Netcare expects strong earnings growth despite slower second-half performance

Netcare is projecting adjusted headline earnings per share (HEPS) growth of 16% to 19% for the full year ending September 2025, underpinned by a forecast operating profit increase of at least 8.5%.

The company on Tuesday cited robust growth in total paid patient days (PPD) and improved full-week occupancy as key drivers.

Revenue for the period is expected to rise between 4.5% and 4.7%, with the company returning approximately R854 million to shareholders through share buyback program for the repurchase of 64.2 million ordinary shares at an average price of 1 324 cents per share.

An additional 52.9 million shares were cancelled during the year. Netcare plans to release its full financial results next month.

“Following strong growth in total paid patient days in H1 2025, consistent with expectations and seasonal trends, activity growth slowed in H2 2025,” said the company. 

“As a result, total paid patient days for FY 2025 are expected to increase by c.0.8%1 year-on-year, comprising an increase of c.0.8%1 in acute hospital PPD and an increase of c.0.5% in mental health PPD.” 

In the acute hospitals segment, full week occupancy is expected to improve to 65% for the year from 64.3%  in the prior year.

The hospital and emergency services segment revenue for the period under review is expected to grow by 4.8% to 5.% compared previous contrasting period’s revenue of R24.5 billion.

“Demand for mental health remains strong and notwithstanding the temporary unavailability of beds at certain high occupancy sites for essential refurbishment, activity recovered well in H2 2025, with expected full-year PPD growth of 0.5% against FY 2024, from the decline of 1.3% reported in H1 2025,” further commented Netcare.

Netcare expects changing trends for the primary care category, with same-store medical and dental visits expected to decline by 2.5% to 3.5%. This is reflective of the constrained consumer environment.

Moreover, a large occupational health contract for Netcare closed in May 2025 and has not been renewed. The contract accounts for the expected 7% to 8% revenue decline in the primary care segment.

Nonetheless, Netcare “has been successful in actively diversifying its base of occupational health customers during the year by securing” new contracts.

“Normalised for the loss of this single occupational health contract, the underlying revenue growth in the Primary Care segment is 2.0% to 3.0%. Despite the challenging environment, the earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin is expected to expand by 100 to 150 basis points,” it said.

With group revenues expected to increase by 4.5% to 4.7% from R25.2bn in the prior year and slightly below the guidance range of 5% to 6%, group EBITDA is expected to strengthen by 6.5% to 8.5%.

Operating profits for the year are expected to improve by between 8.5% and 11.5% from R3.1bn a year ago.

“The group’s financial performance in H2 2025 is expected to exceed that of H1 2025, supported by sustained operational efficiencies, the realisation of digitisation benefits, reduced strategic and diesel costs, lower interest rates and the positive impact of the share buyback programme,” noted Netcare.

Netcare recently said that it “continues to focus on operational efficiency and strategic innovation, streamlining processes to reduce costs, and investing in technology that enhances patient care” and service delivery.

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