Netcare to buy Akeso for R1.3bn

By Reuters Time of article published Nov 21, 2016

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Johannesburg - South Africa's second-largest private hospital firm Netcare will buy Akeso Clinics, a chain of psychiatric health facilities, for R1.3 billion ($91 million), the firm said on Monday.

Netcare, which runs Britain's largest private hospital network, is seeking to increase its exposure to mental healthcare, which it sees as a fast-growing segment in its home market.

Akeso is a chain of 12 South African clinics and provides specialised treatment for eating disorders, post-natal depression, addiction and other psychiatric disorders.

“This will provide a national platform from which we can drive our mental health strategy,” said CFO Keith Gibson.

Read also: Operations in Britain weigh on Netcare’s earnings

The acquisition will be earnings neutral in the first year but will contribute to profits thereafter, CEO Richard Friedland told investors at the firm's full-year results presentation.

Netcare reported a 31 percent drop in full-year profit as a once-off accounting charge in Britain weighed on earnings.

Diluted headline earnings per share (EPS) fell to 117.1 cents for the year to end-September, compared with 170 cents the previous year.

But when headline EPS is adjusted to separately disclose the exceptional nature of the swap instruments of the UK rent transaction, EPS totalled 199.5 cents, an increase of 5.6 percent, and better than analysts' expectations.

Shares in Netcare were up 2.6 percent at R34.89 by 1007 GMT, while the benchmark Top 40 index was flat.

Headline EPS is the main profit measure in South Africa and strips out certain one-off items.

Demand for private healthcare services in South Africa is expected to remain resilient and Britain's decision to leave the European Union has had no measurable impact on the business to date, Netcare said.


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