Healthcare group AfroCentric reported a fall in profit and decided against rewarding shareholders as it felt the effects of various changes in the company, including restructuring, and declining demand for healthcare since the end of the Covid-19 pandemic.
“The trading in the pharmaceutical cluster has normalised back to pre-Covid levels and therefore decreasing from the high levels experienced in the June 2022 financial year which was driven by the Covid-19 impact,” the company valued at about R2.8bn on the JSE, said in its results for the year to end-June.
Unlike last year the investment holding company, which owns a diversified range of companies aimed at improving health services, declared no dividend and is looking into a new payout policy that might be linked to “short-term acquisition and investment opportunities”.
The company has undergone significant changes in the past year as it appointed a new CEO and was taken over by insurance group Sanlam in May after it became the majority shareholder.
“The group’s core business remains sound with good diversification in private and public medical scheme membership. A focus for the group will be to optimise its spend on IT which will then enable operations to become more efficient in its service model,” it said.
Revenue grew 2% year on year to R8.9bn, but profit fell 38.5% to R294.7m and headline earnings per share, a common profit measure in SA that excludes certain items, fell 34% to 36.2c.
Apart from the downturn after the pandemic, Afrocentric also felt the blow of one-off costs as it closed down the group’s operations that bought hospital surgical products via its subsidiary MMed, amounting to lost operating profit of R65m.
A slowdown in the sale of over-the-counter and HIV medicine, fewer patients taking their chronic medication, the regulated single-exit price and a tough economic environment for consumers resulted in lower pharmaceutical sales and a 41.1% fall in operating profit in Afrocentric’s second-largest segment by revenue.
“Pharmaceutical sales were also affected by supply instability from manufacturers, leading to occasional out-of-stock issues, particularly for some of our main products” Afrocentric said.
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