Netcare profit dented by the cost of securing protective equipment
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JOHANNESBURG - NETCARE, South Africa’s largest healthcare provider, said yesterday that its interim operating profit had suffered a 48.8 percent decline to R915 million during the six months ended March 2021, after incurring higher personal protective equipment (PPE) costs.
The group said the increased costs, coupled with the large, fixed component of employee costs against a declining revenue base, had weighed on operating profit.
Netcare previously told the market that Covid-19 costs had amounted to R316 million in the first half of 2021.
“The majority of these costs relate to PPE, where stringent border controls and significant global demand during the first wave of the pandemic resulted in substantial price increases for several critical stock items,” Netcare said.
Netcare said acute hospital patient days reflected a 24.4 percent uptick against the second half of 2020, but fell by 13.7 percent against the first half due to the temporary suspension of elective surgery from mid-December 2020, coupled with higher Covid-19 admissions.
It also recorded a spike in mental health occupancy levels which improved to 60.6 percent in the first half of 2021, from 41 percent in the second half of 2020.
“Despite the onset of the second wave, the easing of lockdown measures in the second half of 2020 allowed for the resumption of group therapy sessions, resulting in higher admissions,” said the group.
Mental health patient days improved by 46.9 percent against the second half of 2020, but remained 12.6 percent lower than the first half of 2020. Netcare said that mental health patient days were 6.4 percent lower in April 2021 compared with March 2021 and had jumped by 169.1 percent against April 2020, with an average occupancy of 69.6 percent for the month of April 2021 and current occupancy trending at 73.7 percent during May 2021.
Netcare announced it aimed to spend R1.2 billion in capital projects during its 2021 financial year including R400m on the new Netcare Alberton Hospital, R70m to upgrade its hospital wi-fi connectivity and firewall systems, and R30m on the new 36-bed Akeso facility in Richards Bay due to open towards the end of the 2021 financial year.
The group also said that an estimated R40m would be invested during 2021 in the new 72-bed Akeso facility in Gqeberha.