Private hospital group Netcare anticipates normalised earnings before interest tax depreciation and amortisation (EBITDA) to increase by between 7.3% and 7.7% for the six months to March 31.
In a trading statement on Friday, the group its directors expect interim results to be published on May 20 said it expected revenue would increase by between 4.2% and 4.4%.
Activity in the six months had been influenced by sector seasonality, a change in respiratory disease patterns, less maternity cases and the impact of low-cost medical scheme networks.
The group also invested R264 million in share buybacks to April 30. The normalised EBITDA margin was expected to be between 17.8% and 18.2% compared with 17.5% at the interim stage last year.
Sector seasonality was affected by a one-week delay in the start of the school year in January 2024, which contributed to a softening of patient activity at the beginning of the calendar year.
However, there was a robust upswing in activity from February 24 this year. School holidays started on March 20, and the Easter long weekend began on March 29, falling mostly within the first half of the financial year.
The year before, the school holidays started on March 27, while the Easter long weekend began on April 7, primarily affecting the second half of the financial year.
Consequently, performance for the month of March 2024 was not directly comparable to March 2023.
As anticipated, activity decelerated in the final two weeks of March 2024, nullifying the gains made over the preceding six weeks of trading.
However, April 2024 reflected a recovery of this timing impact, and so the year-to-date metrics for the seven months to April 2024 provided a more accurate indicator of year-on-year trends.
Total paid patient days (PPDs) for the first half fell by 0.8% compared to the prior period, but increased 0.4% for the seven-month period to April 2024.
The total PPD decline for H1 2024 comprised a 1.7% reduction in acute PPDs and a 7% increase in mental health PPDs.
The decline in acute care PPDs was due to less respiratory, maternity and private cases, the intentional cessation of poor credit risk activity and, to a lesser extent and in line with group expectations changes in low-cost networks.
Total operating costs were well contained in a high inflationary environment and an extra public holiday on December 15, 2023, which led to an increase in staffing costs of about R22m.
A strong balance sheet facilitated continued investment in projects, with R510m of capital expenditure invested in the first half out of the anticipated total spend of R1.4bn for the 2024 financial year.
Net debt increased to R5.8bn from R5bn due to the payment of ordinary and preference dividends, share buybacks and a higher interest bill.
All projects were on track and the digitisation initiative to implement Electronic Medical Records across the group's ecosystem and seven delivery platforms had been completed.
The hospital and emergency services division, which comprise acute and mental health hospitals, as well as emergency and ancillary services, was expecting to report normalised EBITDA growth of between 8% and 8.4%.
Medical PPDs continued to recover at a faster pace than surgical PPDs, notwithstanding subdued respiratory activity when compared to the prior period.
Occupancy in the acute hospitals declined slightly to 62.1% from 62.6%.
Demand for mental health remained strong, with PPDs increasing 7%, with Akeso Gqeberha (commissioned in May 2023) contributing 5.2% of the growth. Average occupancy was 69.3% (71% excluding Akeso Gqeberha).
In the Primary Care segment, revenue grew by 6.3%. The occupational health business recorded a strong performance, enhanced by new contracts.
