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NTC - Netcare News Story

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UPDATE 1-South Africa's Netcare scraps 2020 outlook due to coronavirus

Mon 30th March, 2020 4:11pm
(Adds details)
    JOHANNESBURG, March 30 (Reuters) - South Africa's Netcare
 NTCJ.J  has scrapped its 2020 outlook, suspended spending on
projects and share buybacks, and may need to review its dividend
policy due to the impact of coronavirus, the private hospital
company said on Monday.
    "The impact of COVID-19 introduces significant forecast
risk. Netcare will be better positioned to provide updated
guidance at the time of publishing its interim results in May
2020," it said in a statement. "This may also necessitate a
revision of Netcare's dividend policy."
    Non-essential elective surgery at Netcare's hospitals has
also been suspended following a 21-day national lockdown to curb
the spread of coronavirus that started last week, it said.
    The company said its financial position and cash flow
remained in a healthy condition and it had cash balances and
committed banking facilities in excess of 3.5 billion rand from
which to manage its future liquidity requirements.
    In November, Netcare said it expected so-called patient day
growth - which represents customer stays in its hospitals - of
0.8% to 1.2% for its fiscal year which ends on Sept. 30. 
    It also expected its margin on earnings before interest,
taxes, depreciation and amortisation (EBITDA) within the core
acute hospital business to hold steady at 20.5%, while capital
expenditure was set to be 1.4 billion rand ($77.9 million).
    However, Netcare said on Monday that 800 million rand of
spending earmarked for new and current projects had been
postponed, as had further share buybacks, to preserve cash and
ensure liquidity.
    Netcare, which competes with Life Healthcare  LHCJ.J  and
Mediclinic  MDCM.L , said it expected total patient days to fall
by 2.7% in its hospital and emergency services division, the
company's biggest, in the six months ending on March 31.
    It said this was due to lower acute patient days as a result
of competition from new hospital networks. The division also
experienced ongoing pressure in respiratory admissions and
slightly lower volumes in surgical procedures in March.
    EBITDA margins in the division were broadly in line with the
expected level of 20.5%, it said.
    Total revenues at its Primary Care division were expected to
fall after the healthcare provider integrated all 15 Medicross
day theatres into the hospital division and rationalised some
previously loss-making Medicross clinics.
    Underlying revenue, which excludes day theatres and
rationalised clinics, is expected to increase by about 7.5%, it
said.
    Netcare said it had spent 150 million rand to enhance its
ICU and High Care facilities, including additional ventilators,
ultraviolet light disinfection robots and specialised air
filters to ensure appropriate disinfection measures. 
    Given the lockdown, all routine activities other than
essential activities relating to coronavirus have been stopped.
    "Netcare has also suspended non-essential elective surgery,
to ensure that asymptomatic COVID-19 positive patients are not
operated on, thereby potentially placing other patients,
healthcare workers and doctors at risk," it said.
   ($1 = 17.9712 rand)

 (Reporting by Nqobile Dludla; Editing by Susan Fenton and David
Clarke)
 ((nqobile.dludla@thomsonreuters.com; +27115952816; Reuters
Messaging: nqobile.dludla.thomsonreuters.com@reuters.net))
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