AfroCentric gears up for new contracts


AfroCentric gears up for new contracts

Published Date: 2019-03-13 | Source: Stephen Gunnion | Author: Stephen Gunnion | Comments

AfroCentric gears up for new contracts

AfroCentric has reported subdued first-half profit growth as it invests in new businesses across the healthcare value chain.

The company owns medical scheme administrator MedScheme, with complementary investments in wholesale pharmaceutical supply, national chronic medication distribution and disease management. In the six months to end-December, it secured a number of new contracts, increased its shareholding in AFA Botswana to 49%, and exercised a call option to buy the remaining 74% in pharmaceutical distribution company Activo Health. It also continued to invest in Pharmacy Direct as it implements a Department of Health (DoH) contract in KwaZulu Natal, which it said would go a long way in alleviating congestion at public hospitals and clinics.

Revenue from AfroCentric's healthcare services rose 11.5% to R1.61 billion in the six months to end-December and total healthcare operating profit increased by 26% to R358 million. Profit after tax increased by 2.1% to R239.5 million as it absorbed non-recurring development and establishment costs of more than R9 million to support the DoH contract. It also spent R3 million in initial set-up costs for Scriptpharm and MMed. Scriptpharm recently secured the Polmed Chronic Medicine Management contract, which took effect on 1 January. It said acquisitions and investments left it with less cash in the bank, resulting in lower interest for the period.

The group said the benefits of its maintained programme of expansion, including the general and sustained quality of earnings from within the underlying businesses, all contributed to the satisfactory financial outcome for the six-month period.

It reported a 3.1% rise in headline earnings per share to 22.35c and raised its interim dividend by 6.25% to 17c per share.

Its shares rose 4.9% to R4.30.

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