Interim results for the six months ended 31 March 2023

Netcare delivers robust interim result

Monday, May 22 2023


"Notwithstanding the fluid macroeconomic environment, we are encouraged by the ongoing improvement in our operational and financial performance. We are confident that our strategy positions us to benefit from the positive long-term dynamics driving growth in healthcare and we remain committed to realising growth opportunities, improving returns and the successful completion and delivery of our key strategic priorities,”
Dr Richard Friedland, chief executive officer, Netcare Group


  • 11.9% increase in Group revenue to R11 537 million
  • 24.0% growth in Group normalised EBITDA
  • 220 basis point improvement in Group normalised EBITDA margin (excluding strategic costs and generator diesel costs) to 19.1%
  • 31.5% increase in adjusted HEPS to 46.3 cents
  • 50.0% increase in interim dividend to 30.0 cents per share (64.8% of adjusted HEPS)

As the post-COVID-19 operating environment continues to normalise, the Netcare Group has delivered a robust incremental improvement in financial performance in H1 2023, when measured against the comparative six-month period ended 31 March 2022 (H1 2022).

The Group’s adjusted Headline Earnings Per Share (HEPS) increased 31.5% to 46.3 cents (H1 2022: 35.2 cents), and normalised EBITDA grew by 24.0% to R2 015 million (H1 2022: R1 625 million). The normalised EBITDA margin, including strategic costs and generator diesel costs, improved by 170 basis points to 17.5% (H1 2022: 15.8%). The margin improvement is largely attributable to higher occupancy levels in H1 2023 and well managed costs.

Netcare chief executive officer, Dr Richard Friedland, commented, “We are encouraged by the improvement in demand for private healthcare services. In March 2023, acute hospital occupancies in the core acute segment recorded the highest level since the onset of the pandemic. The sustained improvement in activity has resulted in Group revenue for H1 2023 exceeding H1 2019 pre-pandemic revenue by 9.7%.”

Excellent progress has also been made on implementing key strategic projects:

  • The CareOn digitisation project was successfully rolled out at 30 acute hospitals covering 6 722 beds (which is 70% of registered beds) since the start of the project in 2020.  The project remains within budget and timelines, demonstrating tangible evidence of efficiencies and savings. The digitisation of the Group’s entire ecosystem will provide a long-term sustainable competitive advantage and is critical to Netcare’s strategy of delivering person centred health and care that is digitally enabled and data driven. Although still in the implementation phase, the efficiencies and savings realised in H1 2023 of R50 million (FY 2022: R37 million) have exceeded expectations.
  • The Group’s environmental sustainability strategy, which has received 31 national and international awards, continues to enhance efficiency across all facilities. Since 2013, the Group has invested R589 million in capex to implement more than 204 environmental sustainability projects. These have played a pivotal role in reducing exposure to the impact of the instability of the national electricity grid. Energy intensity per bed has been reduced by 35% and Netcare has achieved cumulative operational savings and benefits of more than R1.2 billion to date.
  • Sales of NetcarePlus products continue to gain traction and are contributing to the Netcare ecosystem through the increased use of Group facilities.
  • Netcare Diagnostics continued with the rollout of validated and quality assured Point of Care devices across Netcare’s ICU, high care, theatres and emergency departments.
  • The new Netcare app will be launched in June 2023, and will further support Netcare’s digitally integrated patient experience, as the Group intentionally moves from the traditional siloed and episodic-led model of care to an ongoing engagement-led model of care.

In February 2023, Netcare Christiaan Barnard Memorial Hospital received Level One trauma accreditation from the Trauma Society of South Africa, which is aligned to the American Trauma Society accreditation principles. There are only four hospitals in South Africa that have achieved this status, all of which are in the Netcare Group.

The Just Energy Transition Plan (JET IP) developed by the Presidential Climate Commission was approved by Cabinet in September 2022, highlighting a shift in focus for South Africa and a period of intensified climate action. Dr Friedland commented, “We fully support these initiatives, and our environmental sustainability strategy and goals are well aligned with those of the JET IP. The Group’s 2030 strategy aims to achieve 100% electrical energy utilisation from renewable sources, with zero waste to landfill and a 20% reduction of impact on water sources.”

