Netcare lines up new CEO – but it’s not ready to say who

Netcare – one of South Africa’s largest healthcare providers – remains coy on its CEO search.

Following an extensive search, Netcare said that it had identified its preferred CEO candidate.

However, given the candidate’s unavailability for an extended period, details remain confidential.

Dr Richard Friedland – who has been CEO for nearly two decades – will thus remain CEO beyond September 2024 for six months.

This was announced in the group’s financial results for the year ended 30 September 2023 (FY23), where the group hit all of its operational and strategic targets.

Group revenue increased to R23,699 million (FY22: R21,636 million), whilst the group’s EBITDA for FY23 grew by 17.7% to R4,115 million (FY22: R3,496 million).

Operation costs relating to strategic projects grew to R258 million (FY 2022: R249 million), it added.

“We experienced an average of Stage 3.6 load shedding across our facilities during the year, resulting in a sharp increase in generator diesel costs to R124 million from R37 million in FY 2022. EBITDA margins, excluding strategic and generator diesel costs, increased by 150 basis points from 17.5% to 19.0%,” the group said.

Overall, normalised operating profit improved by 23.9% to R2,841 million (FY22: R2,293 million), whilst headline earnings per share grew 36.5% to 101.0 cents per share (FY22: 74:00 cents)

With the group’s aim of providing shareholders with a dividend of 50% – 70% of earnings, the board declared a total dividend of 65 cents per share (FY22: 50 cents)

Outlook

“We are confident that our strategy remains relevant, and we remain committed to realising growth opportunities, improving returns and the successful completion and execution of our key strategic projects,” the group said.

“Notwithstanding the fluid economic environment, we expect ongoing improvements in the operational and financial performance of the business in FY 2024 and beyond.”

“Although the macro environment remains impacted by national power grid load shedding, global supply chain constraints, a constrained consumer, and high levels of unemployment, we have a number of measures in place to mitigate these challenges and will remain focused on optimising the progress made in FY23.”

The group added that its environmental sustainability projects will lessen the impact of the significant increase in costs associated with increased reliance on diesel-powered generators.

Due to the weak macroeconomic environment and the increased stress on disposable income, there has also been growth in affordable restricted network plans. The group’s large geographic footprint and NetcarePlus GapCare products have allowed it to retain many patients in these networks.

“In addition, although there has been limited growth in medical scheme membership, the pool of covered lives remains resilient and underscores the sustainable demand for quality private healthcare, which is exacerbated by the growing disease burden and ageing insured population,” the group said.

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