Interim results for the six months ended 31 March 2021

Netcare delivers strong interim profit growth when compared to second six months of the previous financial year

Monday, May 24 2021


  •   Strong revenue and earnings growth over the six months to 31 March 2021 ("H1 2021") compared to the six months ended 30 September 2020 ("H2 2020") 

        ◦ Group revenue increased by 24.0% to R10 081 million 
        ◦ EBITDA improved by 654.0% to R1 493 million 
        ◦ EBITDA margin improved from 2.4% to 14.8%  

  •    Second wave of COVID-19 adversely impacted performance against the comparative period with Group revenue and EBITDA down on the six months to 31 March 2020 ("H1 2020")
  •   Adjusted HEPS of 27.3 cents
  •   Cash resources and committed undrawn facilities of R6.6 billion as at 31 March 2021
  •    Strong cash conversion ratio of 103.1%
  •   Vaccination of Netcare frontline healthcare workers near complete 

Netcare Limited ("Netcare") continued to see a steady improvement in both patient days and occupancy levels in H1 2021, when compared to H2 2020.  This is despite both six-month periods being impacted by the first and second waves of the COVID-19 pandemic.

Group revenue in H1 2021 rose by 24.0% to R10 081 million (H2 2020: R8 130 million). Group EBITDA for H1 2021 increased by a significant 654.0% to R1 493 million, when compared to the R198 million in H2 2020, resulting in a considerably improved margin of 14.8% (H2 2020: 2.4%).  

Profit before taxation for H1 2021 increased by 165.2% compared to H2 2020, although decreased by 60.9% against the prior period to R542 million (H1 2020: R1 387 million). Profit after taxation decreased by 61.9% to R375 million (H1 2020: R983 million). Adjusted headline earnings per share ("HEPS") declined 61.9% to 27.3 cents (H1 2020: 71.7 cents), although reflecting an improvement of 169.6% compared to H2 2020.
Netcare Chief Executive Officer, Dr Richard Friedland commented that, "The comparative six-month period ended 31 March 2020 was largely free of the impact of COVID-19 other than for the last two weeks of March 2020, which makes comparable numbers unreliable indicators of performance". 

Group revenue for H1 2021 declined by 5.9% against H1 2020 due to lower occupancy levels related to COVID-19. Group EBITDA decreased by 36.7% while EBITDA margin contracted to 14.8% from 22.0% for H1 2020, due largely to the loss of hospital admissions, the resultant negative operating leverage and additional costs related to the pandemic. 

Trading for H1 2021 was impacted by the emergence of an even more contagious COVID-19 variant resulting in a second wave of infections. The intensity of the second wave was evidenced by the number of COVID-19 patient admissions in H1 2021 exceeding those of the entire 2020 financial year ("FY 2020") by 39%. 

COVID-19 costs have continued into FY 2021 amounting to R316 million in H1 2021. The majority of these costs relate to personal protective equipment ("PPE"), where stringent border controls and significant global demand during the first wave of the pandemic resulted in substantial price increases for several critical stock items. 

"Netcare treated its first COVID-19 patient on 9 March 2020" said Dr Friedland, "and we have since treated more than 73 000 COVID-19 patients, of which approximately 32 000, (44%) were admitted to our hospitals, with around 26% of those admitted being treated in high care or intensive care. All this underscores just how virulent this virus is. We currently have 530 COVID-19 patients admitted within our facilities".

Netcare played a significant role in supporting the Sisonke J&J vaccine rollout to healthcare workers at several sites during Phase 1a. In total over 65 000 vaccines were administered at Netcare sites alone, excluding those given by Netcare personnel at several other sites.

The vaccination of all Netcare frontline healthcare workers remains a crucial priority, and the majority have been vaccinated. It is expected that the remaining healthcare workers will be vaccinated in the coming weeks once commercial stock is made available.

Netcare will continue to keep its vaccination sites open to support the Phase 2 vaccine rollout programme and will be making 30 Medicross Family Medical and Dental Clinics available for vaccinations. Netcare Occupational Health has also made a vaccination programme available to all its clients.

