Private hospital group Netcare remains on track to achieve revenue growth of 5%-6% in the year to end-September, with revenue and occupancy rates expected to meet guidance.
The group’s share price has lost 11.6% since the start of the year, partly reflecting uncertainty about its shifting leadership team.
Last month, Netcare announced that it had extended the contract of CEO Richard Friedland after the candidate it had identified for the role pulled out at the last minute.
It said Friedland had accepted the board’s request to continue serving as CEO until September 2026, delaying his retirement and prolonging the group’s hunt for new leadership.
This came a month after the group appointed Alex Maditse as chair, having announced the retirement of his predecessor Mark Bower last year.
Netcare’s share price rose as high as R13.57 in early afternoon trade on Friday before closing up 0.38% at R13.25 after the release of a trading statement in which the group flagged improved occupancy rates in the first half.
Netcare, which is valued at about R19bn on the JSE, operates 49 acute hospitals and 14 mental health hospitals countrywide.
Total paid patient days (PPD), its key metric for occupancy rates, are expected to climb by just more than 1% in the six months to end-March, compared with the first half of its 2024 financial year.
The improvement was primarily driven by Netcare’s acute hospitals, where occupancy is set to rise 1.5% year on year. The group reported a 4.5% increase in acute hospital revenue per PPD for the five months to end-February.
While surgical cases make up more than 70% of the company’s revenue, medical cases “continue to grow at a faster rate” than surgical ones, partly due to a downward trend in maternity cases.
The higher demand for Netcare’s acute hospitals was offset by a decline in occupancy rates for its mental health services. Despite robust demand for the services, a shortage of beds at popular sites led to a 1.9% decline in PPD for this division.
Overall, occupancy is expected to grow 0.8%-1.3% in the year to end-September, with the Easter season and school holidays likely to bring a dip in activity next month.
The group expects to report a R1.5bn capital expenditure bill this year that is unchanged from the previous financial year and equal to its profit after tax and exceptional items for the year to end-September 2024.
Netcare will continue its share buyback programme this year in an effort to return excess cash to investors. It acquired 27.8-million ordinary shares at an average price of R13.21 per share between October 1 and March 27, while cancelling 26.2-million shares.
The group has bought back 112.6-million shares since starting the programme in September 2023, representing 7.8% of its total issued shares at the time.
Netcare will release its first-half results on May 19.
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