Netcare returns to profit as it adapts to Covid-19

Better treatment regimens and management allowed the hospital operator to recover despite the second wave

24 May 2021 - 10:56 By Karl Gernetzky
Netcare posted a R375m profit in its 2021 half year from a loss of R196m in the previous six months. File image.
Netcare posted a R375m profit in its 2021 half year from a loss of R196m in the previous six months. File image.
Image: Picture: 123RF/SAMSONOVS

Netcare, SA’s third-largest private hospital operator by market value, says it managed to return to profit in its first half to end-March, despite a severe second wave of Covid-19 infections.

Netcare, whose focus is almost entirely on SA, said better management and protocols helped it post a R375m profit in its 2021 half year from a loss of R196m in the previous six months.

The pandemic hit SA hospitals hard, with many patients staying away and deferring elective surgeries. Covid-19 has also prompted additional expenditure on equipment, health and safety, while other effects have included a fall in revenue from coffee shops and parking fees.

The hospital group said it was able to adopt a more “nuanced approach” to managing bed demand during the second wave, including the application of more effective treatment regimens that reduced the length of stay for Covid-19 patients, and the introduction of rapid antigen tests.

During the peak of the second wave in January this year, despite the substantial increase in admissions, about 60% of total beds were allocated to Covid-19 patients compared with about 80% during the peak of the first wave in July 2020.

Netcare’s revenue was down 5.9% to R10.8bn year on year to end-March, but it was up almost a quarter relative to the second half to end-September.

Earnings before interest, taxation, depreciation and amortisation (ebitda) — or core profit — fell just more than a third year on year to R1.49bn. It surged 654% relative to the second half of Netcare’s 2020 year.

The group said on Monday that tightening of lockdown measures over the Easter period successfully curbed the incidence of positive Covid-19 cases reported since end-March.

“Despite several public holidays at the beginning of April 2021, patient admissions in the acute hospital division continued to increase for the first three weeks before slowing down ahead of the long weekend at the end of April,” the group said.

With the onset of winter in SA as well as a vaccination programme that has yet to gain momentum, the threat of a third wave of infections remains, Netcare said, adding it believes it is “in a better position to manage the consequences of a third wave in a more efficient and effective manner” than before.

In morning trade on Monday, Netcare’s shares were trading 0.88% lower at R14.69, having fallen almost a quarter since the beginning of 2020.

Over the same period Life Healthcare’s shares have fallen about 15% and Mediclinic’s 21%.

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