Covid-19 has a materially negative impact on Netcare’s results says CFO Keith Gibson
Netcare estimates that the pandemic resulted in foregone revenues of R3.7 billion and EBITDA of R2.3 billion.
Netcare has released its results for the year ended 30 September 2020, citing that the company’s performance reflects the impact of Covid-19.
The group experienced strong trading during the first five months of the financial year, which was offset by the impact of Covid-19 on revenue and costs. In the second half of the year, the company stated that patient days were impacted by the suspension of non-urgent surgery during levels 5 and 4 of the lockdown and, in particular, during July 2020 when infections peaked, exacerbated by the significant fall in the number of usual seasonal flu or respiratory viral cases. Furthermore, emergency and trauma related activity fell dramatically during the initial stages of the lockdown.
As lockdown levels eased and Covid-19 admissions reduced, medically necessary and time-sensitive surgeries resumed, which led to a gradual and steady uplift in patient days. However, the recovery of operations wasn’t enough to cover the fallout from earlier months.
As a result of the lower patient days, group revenue declined by 12.7 percent to R18,843 million, while normalised EBITDA declined 52.4 percent to R2,088 million. Higher costs resulted in negative operating leverage with operating profit down 64.2 percent to R1,303 million.
“Covid-19 had a materially negative impact on Netcare’s financial results,” says CFO and 2020 CFO Awards nominee Keith Gibson. “We broadly estimate that it resulted in foregone revenues of R3.7 billion and EBITDA of approximately R2.3 billion.”
He adds that, as a provider of healthcare services, Netcare had to ensure that it could continue to operate its facilities through the pandemic in order to provide care to South Africans. In order to do so, the company focused on six critical areas of business. “We had to ensure that we had sufficient hospital beds available and had to secure adequate oxygen capacity, supply of medication and personal protective equipment to keep patients, nurses, doctors and hospital workers safe.”
The company also had to safeguard the ongoing financial viability of the business by ensuring it had access to sufficient committed funding lines, as well as implementing various cash preservation initiatives, like deferring uncommitted capital projects, reducing usage of agency nursing staff and suspending dividend payments.
“Looking back over the past year I am extremely proud that Netcare has been able to play a role in providing essential clinical services and thereby assisting South Africa to deal with the devastating impact of Covid-19,” Keith says. “We owe a huge debt of gratitude to the nurses, doctors, other healthcare workers and hospital support staff who put their lives on the line to care for those who required hospitalisation during this time.”