Netcare achieves solid improvement in year-on-year results

Improved sequential performance leads to HEPS increase of 107%

Monday, November 22 2021

“In a time of unprecedented difficulty, we remain confident that Netcare’s strategy is appropriate, our growth opportunities are achievable, and our purpose has never been more meaningful and inspiring.”

Dr Richard Friedland, chief executive officer, Netcare Group

Salient Features

  • Steady sequential trading improvement throughout FY 2021 despite severe second and third waves of COVID-19
  • Strong cash conversion ratio of 118.8%, up from 58.3%
  • Cash resources and committed undrawn facilities of R5.6 billion 
  • Adjusted HEPS increased by 107.4% to 67.4 cents 
  • Resumption of dividend at 34.0 cents a share

Johannesburg, 22 November 2021 Netcare Limited’s revenue, EBITDA and EBITDA margins have showed a steady sequential improvement over the second half of the financial year ended 30 September 2021 (“FY 2021”) when benchmarked against both the first half of FY 2021 and the second half of the financial year ended 30 September 2020 (“FY 2020”).  This has resulted in a solid improvement in the year-on-year financial results.

Group revenue for FY 2021 increased by 11.5% to R21 005 million (FY 2020: R18 843 million). Group EBITDA for FY 2021 improved by 24.8% to R3 193 million (FY 2020: R2 558 million), with the Group EBITDA margin improving to 15.2% (FY 2020: 13.6%). Adjusted headline earnings per share (“HEPS”) increased by 107.4% to 67.4 cents (2020: 32.5 cents). 

While Netcare suspended the interim and final dividend payments for FY 2020 and the FY 2021 interim payment, the Board has resolved to pay a final dividend of 34.0 cents per share.

Commenting on the COVID-19 pandemic, Netcare Group CEO, Dr Richard Friedland, says it is the worst health crisis for almost a century. Its magnitude in terms of loss of life and its impact on the economy have been devastating.

“Netcare’s core purpose of providing the best and safest care has never been more relevant and we have been privileged to play a role on the frontline in supporting our country through the COVID-19 pandemic. Since our first COVID-19 case on 9 March 2020, we have treated over 125 000 COVID-19 patients, of which 43% were admitted to our hospitals. 

“We express our sincere gratitude and thanks to our staff and doctors for their utmost dedication and resilience in embodying our purpose of providing patients with the best and safest care and delivering world-class healthcare under such difficult circumstances. We extend our heartfelt condolences to the families of our doctors and staff on the loss of their loved ones as a result of the pandemic.”

Group Financial Review

The first wave of the COVID-19 pandemic, which peaked in July 2020, predominantly impacted Netcare’s operations for the second half of FY 2020. The second wave of COVID-19, driven by the emergence of the Beta variant in late November 2020, peaked in January 2021 and negatively impacted Netcare’s operational and financial performance during H1 2021. H2 2021 was affected by a third wave of COVID-19 following the emergence of the more contagious Delta variant in May 2021. Each successive wave has proven to be more severe than the preceding wave, as evidenced by the number of COVID-19 admissions during H2 2021 exceeding those of H1 2021, which in turn exceeded those of H2 2020. 

It is broadly estimated that the pandemic resulted in the loss of approximately R1.5 billion in EBITDA (FY 2020: R2.3 billion) to the Group. However, operating profit increased by 45.4% to R2 025 million (FY 2020: R1 393 million). 

In addition to absorbing lower activity levels throughout the pandemic, the Group also incurred COVID-19 related costs of approximately R521 million in FY 2021 (FY 2020: R300 million). Approximately 80% of these costs comprise personal protective equipment (PPE) required to keep staff, doctors and patients safe and prevent in-hospital infection. These costs continued to weigh on margins, given the higher prices paid for PPE during the first wave in May 2020 due to a shortage of international supply and long lead times.

Profit after taxation increased by 188.8% to R904 million (FY 2020: R313 million). 

Capex on critical strategic projects continued during the year, with total capex investments amounting to R1.1 billion. 