The period under review experienced the impact of the tightening and subsequent easing of lockdown regulations, the sporadic curtailment and re-commencement of elective surgeries and a considerable reduction in non-COVID-19 medical admissions. However, Netcare was able to swiftly and effectively pivot the organisation to deal with the ongoing challenges in a rapidly changing market and strained economic environment.

Dr Friedland added, "We continued to maintain a rigorous approach to ensure the safety of our staff and patients, carefully balancing hospital capacity during the surge in line with increasing demand for the admission of patients with severe COVID-19 symptoms. As a result, on 19 December 2020, we temporarily suspended elective surgery across our network, only allowing for medically necessary and time-sensitive surgeries. Following a decline in the national incidence of COVID-19 cases these constraints were subsequently lifted, allowing for the resumption of elective surgeries across our entire network in early February 2021 and the gradual return of non-COVID-19 patient admissions, which continue to improve".

The Group's strong balance sheet has facilitated ongoing investment in key strategic projects to enhance its ecosystem and support the goal of achieving a sustainable competitive advantage by providing person-centred health and care that is digitally enabled and data driven.  Dr Friedland continued, "Although capex and other capital allocation requirements were tightly controlled during this period, critical strategic projects continued, with total capex of R473 million for H1 2021. Of this, R201 million related to expansionary projects, including the construction of the new Netcare Alberton Hospital. The CareOn hospital digitisation project utilised R18 million and a further R11 million was spent on digitisation initiatives across the entire ecosystem".

Cash generated from operations showed strong growth with the cash conversion ratio improving to 103.1% (H1 2020: 53.1%), aided by the reduction of inventory holdings and seasonally lower growth in accounts receivable.

As at 31 March 2021, the Group had cash resources and committed, undrawn facilities of R6.6 billion at its disposal.  Group net debt (exclusive of IFRS 16 lease liabilities) declined to R6.1 billion at 31 March 2021 from R6.4 billion at 30 September 2020. 

Netcare's strategic initiatives are firmly back on track despite the changes brought about by the pandemic, and key capital projects that were postponed at the end of H1 2020 have been successfully resumed. 

Despite interruptions caused by the second wave of COVID-19, the rollout of the CareOn digitisation project has resumed. The CareOn implementation completed at three Western Cape hospitals in May 2021. Another two hospitals in Gauteng will be completed by September 2021, following which the implementation will commence at a further three hospitals in October 2021. An additional nine hospitals are undergoing infrastructure preparation for CareOn implementation.

In order to promote healthcare access, affordability and inclusion, Netcare established an Innovative Products division, NetcarePlus, last year. NetcarePlus is aimed at developing healthcare solutions focused on solving for the needs of households that are employed, but do not have adequate healthcare cover. In addition to the three prepaid GP vouchers launched in FY 2020, NetcarePlus Accident and Trauma cover and NetcarePlus Prepaid Procedures were launched in April 2021. These products will entrench Netcare's reach into this underpenetrated segment of the market while enhancing its core business and seamlessly integrating into Netcare's unique ecosystem.


Hospitals and emergency services comprise acute and mental hospitals, as well as emergency and ancillary services.  Average acute hospital occupancy levels continued to improve during H1 2021 with full week acute occupancy averaging 53.8%, improving from 42.8% during H2 2020, and weekday occupancies of 57.1% increasing from 45.1% in H2 2020. Notwithstanding the improvement, occupancy levels have not recovered to pre-pandemic levels. 

Mental health occupancy levels increased sharply, improving from 41.0% in H2 2020 to 60.6% for H1 2021 (H1 2020: 68.9%). Despite the onset of the second wave, the easing of lockdown measures in H2 2020 allowed for the resumption of group therapy sessions resulting in higher admissions.

Total patient days for H1 2021 grew by 26.2% against H2 2020, although being 13.6% lower than H1 2020. Acute hospital patient days reflected growth of 24.4% against H2 2020, but fell by 13.7% against H1 2020 due to the temporary suspension of elective surgery from mid-December 2020 coupled with higher COVID-19 admissions. Mental health patient days improved by 46.9% against H2 2020, but remained 12.6% below H1 2020. 

