Dis-Chem has strengthened its integrated healthcare programme with the acquisition of insurance group OneSpark, which will add products such as life cover and funeral cover to the health retailer’s portfolio. The company said on Friday it has bought a 50% stake in OneSpark for R155.9m.
Dis-Chem’s integrated healthcare ecosystem is centred on providing a one-stop shop for healthcare services that also include clinics, doctors’ consultations, medical insurance and medical aid gap cover, and now with the acquisition it will add more products. It is repositioning its brand away from being just a pharmacy retailer to being a healthcare provider.
CEO Rui Morais said the company has been looking for a life insurance provider for about two years and together with Kaelo, which was acquired two years ago, OneSpark will form businesses that deploy “our financial services ambitions into integrated healthcare”.
“If you think about what we do, we inherently manage risk well. So we reduce morbidity and mortality risk, which is an underlying metric for life insurance.”
From 2025, Dis-Chem will start offering general life insurance products, specific chronic conditions products, funeral products and education-related products that will be focused at its Baby City customers.
“We have always wanted to invest in products and business that can be seen in the healthcare lens,” said Morais.
The company has 513 health clinics across its retail pharmacy store network and Morais said that provides the foundation for public-private health partnerships, as Dis-Chem is “well positioned to facilitate access to healthcare for all”.
He said there has been significant progress with provincial departments of health in contracting Dis-Chem clinics for some healthcare services.
Dis-Chem will also beef up its digital platforms to enable its customers to, among other things, be able to claim digitally from medical aids and deliver medication and other products from its stores in less than an hour, “which is something that’s already in the market but we will roll that out nationally,” said Morais.
“We want to own the digital health space as many consumers want to engage with brands online,” said.
Commenting on National Health Insurance (NHI), which was signed into law in May and has been strongly criticised by the private hospitals and medical aids, Morais said while there were some areas of concern, Dis-Chem could play a role in NHI.
I think we’ve got assets that can assist in collaborating with the state to deliver any form of NHI that comes out to the market.
— Rui Morais, Dis-Chem CEO
“We will be well positioned for that. Not only do we have a large pharmacy network but also the biggest private sector clinic provider. We are well positioned to service NHI when it comes.”
On whether it poses a threat to medical insurance products, which offer limited access to private health unlike medical aid, Morais said “it depends on how the regulation plays out”.
“The reality is medical insurance as a functional private healthcare should be a decision that anyone makes, independent of the state. In time we will see how regulations play out. As a brand, we are relatively defensive in that we will provide services in that space and also have administration capacity that allows us to assist the state to administer NHI. Whatever way or form it takes, I think we’ve got assets that can assist in collaborating with the state to deliver any form of NHI that comes out to the market.”
Dis-Chem has launched a campaign to educate consumers about medical insurance to accelerate policy sales. Medical insurance products provide access to a range of services including doctors, optometrists, dentists and medicine. The insurance does not cover hospital admissions and specialists, which are mostly catered for by medical aid schemes.
On Friday, Dis-Chem reported an 11.1% rise in revenue growth for the 12 months to the end of February to R36.3bn. Retail revenue grew 9.7% to R31.7bn. During the period, 15 retail pharmacy stores were opened or acquired, resulting in 273 retail pharmacy stores and 54 Baby City stores.
Dis-Chem will open 22 stores and two new Baby City stores. Dis-Chem is dominant in the dispensary market compared to rivals and wants to continue growing that to drive growth of other products in-store. According to the company, it is strong in Gauteng and the plan is to replicate that nationally. Morais said Dis-Chem opened a store in East London in February 2023 and now has three stores, with one more planned.
From March to 25 May, Dis-Chem revenue grew by 11.4% over the prior comparable period. Morais said the company had a record month in May at its pharmacies due to the flu season.
“The flu season has been slightly earlier than what it was last year. We’ve actually had a record pharmacy month. We have seen a lot of traffic specifically in May as a function of the flu season and the different variants of the flu being earlier than it was last year.”
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