The Group‘s cash resources and available undrawn committed facilities were unchanged at R5.6 billion. Cash generated from operations showed strong growth of 154.3% to R3 794 million (FY 2020: R1 492 million). The cash conversion ratio improved further to 118.8% (FY 2020: 58.3%).

Divisional Review

Hospital and Emergency Services

Revenue for this segment, which comprises acute hospitals and mental health facilities, as well as emergency and ancillary services, increased by 11.9% to R20 422 million (FY 2020: R18 250 million). Normalised EBITDA for the segment increased by 24.5% to R3 069 million from R2 465 million in FY 2020.  The improved sequential performance is reflected in the EBITDA margin for the full year, which grew to 15.0% from 13.5% reported for FY 2020. 

Total patient days in FY 2021 grew by 6.8%, comprising an increase in acute hospital patient days of 6.2% and 12.7% in mental health facilities. 

“Despite the challenges of navigating the rolling waves of COVID-19 and the short recovery periods between waves, our average full week acute hospital occupancies continued to improve to 55.9% from 52.5% in FY 2020.  Similarly, mental health occupancies continued to show a steady improvement increasing from 55.0% in FY 2020 to 62.1% for FY 2021,” said Dr Friedland. 

The temporary suspension of elective surgery during the second and third waves, coupled with higher COVID-19 admissions, resulted in a decline of 12% in surgical elective admissions compared to FY 2020. Surgical admissions comprised 58.2% of total admissions in FY 2021 (FY 2020: 60.0%).

Acute revenue per patient day increased by 5.4% compared to FY 2020. 

Full year normalised EBITDA margins excluding the impact of strategic project costs of R172 million, continued to improve and strengthened to 18.4% in FY 2021 from 15.7% in FY 2020. 

Primary Care

Total medical and dental consultations increased in FY 2021 by 1.5% on a like-for-like basis, despite the impact of the COVID-19 pandemic, subsequent lockdowns, an absence of seasonal flu and the civil unrest in KwaZulu-Natal, which resulted in the temporary closure of some medical and dental centres. 

Revenue for FY 2021 declined by 2.6%. EBITDA for FY 2021 increased by 33.3% resulting from stringent cost management. The EBITDA margin for FY 2021 improved to 20.8% from 15.2% in FY 2020.

Strategic Update

Dr Friedland commented, “Notwithstanding the disruptive operating environment, we continued to differentiate ourselves through a number of key strategic projects during FY 2021 which are predicated on solving healthcare challenges that are common to both the private and public sector and will fundamentally redesign Netcare’s healthcare delivery model.”

The goal underpinning this strategy is to achieve sustainable competitive advantage. In delivering a person centred approach, which encourages patients to take ownership of, and to actively participate in, their health and care, the digitisation of our entire ecosystem across all our service offerings is critical. During FY 2021, the Group continued to develop this platform and remains on track to achieve the objectives by the end of 2023.

Netcare’s core focus on digital enablement and data analytics was a critical enabler during the pandemic and enhanced its ability to respond to the changing healthcare environment. The benefits of Netcare’s digital systems were evident during this period as doctors could limit their physical presence in wards while still managing patients remotely, timeously and effectively.

Investment and progress

The Group invested capex of R120 million and incurred operational costs of R172 million on various strategic projects across the ecosystem in FY 2021. A major focus of these projects is to provide electronic medical records (“EMR”) across all divisions of Netcare. Despite the delays caused by three successive waves of COVID-19, the hospital EMR, CareOn, was successfully implemented at four hospitals. A further 16 hospitals will be completed by the end of FY 2022 and implementation is expected to be fully completed across the acute hospital portfolio by the end of 2023.

Substantial progress has also been made on the digitisation of Akeso, National Renal Care and Medicross, which are expected to be completed during 2022. 

Promoting access to healthcare

Netcare continued to invest in complementary initiatives that can leverage off its extensive acute care network and facilitate access to its ecosystem for both insured and uninsured individuals. 

