South Africa: Netcare’s exit from Britain spurs rise in earnings

South Africa’s second-largest private hospital operator Netcare witnessed an 8.5 percent rise in half-year earnings. The company on Monday noted that the increase has been attributed to a strong domestic performance and recent exit from the UK.

Citing returned growth in the South African healthcare market, the company projects demand for private healthcare to remain resilient over the medium to longer term because of an ageing population. Half-year group revenue rose 8.2 percent to 9.97 billion rand, Reuters reported.

The company reported adjusted diluted headline earnings per share (EPS) from continuing operations in South Africa that rose to 87.7 cents for the six months to 31 March and increased interim dividend to 44 cents from 38 cents in 2017.

Meanwhile, Netcare registered a 3.5 percent increase in patient days (which represents customer stays in its hospitals). This has helped lift cash generation in its home market to nearly 33 percent. Netcare, however, projects that the growth in patient days will continue into the second half, though at a slower rate than in the first half.

Difficult trading conditions had forced Netcare to put an end to its Britain ambitions that forced the private hospital chain out of the market where it has been operating in the last ten years through a controlling stake in BMI Healthcare.

Prior to its announcement about exiting the UK in March, Netcare said, in November, that it would reform its British operations, following a decrease in its annual profit that was partially attributed to cutbacks by Britain’s publicly funded healthcare system.

Running an operation that has left it with a baggage of over 1 billion pound deficit and a shortage of beds and staff, NHS has been pursuing aids from private health companies including BMI Healthcare, Spire Health, and Nuffield Health. In the UK, most private medical services are provided by physicians whose main commitment is to the NHS.

Consistent tough trading conditions across the private healthcare market in Britain, which includes the poor performance by BMI Healthcare as a result of the demand by management initiatives of National Health Service (NHS –England’s publicly funded healthcare) and weaker private medical insurance, left Netcare with no choice but to leave Britain.

With regulators approval of its purchase of Akeso Clinics in South Africa, Netcare is looking to obtain a network of 12 dedicated mental healthcare facilities.