JOHANNESBURG – Private hospital group Netcare said yesterday that the surge in mental illness in the country would add to its bottom line through its recently concluded R1.3 billion acquisition of Akeso Clinics, a chain of psychiatric health care facilities.
Netcare’s chief executive, Richard Friedland, said demand for mental health was expected to remain strong, benefiting from the inclusion of Akeso for a full 12 months.
“Unfortunately, there is a high demand for mental healthcare in South Africa. We have seen very high demand for the services within Akeso. We have been busy integrating Akeso’s back office into Netcare and we have plans to expand it. Certainly, there is a greater need for mental healthcare services,” Friedland said.
In November 2016, Netcare announced the proposed acquisition of Akeso Clinics, a group of 12 dedicated mental healthcare facilities comprising 811 beds and located in various parts of South Africa, including Cape Town, George, Johannesburg, Pretoria, Nelspruit, uMhlanga and Pietermaritzburg.
The deal only received the nod from competition authorities in March with the condition that Netcare disposes of its Netcare Rand and Netcare Bell Street hospitals by March 2019 and September 2019, respectively. The group said it had already received a number of written offers and potential buyers have been identified.
Available data shows that an estimated 400 million people worldwide suffer from mental or neurological disorders from psychosocial problems.
Investors cheered the company's decision to declare a special dividend of 40 cents a share on the back of group profit after tax for the year ended September of R4.7bn, a turnaround from a loss of R2.7bn.
The group attributed the significant turnaround to the exit from the UK operations. Friedland said the special dividend was in line with Netcare’s policy of returning excess capital to shareholders, which the board deemed prudent considering the current economic circumstances.
The group's hospital and emergency services division saw its revenue jump to R20bn in the period under review, from R18.4bn in the comparative period, while its primary care division registered revenue of R717 million from R711m.
The group has set aside R1.6bn for capital expenditure for 2019. This will include R600m expansion of Netcare Milpark Hospital with 100 beds due to be commissioned in 2020.
The group has also set aside R600m over a 10-year period to fully digitise its entire information technology and data gathering platform across all divisions.