South Africa's Netcare warns on hospital margins (updated)
13/05/2019 10:50
(Recasts with outlook)
JOHANNESBURG, May 13 (Reuters) - South Africa's Netcare Ltd
NTCJ.J warned that profitability at its biggest division,
hospital and emergency services, will fall this year after it
reported a 1.3 percent rise in half-year core profit.
The country's third-largest private hospital chain by market
value has seen falling occupancies as healthcare funders rein in
costs, squeezing healthcare providers' margins.
"The impact of the funder case management on our occupancy
levels combined with the growing prevalence of restricted
hospital networks and reduction in foreign case loads, will
outweigh the benefits of our efficiency initiatives," Chief
Financial Officer Keith Gibson said at a results presentation.
"We do foresee a reduction in our hospital and emergency
services full-year EBITDA margin of between 50 to 80 basis
points."
In the six-months to end March, Netcare's hospital and
emergency services division reported an earnings before
interest, tax, depreciation and amortisation (EBITDA) margin of
20.8 percent, down from 21.5 percent a year earlier.
Netcare's expectation for growth in patient days, which
represent customer stays in its hospitals, in acute and mental
health for the financial year 2019 is within a range of 3% to
3.5%.
At 0914 GMT, shares in Netcare fell 1.08 percent to 22.99
rand.
Netcare, which competes with Life Healthcare LHCJ.J and
Mediclinic MDCM.L , reported a 1.3 percent rise in group
normalised EBITDA to 2.12 billion rand ($148.53 million),
boosted by rising day patient numbers at its hospital and
emergency services division in the period.
While adjusted headline earnings per share rose by 2.4
percent, it said.
The healthcare provider increased its interim dividend by
6.8 percent to 47 cents a share.
($1 = 14.2735 rand)
(Reporting by Nqobile Dludla, editing by Louise Heavens)
((nqobile.dludla@thomsonreuters.com; +27117753126; Reuters
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