Acquisitions boost Afrocentric’s health


Acquisitions boost Afrocentric’s health

Published Date: 2019-09-16 | Source: Stephen Gunnion | Author: Stephen Gunnion

Acquisitions boost Afrocentric’s health

The Medscheme owner has made a number of purchases as it grows its retail business.

As private healthcare comes under the spotlight with the looming introduction of National Health Insurance (NHI), Afrocentric says affordability remains a big factor. The healthcare investment company says this has had an effect on the revenue earned by Medscheme, its healthcare administration business. Members are downgrading their health insurance plans to cheaper options, resulting in lower fees for Medscheme.

Releasing its annual results, Afrocentric said its earnings for the year to end-June depicted a picture of transition as it transforms its healthcare offerings and composition of earnings. While its Healthcare services business experienced increased members (Medscheme now covers 3.7 million lives) and additional managed care contracts, operating profit was depressed by take-on costs for the initial uptake.

Its Retail Cluster expanded with the addition of the remaining 74% interest in pharmaceutical company Activo Health. Pharmacy Direct grew operating profit by 11% year-on-year despite no growth at the half-way stage as it absorbed non-recurring development and establishment costs to support a big Department of Health contract in KwaZulu-Natal. Two start-up companies, Scriptpharm and MMed, turned profitable in the second half of the year as the uptake on their contracts got traction and efficiencies started being realised.

The group also made a number of complementary acquisitions over the year and invested in new and growing contracts.

Total revenue jumped 25.7% to R5.3 billion and group operating profit increased by 8.8% to R678 million. But profit before tax declined by 1.8% to R529 million. It said relatively flat headline earnings per share of 47.29c for the year were mainly attributable to higher debt to fund the Activo deal, which pushed up its interest bill, and higher amortisation costs of its intangible assets. It has matched its 17c per share interim dividend with its final dividend, taking the total payout for the year to 34c, up 6.25%.

The group made no mention of NHI, but last month called for a "calm, cogent, phased introduction" of the universal healthcare plan. While it supported affordable healthcare for all, it said the NHI bill was still vague and implementation details, particularly funding, were still uncertain.

Its shares fell 2.9% to R3.30 on Friday.

Similar Stories