The Board has declared an interim dividend of 30,0 cents per share. This represents 64.8% of adjusted HEPS and is an increase of 50.0% over the 2022 interim dividend. This is in line with Netcare’s dividend policy, where the aim is to provide shareholders with a sustainable dividend of 50% - 70% of earnings.

Group revenue increased by 11.9% to R11 537 million (H1 2022: R10 311 million).

Strong cash generation during the period under review resulted in net debt remaining at comfortable levels, with a net debt to annualised EBITDA ratio of 1.2 times (H1 2022: 1.7 times), which is well within the requirements of banking covenants.
The impact of load-shedding on operations has been well contained with the majority of Netcare’s acute hospitals operating independently, off the grid. Uninterrupted Power Supply systems and a fleet of 200 backup diesel generators support all facilities across the portfolio. Over the past decade, Netcare invested in a sizable solar power base across 72 sites, capable of generating 18 - 20 GWh per annum. This is used during daylight hours and outside of load shedding to ensure that safe, sustainable care is delivered without disruption throughout hospitals.

The Group incurred operational costs relating to strategic projects of R127 million (H1 2022: R112 million) during the period, with a further R130 million expected to be incurred in H2 2023. Pleasingly, normalised EBITDA margins, excluding strategic costs and generator diesel costs, strengthened from 16.9% in H1 2022 to 19.1% in H1 2023.

Normalised operating profit grew by 32.5% to R1 382 million (H1 2022: R1 043 million), driven by solid operating leverage from higher activity levels as well as tight cost control across the Group. Normalised profit before taxation increased by 36.4% to R934 million (H1 2022: R685 million). The normalised taxation charge amounted to R268 million (H1 2022: R202 million), reflecting an effective tax rate of 28.7% (H1 2022: 29.5%). Profit after taxation and exceptional items increased by 48.7% to R666 million (H1 2022: R448 million) and adjusted HEPS increased by 31.5% to 46.3 cents (H1 2022: 35.2 cents).

Capital expenditure and cash flow

The Group invested R430 million in capital expenditure during the period. Of this, R81 million related to expansionary projects, including the completion of the construction of the new 72-bed Netcare Akeso Gqeberha facility which commenced operations on 8 May 2023, and R43 million (H1 2022: R24 million) invested in the CareOn hospital digitisation project.

Cash generation remains strong, and Group net debt (exclusive of IFRS 16 lease liabilities) declined to R5.0 billion from R5.4 billion at 31 March 2022. The decrease in net debt is due to higher operating profit, partially offset by ongoing capital expenditure and dividend payments.
At 31 March 2023 the Group had cash resources and undrawn committed facilities of R3.6 billion.

Segmental performance - Hospital and emergency services

This segment delivered a strong performance driven by a recovery in demand and further normalisation of the post COVID-19 operating environment. Revenue increased by 12.2% to R11 226 million (H1 2022: R10 008 million), and total paid patient days (PPD) grew by 11.5% in H1 2023.

Acute hospitals experienced a steady incremental improvement in patient days, demonstrating resilient activity notwithstanding the recent changes in various network arrangements. PPD increased by 11.3%, equating to 95.5% of FY 2019, with PPD in the month of March 2023 being at 98.5% of March 2019 levels on a same store basis. Similarly, there has been a steady increase in emergency department (ED) visits and out-patient conversions (admissions from ED) which have outpaced FY 2019 levels.

Medical PPDs grew at a faster pace than surgical PPDs and increased by 15.6% compared to H1 2022. Medical PPDs for H1 2023 were at 100.5% of pre-pandemic levels. Surgical PPDs increased by 7.5% against the prior period and are trending at 91.3% of pre-pandemic levels, contributing 72.0% (H1 2019: 73.5%) of revenue.

Total surgical cases comprised 57.5% of admissions (H1 2022: 60.3%; pre-pandemic levels: 60.6%) and medical cases 42.5% (H1 2022: 39.7%; pre-pandemic levels: 39.4%).

Average length of stay increased from 4.2 days in H1 2022 to 4.3 days.

