Netcare CFO Keith Gibson says improved trading profit margins have been encouraging

Netcare saw a nine percent profit margin for hospital and emerging services, and over six percent for primary care.

Netcare’s revenue margins have shown a steady sequential improvement over the second half of the 2021 financial year, with the group reporting an 11.5 percent increase to R21,005 billion. CFO Keith Gibson says that this was due to good growth in the group’s hospital and emergency services businesses.

“The improved trading profit margin across the board has been encouraging,” he says, adding that the group saw a nine percent profit margin for hospital and emergency services, and over six percent for primary care services.

The health care company has reported a cash conversion of 118.8 percent for the year ended 30 September, something Keith is very proud of. “The cash conversion at nearly 119 percent has been excellent, considering the environment in which we are operating,” he says.

Keith explains that he is also pleased that Netcare was able to reward its shareholders by resuming dividend payments. After suspending the interim and final dividend payments for the 2020 financial year and the 2021 interim payment, the group has resolved to pay a final dividend of 24.0 cents per share.

The group managed to reduce its net debt positioning, which Keith described as a commendable achievement “at a challenging time like this”.

The group has also seen an improvement in its EBITDA margins to 15.2 percent, and headline earnings per share increased by 107.4 percent to 67.4 cents. “Covid-19 continued to impact financial performance,” Keith explained. “There was an adverse EBITDA impact due to the decline in patient days, and the business still needs to recover back to pre-pandemic activity and profitability.”

However, he says that a pleasing aspect of the past year has not only been the strong statement of financial position, but at the same time Netcare has been able to continue with its ongoing investments in key strategic projects. “These include projects that are predicated on solving healthcare challenges that are common to both the private and public sector and will differentiate Netcare in the market.”

He adds that, while the group is already recognised as a global leader in healthcare sustainability, it is now setting even bolder environmental sustainability targets for 2030.

Keith says that Netcare’s ultimate strategic goal is to deliver person-centred health and care, which is digitally enabled and data driven. “This will make it possible for patients to take ownership of, and to actively participate in, their health and care.”

To achieve this, he explains, Netcare is digitising its entire ecosystem across all its service offerings, among other strategic imperatives that are advancing.

“Although we are living through a time of unprecedented difficulty, it is pleasing that Netcare has remained focused,” Keith says. “Our strategy being implemented remains appropriate and will set the business on a course to achieve market growth, a differentiated offering and improve profitability and returns.”