The NetcarePlus division launched several new products, including NetcarePlus Accident and Trauma cover, NetcarePlus pre-paid procedures and NetcarePlus vouchers for optometry services, with the introduction of dental vouchers currently underway. These products present possible solutions for the needs of households that are employed but do not have adequate healthcare cover. 

In addition, given the ongoing trend of buy-downs by medical scheme members, GapCare, a range of three gap cover products underwritten by Hollard, allowing medically insured patients unencumbered access to healthcare, will be available from January 2022. 

Expanding the Netcare ecosystem

Construction of the new Netcare Alberton Hospital, which will replace the existing Netcare Union and Netcare Clinton hospitals, is progressing well with the opening of the 427 bed facility planned for April 2022. In addition, the construction of the new 36-bed Akeso facility in Richards Bay has been completed and will open in early 2022.

Environmental sustainability 

“Netcare is a recognised global leader in healthcare sustainability and we are pleased to be leading the continent’s private healthcare response to the Race to Zero 2050 challenge of the UN Framework Convention on Climate Change,” said Dr Friedland.

Since the implementation of Netcare’s environmental sustainability strategy in 2013, the Group has reduced its absolute Scope 1 and Scope 2 emissions by 8%, with a 28% reduction in the intensity of Scope 2 emissions per bed. Netcare has reduced energy intensity per bed by 28%, ahead of the initial 10-year target.  

“We have set even bolder targets for 2030, with a primary target to reduce scope 2 emissions to zero by 2030 and reduce scope 1 and 2 emissions by a combined 84%. As part of our strategy, by 2030 we aim to utilise 100% of our energy from renewable sources, achieve zero waste to landfill and reduce our impact on water sources by 20%,” said Dr Friedland. 

Appointment of Independent Non-Executive Directors

Netcare is pleased to announce the appointment of Dr Rozett Phillips and Dr Thabi Leoka as independent non-executive directors with effect from 1 January 2022.

In addition to her medical training, Dr Phillips has over 25 years of business and management consulting experience across Africa, Europe and the Middle East, covering strategy formulation, business, digital and human capital transformation and large-scale technology implementation programmes. She will also be joining the Social and Ethics and Consistency of Care committees. Dr Phillips serves as an independent non-executive director of SPEAR REIT, a property portfolio investment company.

Dr Leoka has a PhD in Economics and has worked as an economist in various financial sector firms in London and South Africa, and has a passion for emerging markets and African economies. She serves as an independent non-executive director for MTN SA and Anglo American Platinum. Dr Leoka will also be joining the Audit Committee and the Social and Ethics Committee.
The Netcare Board welcomes the appointments of Dr Phillips and Dr Leoka and is confident that they will provide valuable insight and experience to the Group.


The outlook for FY 2022 largely depends on the evolution of the COVID-19 pandemic and the potential scenarios emanating from it. 

The possibility of further waves of COVID-19 still exist. In the absence of new highly transmissible and virulent variants of the virus, Netcare expects a reduction in severity of such potential waves. This is due to increasing levels of immunity from natural infection and vaccination, which will continue to influence its ability to operate in an unrestrained environment. 

Dr Friedland said that if South Africa is able to move from a pandemic to an endemic state in which outbreaks are not overly disruptive and largely controlled by significant and frequent vaccination, recovery in activity over time to pre COVID-19 levels will be possible.

EBITDA margins in the underlying operating divisions are expected to strengthen. However, the Group margin is expected to remain unchanged due to planned operating costs of R273 million (FY 2021: R172 million) associated with the implementation of the Group’s strategy. 

Dr Friedland concluded, “We expect to spend R1.4 billion on capex including the investment of R227 million in strategic projects, R160 million on Netcare Alberton Hospital and R80 million in the new 72-bed Akeso facility in Gqeberha, which will be completed in FY 2023.  The strength of our balance sheet and the underlying businesses, together with an enhanced pipeline of new initiatives, should allow the continuation of dividend payments and position Netcare to return to pre COVID-19 profitability and growth over the medium term.” 




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.

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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]