Netcare says Covid-19 poses significant uncertainty for remainder of year
JOHANNESBURG - South African private healthcare company Netcare on Monday reported a 6.3 percent decrease in adjusted headline earnings per share to 79 cents for the half-year to March, saying the Covid-19 pandemic introduced significant uncertainty and forecast risk for the remainder of the financial year.
The company said its strategic objectives remain unchanged but implementation timelines had been disrupted by the pandemic.
It said trading during the first five months of the 2020 financial year through to the end of February remained in line with expectations and market guidance. However after confirmation of the first South African case of Covid-19, the business was materially impacted by extensive preparations and the curtailment of patient volumes resulting in lower occupancies from mid-March.
"Capex of approximately R150 million has been spent or committed to date to enhance the readiness of Netcare’s ICU and high care facilities in the form of additional ventilators, specialised air filters and ultraviolet light disinfection robots," it said.
It said the real impact of the coronavirus was experienced in April when South Africa was under a full lockdown to contain its spread, dramatically impacting non-urgent surgery, medical and trauma cases, with acute hospital occupancies falling to 32.5 percent.
Through the lockdown, pathology laboratories experienced a significant fall in the percentage of positive specimens for the usual respiratory viral cases.
Emergency and trauma related activity also fell dramatically, as borne out by a decline of up to 60 percent in unnatural deaths in South Africa during this period.
The responsible resumption of medically necessary, time sensitive surgery commenced at the beginning of May 2020, resulting in an uplift in patient days.
The healthcare group said it had welcomed the release of a report following an independent probe into a Covid-19 outbreak at its St. Augustine’s hospital in Durban which led to its temporary closure between April 2 and May 11.
It said all recommendations and interventions had been fully implemented while those that had already been in place had been further strengthened.
"Given the evolving understanding of the pandemic, both locally and globally, it is evident that demand for, and the provision of, healthcare services for the next six months and beyond, will change significantly," it said.
Margins would be impacted by changes in volume and case mix, which would be determined by the timing and peak of the pandemic, as well as the increased costs of risk mitigation measures, Netcare added.
The company has committed to treating public Covid-19 patients at its facilities on a not-for-profit, cost recovery basis.
"Netcare remains in a healthy financial position with low levels of gearing as reflected by its net debt to earnings before interest, tax, depreciation and amortisation ... coverage of 1.5x at 31 March 2020," it said.
Notwithstanding this, the company said it had suspended its interim dividend in order to preserve cash.
Other cash preservation measures included the reduced utilisation of agency staff, deferral of non-critical project expenditure, the postponement of approximately R800 million of capital expenditure earmarked for new and current projects and the suspension of further share buy-backs.
- African News Agency (ANA)