The strong demand for mental healthcare resulted in a 13.5% increase in PPDs during the period, with Netcare Akeso Richards Bay contributing 3.9%. Average mental health PPD activity has surpassed H1 2019 pre-pandemic levels by 4.6% (same store) and 8.4% (inclusive of Netcare Akeso Richards Bay). The Group continues to explore opportunities to meet the demand for mental healthcare. Following the successful commissioning of Netcare Akeso Richards Bay (36 beds) in May 2022, it has also completed the construction of Netcare Akeso Gqeberha (72 beds), which was commissioned in May 2023. Other initiatives to add a further 200 beds to the portfolio across three provinces are underway.

Occupancy levels in the Group’s mental health facilities have increased sharply from 64.2% in H1 2022 to 70.2% for H1 2023, with average occupancy of 80.7% in March 2023, ahead of pre-pandemic occupancy of 77.2%.

Normalised EBITDA for the segment grew by 24.6% to R1 937 million, and normalised EBITDA margins strengthened to 17.3% from 15.5% in H1 2022. Underlying EBITDA margin (excluding strategic and generator diesel costs) improved to 18.9% (H1 2022: 16.7%).

Netcare has attracted a net 61 new specialists to the Group.

Segmental performance - Primary Care

Total GP and dental visits declined by 2.2% in H1 2023 as a result of the higher base in H1 2022, which was boosted by increased COVID-19 activity during the Omicron-driven fourth wave. Notwithstanding this decline in visits, revenue increased by 2.6%. EBITDA margins increased to 24.6% from 23.0% and were boosted by a capital profit of R2 million relating to the sale of property.


Dr Friedland said, “We expect ongoing improvements in the operational and financial performance of the business in H2 2023 and beyond as demand recovers from the impact of the COVID-19 pandemic and the operating environment continues to normalise. While there are a number of macro-economic challenges facing corporate South Africa, we believe our advancing strategy and market positioning will hold us in good stead to navigate these challenges.”

The Group expects full-year revenue growth of between 9.0% and 12.0%. Given the normalised base of H2 2022, patient-day growth for the full financial year remains within guidance of between 6.5% and 7.5%.
The business will remain focused on optimising the cost efficiencies realised in the first half and, in the absence of abnormal inflation, the underlying year-on-year EBITDA margins (excluding strategic costs and generator diesel costs), earnings and ROIC are expected to strengthen year-on-year in line with improving occupancies.

Total capital expenditure for FY 2023 of R1.6 billion (R430 million incurred in H1 2023) is expected. Total capex includes R111 million attributable to expansion in mental health, approximately R600 million for refurbishments that were delayed during the pandemic and R181 million for strategic projects.

Dr Friedland concluded, “We will continue to maintain an optimal capital structure. The strength of our financial position and the ongoing improvement in operational performance in the underlying businesses will continue to support dividend payments in line with our dividend policy, where we seek to return at least 50% - 70% of adjusted headline earnings to shareholders.”




The Netcare Group (JSE: NTC) offers a unique, comprehensive range of medical services across the healthcare spectrum, enabling us to serve the health and care needs of each individual who entrusts their care to us. Our focus on implementing sophisticated digital systems will enable us to provide care that is fully integrated and an enhanced experience across our Group's operations. At Netcare, we are striving to change healthcare for the better. In addition to its world-class acute private hospital services, Netcare provides:

  • radiosurgery, radiotherapy, chemotherapy, bone marrow transplant and robotic-assisted surgery through Netcare Cancer Care;
  • primary healthcare services through Netcare Medicross;
  • emergency medical services through Netcare 911;
  • occupational health and employee wellness services through Netcare Occupational Health;
  • mental health and psychiatric services through Netcare Akeso;
  • innovative solutions to increase access to quality and affordable private healthcare through NetcarePlus; and
  • renal dialysis services through National Renal Care (NRC).

Netcare is also a leading private trainer of emergency medical and nursing personnel in the country.

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Issued by:       MNA on behalf of Netcare
Contact:          Martina Nicholson, Meggan Saville, Estene Lotriet-Vorster or Clementine Forsthofer
Telephone:      (011) 469 3016
Email:              [email protected], [email protected], [email protected], [email protected] or [email protected]