In line with the sector trends, the decline in non-COVID-19 medical cases since the onset of the pandemic in March 2020 was more pronounced than surgical cases across several medical disease categories. For the period under review, medical and surgical admissions declined by 42.3% and 28.5%, respectively. Surgical admissions comprised 59% of total admissions (H1 2020: 60%). Theatre minutes increased by 22.7% in H1 2021 against the previous six month period, but were 20.9% lower than H1 2020.

Acute revenue per patient day increased by 9.8% compared to H1 2020, primarily due to a higher mix of more ill patients. Similarly, the average length of stay increased by 19.2% to 4.7 days (H1 2020: 3.9 days).

Revenue for H1 2021 increased 24.4% to R9 794 million (H2 2020: R7 870 million) but was lower than H1 2020 revenues by 5.6% (H1 2020: R10 380 million).

EBITDA increased to R1 439 million against the low base of R180 million in H2 2020, but remains 37.0% below H1 2020 due to the negative impact of COVID-19 on patient admissions. EBITDA margins have strengthened to 14.7% from 2.3% in H2 2020. The EBITDA margins remain below the largely pre-pandemic levels of 22.0% achieved in H1 2020. 

No new beds were commissioned during the period under review, and in line with Netcare's strategy of improving asset utilisation, the Group converted 342 beds to intensive care and high care beds during the height of the pandemic.

GP and dental consultations reflected a steady improvement, growing on a like-for-like basis in H1 2021 by 18.6% compared to H2 2020. However, patient visits remained 11.8% lower than H1 2020 due to the impact of COVID-19. 

When compared to H1 2020, revenue reflected a decline of 14.3% to R293 million (H1 2020: R342 million) due to lower patient visits and reduced revenue from occupational health contracts, both attributable to COVID-19. As a result of these reduced levels, EBITDA declined to R54 million (H1 2020: R75 million), and the EBITDA margin decreased from 21.9% to 18.4%. 

Revenue for H1 2021 increased by 8.9% from H2 2020, while EBITDA improved by 200.0% due to the recovery in patient visits and stringent cost management. As a result, the EBITDA margin for H1 2021 improved to 18.4% from 6.7% in H2 2020.

Netcare is encouraged by the improved sequential operational performance, but the operating environment remains fluid. A return to normal levels of admissions will continue to be influenced by:

The trajectory of the pandemic and, more specifically, the risks and the timing of any possible third wave;
The timing and efficiency of an uninterrupted vaccine rollout in South Africa; and
The efficacy of current vaccines against new variants of COVID-19 and the tightening or easing of lockdown levels.

With the onset of winter, a vaccination programme that has yet to gain momentum and the ever-present threat of new variants of COVID-19, a third wave cannot be ruled out. The severity and geographic distribution is unknown and outbreaks limited to specific regions or provinces are also a possibility. However, given the experience and lessons learned in dealing with the first two waves, Netcare believes it is in a better position to manage the consequences of a third wave in a more efficient and effective manner. In addition, the vaccination of most front line workers will also contribute further to a safer operating environment and enhanced patient sentiment. 

In the absence of a third wave, a stabilisation of the macro economic environment and an effective vaccine rollout will contribute to further improvement in patient admission levels and the stabilisation of volumes in H2 2021. In line with increasing occupancies, EBITDA margins are expected to continue to improve.

Netcare is continuing with its philosophy of an asset-light strategy, only investing in strategic projects that will drive revenue growth and ensure operational excellence and cost-efficiency.  In FY 2021, Netcare expects to spend R1.2 billion on capital projects.

Dr Friedland concluded, "We express our heartfelt and sincere condolences to the families of our doctors and staff who have lost loved ones throughout the pandemic, as well as in the tragic helicopter accident on 21 January 2021, in which the ECMO team from Netcare Milpark Hospital, a Netcare 911 paramedic and the pilot tragically lost their lives.  Netcare's ongoing support to its stakeholders, and to the nation, will continue unabated.  Our frontline workers and doctors continue to demonstrate their steadfast dedication and resilience in delivering world-class health and care under unprecedented circumstances and we express our thanks and appreciation for their unwavering commitment".



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 entrust 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 Medicross;
  •   emergency medical services through Netcare 911;
  •   occupational health and employee wellness services through Netcare Occupational Health;
  •   mental health and psychiatric services through 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.

For more information visit

Contact:    MNA on behalf of Netcare  
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]