted in excellent operating leverage.

“Globally, the delivery of healthcare is being redefined by new technologies and evolving patient and clinician needs,” the company said. 

“We are confident that our strategy of delivering person-centred health and care, which is digitally enabled and data-driven, positions the group to benefit from this changing landscape.” 

“The group will continue to focus on optimising and extracting greater value from the entire healthcare ecosystem, enhancing operational efficiencies, improving the patient experience, ensuring benefit for all stakeholders and generating attractive returns for shareholders.”

Basic earnings per share rose to 110.4 cents per share, up 16.83%.

“The 2024 financial year has seen the group deliver a resilient financial performance in a challenging market,” Netcare said.

“The group has executed phase one of its strategic objectives and continues with important strides into the next phases.”

The company explained that the broader South African economy continues to struggle, and the healthcare environment faces several challenges to growth. 

It said medical scheme membership remains stagnant with an increasing prevalence of low-cost medical scheme networks. 

“Against this backdrop, Netcare has managed its cost-base well with targeted efficiency, which, in turn, has contributed to pleasing operating leverage.”

The company’s cost of sales increased by 6.78%, while revenue rose by 6.34%.

Netcare’s capital expenditure for the year amounted to R1.52 billion, up slightly from R1.51 billion in the 2023 financial year.

The company also raised net impairment provisions of R38 million against property, plant and equipment, a significant decrease from R130 million impairment in 2023.

Netcare declared a gross final dividend of 40 cents per ordinary share. This, together with the interim dividend of 30 cents per share, represents an increase of 7.7% compared to the 2023 financial year.

National Health Insurance

In its results, Netcare said it has long recognised the need to address the deficiencies and inequities in healthcare access and delivery in South Africa and remains fully committed to achieving Universal Health Coverage.

“However, there are genuine concerns regarding the feasibility and legality of the National Health Insurance (NHI) Act,” it said.

The Hospital Association of South Africa (HASA), of which Netcare is a member, presented a proposal for enhanced healthcare access and delivery.

“There are several immediate opportunities where the private sector can collaborate with government to address critical healthcare gaps and demonstrate quick wins on the path to Universal Health Coverage,” the company said.

“The HASA proposal would alleviate pressure on public health resources and extend the public budget per capita, thereby improving healthcare access for all South Africans.”

Despite its concerns, Netcare said it is encouraged by the government’s recent engagement with the private sector to discuss matters related to the NHI Act.

Recently, the President requested Business Unity South Africa to submit specific proposals on solutions or issues of concern as a basis for further engagement.

“We believe a collaborative partnership between the public and private sector is critical in finding sustainable and affordable solutions aimed at achieving universal healthcare for all South Africans,” the company said.